Retail Trading in Recent Years, Dissertation – Literature Example

Introduction

This dissertation is based on the topic of Retail Trading (Hypermarkets). This research aims to evaluate the changes in the trading of Retail during the economic crisis of Europe. The analysis of the multiple regressions shows that the volume of sales of the hypermarkets is the dependent variable whereas the inflation, unemployment and the capital income are termed as independent variables. The predictions and the forecasting of the trends of future in the Retail environment of Cyprus shows the correlation. This paper will explain the topic in the light of scholarly sources and online journals.

Literature Review

After the end of the Second World War, the culture and practices of retailing in most of the European countries in the West went through rapid transformation. The economic boom of the post-war, the emergence of mass society of consumers and the innovations adaptation which were already implemented by America in the period of interwar, revolutionized the world of spending and getting goods (Abreu & Mendez, 2014). The implementation of the supermarket and self-service, the spread of the store departments and the order of mail business were not the only factors that caught up to the process of ‘Americanization’ of retailing (Stotz, 2012). The specific cultures and the national patterns of the retail trading remained a long term change process and was crucial at the start of 1920s and 30s (Fratzscher , 2012). In this era, we can see a sudden transformation and the emergence of hypermarkets and this changed the post-war Europe retailing concept. In the 17th annual report Global Powers of Retailing provides an overview of the 250 largest retail companies in the world for the last fiscal year, which goes beyond the usual list.  The document also analyzed the trends that retailers must take into account when planning growth strategies (Han & Kumar, 2013). Special attention is given to the forecast of world economic development and Retail Company’s coefficient ‘Q’ as the method used to predict the performance of retailers in the future by analyzing the current financial information (Davies & Kirby, 2012). The report for the current year has two distinctive features.  In the Retail trade without borders presented a revolutionary look at how modern technology can bring together retailers and consumers and improve their relationships, as well as the first time a list and analysis of the 50 largest retail online trading.   In emerging markets, there is a high demand, while Europe gets more and more dependent on foreign markets.  In fiscal year 2012 retail companies operating in emerging markets continued to take advantage of the growth in consumer demand (Han & Kumar, 2013). While retailers in developed countries struggled with factors hindering their development in mature markets, circumstances favored the rapid growth of emerging market players.  Retailer participants in emerging markets accounted for more than half (26 of 50) among the fastest growing retailers in the 2012 fiscal year.  These included four European companies from the ranking of 250 leading retail companies, as well as six of the seven retailers from Africa and the Middle East, and six of the nine retail companies in Latin America (Davies & Kirby, 2012).

Impact of Inflation on Hypermarket Sales

The effects of inflation on hypermarket sales will depend on whether it is expected or unpredictable.  Inflation expectations can be used in the calculation of the cash flows and discount rates in the analysis and the value of investments can be based on this.

Nominal cash flows include inflation (Calderwood & Davies, 2012). The process of calculating the nominal cash flows requires the analyst or investor not only the calculation of indicators of expected inflation but the expected rise in prices for goods and services which the hypermarket sells or uses.  Thus, the analyst makes forecasts of nominal cash flows for an individual airline will have to predict the rise in prices on air tickets to calculate sales and inflation in fuel prices for the calculation of costs (Mukherjee et al., 2014). The process of calculating the nominal interest rates much easier.  If rates used in financial markets as the basis for calculating the data rate will be nominal (Teltumbde, 2013). The effects of inflation will depend in part on the difference, if any, between the expected inflation of prices of goods which the firm sells, and that the goods which the company uses.  If the hypermarkets expects higher prices for goods that it sells will be faster than the value of its real cost is the cash flows will increase with the growth rate of inflation.  If not, the situation will be reversed.  The relationship between nominal and real discount rate also depends on the level of inflation (Fratzscher , 2012).

Effect of Unemployment and per capita income on Hypermarkets

Unemployment is a socio-economic phenomenon which is expressed in the fact that part of the economically active population who want to work cannot find a job. The economically active population are citizens exhibiting labor activity (providing labor supply), including the employed and the unemployed.  Economists note that during the recession, unemployment increases during periods of recovery is reduced.  In conditions of market relations are always people looking for work (Fratzscher , 2012). Hypermarkets usually have a definite average unemployment rate, which fluctuates around employment.  This level is called natural and is considered inevitable. Every year the European retail companies are increasingly consolidating their positions in the ranking of the 250 largest retailers in the world (Fratzscher, 2012).  In this case, several retailers stopped a step away from inclusion in the ranking, and it is likely they hit the rating in the next year (Kim & Halls worth, 2015).   It is noteworthy that all four U.K retail companies included in the ranking, took the leading position and ended up in the top 15 fastest-growing retailers in the world, suggesting a more dynamic development of the European retail market compared to markets in other countries (Henker & Paul, 2012).

In recent years, developing countries have become the most promising retail market – the head of the international group Deloitte to work with the retail sector. Latin American retailers led the ranking, demonstrating a 15% growth in revenue and ahead of its competitors from Africa and the Middle East (Gardner & Sheppard, 2012). Retailers successfully adapt their business strategies to the growing demand of consumers of the middle class in developing countries on a wide range of products from household appliances and cars to personal hygiene (Kim & Halls worth, 2015). Retailers from Europe last year once again had not easy, because after the introduction of austerity policies to overcome the credit crisis in the Eurozone region was confronted with the recession, which led to low economic growth and high unemployment in many European countries (Chordia & Subrahmanyam, 2011). Retailers of the Asia-Pacific region, excluding Japan, showed a significant increase, but it did not reach double digits demonstrated in the past year.  Japanese retailers have recovered from the crisis of fiscal year 2011, but still lag behind other countries and regions.  In the US, the growth rate of revenue 250 leading US retailers fell to 4.3% compared to 6.3%, demonstrated in the 2011 fiscal year.  In the North American region, especially in Canada, the amount of revenue has grown considerably through a network of shops Alimentation Couche-Tard.  As a result, a major transaction made in 2012, Couche-Tard is now the largest retailer in Canada (Han & Kumar, 2013).

Unlike other indicators (industry, turnover) for 2013, retail sales grew, however, in comparison with previous years, the pace has slowed (Henker & Paul, 2012). The reasons for this phenomenon are, firstly, the general deterioration of the economic situation, falling confidence in the future, therefore, the desire for more savings than consumption (Gardner & Sheppard, 2012). Second, this reduction in real disposable income: the need to pay the loan, increasing expenditures on rates, slowing growth of real income primarily affect the wholesale and retail trade.  Reduced consumer demand will lead to an even greater negative impact on the economy: continued stagnation overstocking will cause that the industry will produce even less.  In this situation, it is obvious that this growth factor is exhausted, and any effective measures are needed to stimulate it, or the active development of other factors that can ensure economic growth.  In any case, the government defined its position a year ago, Kim & Halls worth (2015) said that during the crisis, we have actively supported the demand (Trebbin, 2014).  Now our economy is in a situation where many are involved, if not all, production capacity and unemployment is at a record low (Gardner & Shephard, 2012). Some experts believe that in such an environment to support the demand is less efficient and leads not only to an increase in production, as higher prices.  It is therefore proposed not to get involved in the stimulation of demand, and create conditions for investment. To this end, and reduced government spending (at least, this is justified by the Government).  That’s just it turns out that by stimulating demand declined, as a result, he slowed his pace, but alternative growth factor investment, was in the 2013 general failure: the volume of investments in fixed assets decreased (99.2% compared with the previous year), and net foreign investment was negative (Kim & Halls worth, 2015).

In 1956-1970, an intense concentration process proceeded wholesale enterprises, and this process will continue in the future, because the activity in wholesale require significant investment, since it is necessary to make large purchases, to assume the costs of warehousing of goods, construction of warehouses, transport equipment and the acquisition of computer equipment, implementation loading and unloading operations (Chordia, 2011). Just enough big businesses can carry out such investments and thus achieve a high level of profitability (Abreu & Medes, 2014).  That is why the disappearance of small wholesale enterprises, especially in the food trade, where previously they were quite numerous, and at the same time increases the number of large enterprises.  In addition, many independent wholesalers come into powerful purchasing associations, thereby strengthening its position in negotiations with suppliers and using certain services centers in the conduct of their affairs.  Other changes relate to ways to perform certain functions.  The duties of wholesale enterprises typically includes the delivery of goods to retailers, i.e.  Performing operations such as loading work and transportation; In addition, traders sent their representatives to the customers and provide them with purchasing credits, to avoid the costs associated with the implementation of these (Abreu & Medes, 2014).

Another innovation is that of all the challenges facing the wholesaler, to give preference to the functions of sales and trade organizations, as well as support to retailers.  The fact that the operations relating to the procurement of goods lose their value due to the standardization of products and its design directly to production (Kim & Halls worth, 2015). The share of wholesalers is the rationalization of specific operations, such as handling and delivery of goods to the consumer; especially important thing is to ensure a reliable exchange of information between manufacturers and retailers, creating better conditions of retailers, wholesalers are customers (Trebbin, 2014).  Achieving these goals is especially important if the wholesalers association headed by retailers.  Such a shift of attention to the lower levels of trade was reinforced by the desire to withstand competition from supermarkets and hyper-market that absorb an increasing part of the market, without needing the help of wholesalers.  Therefore, some wholesalers operating in the field of food trade, began to open retail stores, such as supermarkets, thus creating an independent trade integrated enterprise, while others began to create together with the retailers of the so-called voluntary associations or franchises (Calderwood & Davies, 2012).  An example of the company Promotes is an illustration of the rapid development of wholesale trade is a company that emerged in 1961 through the merger of a number of wholesale companies, ranked second among the companies involved in the trade in food products in France (Calderwood & Davies, 2012).  Promotes is a real constellation of branches and various commercial enterprises; half of all sales made in the form of wholesale trade, and the other half – in the form of retail (network of branches, hypermarkets, etc. Thus, the independent wholesalers are by no means a relic of the past gone forever they remain an essential and dynamic element of the trade, however, partly a survival wholesale trade due to its extension beyond its inherent features and implementation in retail trade.

References

Abreu, M., & Mendes, V. (2014). The Investor in Structured Retail Products: Marketing Driven or Gambling Oriented? (No. 6621). EcoMod.

Calderwood, E., & Davies, K. (2012). The trading profiles of community retail enterprises. International Journal of Retail & Distribution Management, 40(8), 592-606.

Chordia, T., Roll, R., & Subrahmanyam, A. (2011). Recent trends in trading activity and market quality. Journal of Financial Economics, 101(2), 243-263.

Davies, R. (2012). Retail and Commercial Planning (RLE Retailing and Distribution). Routledge.

Davies, R. L., & Kirby, D. A. (2012). Retail organisation. Retail Geography (RLE Retailing and Distribution), 156.

De Grauwe, P. (2014). Economics of monetary union. Oxford University Press.

Fratzscher, M. (2012). Capital flows, push versus pull factors and the global financial crisis. Journal of International Economics, 88(2), 341-356.

Gardner, C., & Sheppard, J. (2012). Consuming Passion (RLE Retailing and Distribution): The Rise of Retail Culture. Routledge.

Han, B., & Kumar, A. (2013). Speculative retail trading and asset prices.Journal of Financial and Quantitative Analysis, 48(02), 377-404.

Henker, J., & Paul, D. J. (2012). Retail investors exonerated: the case of the January effect. Accounting & Finance, 52(4), 1083-1099.

Jefferys, J. B. (2011). Retail trading in Britain 1850-1950: a study of trends in retailing with special reference to the development of co-operative, multiple shop and department store methods of trading. Cambridge University Press.

Kelley, E. K., & Tetlock, P. C. (2013). How wise are crowds? Insights from retail orders and stock returns. The Journal of Finance, 68(3), 1229-1265.

Kim, W., & Hallsworth, A. G. (2015). Tesco in Korea: Regulation and Retail Change. Tijdschrift voor economische en sociale geografie.

Kirilenko, A. A., & Lo, A. W. (2013). Moore’s Law Versus Murphy’s Law: Algorithmic trading and its discontents. The Journal of Economic Perspectives, 51-72.

Mukherjee, A., Satija, D., Goyal, T. M., Mantrala, M. K., & Zou, S. (2014). Impact of the retail FDI policy on Indian consumers and the way forward. InGlobalization and Standards (pp. 41-59). Springer India.

Schneider, F., & Kearney, A. T. (2011). The Shadow Economy in Europe, 2011. Johannes Kepler Universitat, Linz.

Stotz, O. (2012). Do Retail Investors Follow Insider Trades?. German Economic Review, 13(3), 257-274.

Teltumbde, A. (2013). FDI in Retail and Dalit Entrepreneurs. Economic & Political Weekly, 48(3), 11.

Trebbin, A. (2014). Linking small farmers to modern retail through producer organizations–Experiences with producer companies in India. Food Policy, 45, 35-44.