Economic and Marketing Information for Indiana Farmers (May 31, 1963) |
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Economic and Marketing Information FOR INDIANA FARMERS Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana Food Retailing in the Future May 31, 1963 by W. D. Gorman, Agricultural Economics Today's food retailing has experienced rapid and drastic changes. And, it appears that these changes are picking up momentum. What implications do these changes in retailing have on the producer of food products? The food retailing industry has problems. It is feeling the profit squeeze. For instance, the average life expectancy of the modern large supermarket is now about 5 to 7 years. Stores that are not remodeled after 5 to 7 years are likely to be forced out of business. Most of the profits deriving from the self-service supermarket—the latest major innovation in the industry— are being dissipated by increased competition and rising costs. Food retailing is aptly characterized as a fiercely competitive industry—both in terms of price competition and non price competition. Over Expansion Indiana's food retail industry, like most other states, is suffering from the problem of "overstoring" or over expansion of food retail facilities. The square footage of retail store selling area is increasing more rapidly than the increasing population. Competition appears to be successfully holding down retail margins or markup. However, nothing appears to be stemming the tide of added floor space or selling area. "Over storing" almost invariably results in a high rate of store failures. With continuing rising costs, particularly for fixtures, building, and labor, accompanied by the increasing struggle to obtain greater volume per square foot of selling area in an attempt to offset these costs, the stage appears set for a sustained period of cut throat competition in the retail food industry. The time may also be ripe for the appearance of a new food retailing innovation. Food retailing during the latter nineteenth century and the early twentieth century was characterized by the corner grocery store and the larger country general store. Chain Stores The first big change from the small independent grocery store was the innovation of the chain store. Through more efficient buying methods and a reduction in the number of services provided (notably consumer credit) chains were able to offer food products at lower prices. The next significant change in food retailing was the self-service supermarket. This is essentially the retailing system today. The self-service supermarket resulted in considerable labor saving for the retail grocer. He no longer had to fill individual grocery orders, his customers did it for him. Major innovations and increased competition in food retailing during the past 50 years resulted in lower gross markups by the retailer, and thereby relatively lower prices to consumers. New technological developments and changes in services provided have enabled the retailer to operate on a lower margin. Inherent in these developments has been the reduction of the amount of labor needed in retail food stores. There is no indication that this trend of less and less labor has leveled off or reversed. Food stores of the future will approach the ultimate of no employees on the premises. Food retail stores of the future will most likely have no sales people or other work personnel available in the store, with the possible exception of a service clerk to answer questions and a machine maintenance engineer. Such an era of unattended stores might be called "robot retailing." Considering the latest technology, pilot projects and ideas in this area, it appears that unattended retailing may take on several forms in the future. Two forms that appear likely are: The automatic-vending machine and the electronic data processing system. Automatic Vending Vending machines are already a common item. The automatic vending industry estimated that $2.5 billion of merchandise was sold through automatic devices in 1962. By the end of 1965, it is estimated that it will reach the $5 billion mark. There are at least four major developments that give strong indications that the automatic vendor will be one of the major factors in food retailing in the future:
Object Description
Title | Economic and Marketing Information for Indiana Farmers (May 31, 1963) |
Purdue Identification Number | UA14-13-econ196305 |
Date of Original | 1963 |
Publisher | Purdue University. Agricultural Extension Service |
Subjects (LCSH) |
Farm produce--Indiana--Marketing Agriculture--Economic aspects--Indiana |
Genre | Periodical |
Collection Title | Extension Economic & Marketing Information (Purdue University. Agricultural Extension) |
Rights | Copyright Purdue University. All rights reserved. |
Coverage | United States - Indiana |
Type | text |
Format | JP2 |
Language | eng |
Repository | Purdue University Libraries |
Date Digitized | 04/02/2015 |
Digitization Specifications | Original scanned at 400 ppi on a BookEye 3 scanner using Opus software. Display images generated in Contentdm as JP2000s; file format for archival copy is uncompressed TIF format. |
URI | UA14-13-econ196305.tif |
Description
Title | Economic and Marketing Information for Indiana Farmers (May 31, 1963) |
Purdue Identification Number | UA14-13-econ196305 |
Transcript | Economic and Marketing Information FOR INDIANA FARMERS Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana Food Retailing in the Future May 31, 1963 by W. D. Gorman, Agricultural Economics Today's food retailing has experienced rapid and drastic changes. And, it appears that these changes are picking up momentum. What implications do these changes in retailing have on the producer of food products? The food retailing industry has problems. It is feeling the profit squeeze. For instance, the average life expectancy of the modern large supermarket is now about 5 to 7 years. Stores that are not remodeled after 5 to 7 years are likely to be forced out of business. Most of the profits deriving from the self-service supermarket—the latest major innovation in the industry— are being dissipated by increased competition and rising costs. Food retailing is aptly characterized as a fiercely competitive industry—both in terms of price competition and non price competition. Over Expansion Indiana's food retail industry, like most other states, is suffering from the problem of "overstoring" or over expansion of food retail facilities. The square footage of retail store selling area is increasing more rapidly than the increasing population. Competition appears to be successfully holding down retail margins or markup. However, nothing appears to be stemming the tide of added floor space or selling area. "Over storing" almost invariably results in a high rate of store failures. With continuing rising costs, particularly for fixtures, building, and labor, accompanied by the increasing struggle to obtain greater volume per square foot of selling area in an attempt to offset these costs, the stage appears set for a sustained period of cut throat competition in the retail food industry. The time may also be ripe for the appearance of a new food retailing innovation. Food retailing during the latter nineteenth century and the early twentieth century was characterized by the corner grocery store and the larger country general store. Chain Stores The first big change from the small independent grocery store was the innovation of the chain store. Through more efficient buying methods and a reduction in the number of services provided (notably consumer credit) chains were able to offer food products at lower prices. The next significant change in food retailing was the self-service supermarket. This is essentially the retailing system today. The self-service supermarket resulted in considerable labor saving for the retail grocer. He no longer had to fill individual grocery orders, his customers did it for him. Major innovations and increased competition in food retailing during the past 50 years resulted in lower gross markups by the retailer, and thereby relatively lower prices to consumers. New technological developments and changes in services provided have enabled the retailer to operate on a lower margin. Inherent in these developments has been the reduction of the amount of labor needed in retail food stores. There is no indication that this trend of less and less labor has leveled off or reversed. Food stores of the future will approach the ultimate of no employees on the premises. Food retail stores of the future will most likely have no sales people or other work personnel available in the store, with the possible exception of a service clerk to answer questions and a machine maintenance engineer. Such an era of unattended stores might be called "robot retailing." Considering the latest technology, pilot projects and ideas in this area, it appears that unattended retailing may take on several forms in the future. Two forms that appear likely are: The automatic-vending machine and the electronic data processing system. Automatic Vending Vending machines are already a common item. The automatic vending industry estimated that $2.5 billion of merchandise was sold through automatic devices in 1962. By the end of 1965, it is estimated that it will reach the $5 billion mark. There are at least four major developments that give strong indications that the automatic vendor will be one of the major factors in food retailing in the future: |
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