The Influence of the Recession on Online Retail Shopping - Literature review Example

?Dissertation Literature Review - "Investigation on the Influence of the Recession towards Online Retail Shopping" (Concentrating on UK) Table of Contents Table of Contents 2 Overview of the Retail Industry 3 Difference between Traditional and Online Retail 4 Factors Influencing Consumer Behaviour in Online Shopping 8 Competitive Advantage of Online Retail 9 References 11 Bibliography 14 Overview of the Retail Industry Retail is recognised to be one of the largest industries in the global marketplace. As was noted by Purohit & Kavita (2009), the final stage of retailing is the distribution process that takes place from manufacturing of the product to distributing it to the consumers. It deals with activities such as selling of the products and services provided in stores. Retailing mainly aims at providing an innovative way of shopping experience for the consumers with due regards to their preferences to a large extent. The basic strategy of retailing intends to deliver the best quality service for a longer period of time. In the current era, the retailing industry plays a significant role as a major contributor to the GDP growth of any economy. It is further noted as one of the fastest growing and most promising industries in the global region (Purohit & Kavita, 2009). It was further stated by Chan (2007) that retailing is considered to be the ultimate connection between the end-users and the production of various goods. With the assumption that the end-consumers are not quite huge in number or population and are immobile as well as uninformed, the firms operating in the retail industry should focus on various attributes. These attributes to be considered by the retailing forms include the geographic regions of the targeted market, the price visibility of the consumers, quality assurance, and product portfolio among others. It is in this context that by considering these attributes, a retail firm is likely to gain better understanding of the market trends and consumer behaviour (Frieden & Roche, 2006). Difference between Traditional and Online Retail With due consideration to the development of the retail industry, its structure can be classified in two segments, such as the traditional retail industry and the contemporary retail industry. As stated by Frieden & Roche (2006), traditional retail is highly developed in small areas of towns and cities of various geographical regions which fundamentally concentrate on the physical distribution of commodities with minimum role to play by technology. Traditional retailing stores reduce the cost of shopping as it brings the products within the reach of the customers, mostly in their local residential area. Certain significant aspects such as assurance of the selected products, its price, and promotional features among others are primarily taken into account by the traditional retailers. Traditional retail system also concentrated on direct selling channels which provided with bargaining opportunities to the customers but incurred considerable costs for the distributors (Chan, 2007). It is worth mentioning that in the contemporary retail marketing, various products are offered including the categories such as food and grocery, wet groceries, and apparel among others that increases the growth of modern retailing. It mainly aims at developing different types of strategies and selling the products as well as services by minimizing the cost of the product. This enables the contemporary retail channels to offer the consumers a vast and complete range of products as per their request and at a cheaper rate than that available through traditional stores. The supermarkets also bear same kind of strategies and are analyzed in an effective manner for an efficient development of traditional retailers. Another advantage presented by the retail stores can be regarded as the accessibility of various national brands as well as internationally renowned brand in the particular market segment (Berni & et. al., n.d.). This increases the customer satisfaction to a large extent which in turn yields in terms of brand loyalty and enhanced brand value (Frieden & Roche, 2006). Online retail means buying and selling of the products and/or services by means of internet services or telephonic conversations. Retailers today are more concerned with online retailing services as an increasingly inevitable form of electronic commerce with various advantages not only for the suppliers but also for the consumers. As stated by Doherty & Harrob (2003), these virtues are considered to enhance the sales aspects for electronic businesses to a large extent. The online retail mainly focuses on satisfying the consumer demand efficiently without the constraint of retail stores. The mechanism of the retail stores executes the examination of the consumers’ demand through online research followed by the distribution of the facts to various online retail stores. This in turn facilitates the retail outlets online to serve the customers according to their preferences gaining competitive advantages. Later, as per the order, the product is directly delivered to consumers with due consideration to their feasibility. Furthermore, it has also been observed that online products are also sold by the traditional retailers (Doherty & Harrob, 2003). However, as personal interaction is not taken into consideration in online retailing, it becomes quite important to develop a trust among the online customers with the intention to enhance the relationship amid the customers and the buyers. One of the most significant attempts made by the online retailers with this concern is that customers are served with the benefit to search sufficient information regarding the products and/or services they desire to purchase (Kuan & et. al., n.d.). It was further noted by Jun & et. al. (2003) that from the view point of a firm and customer online retailing is still recognised to be a new technology, even though it is quite effective in satisfying customer needs and requirements. Other than the trust aspect which builds up the interdependent relationship between the buyers and the consumers, online retailers also need to face challenges in maintaining highly persuading quality. As stated by Peterson (1992), online service quality provided to the customers tends to be an important key for the success of online retailers. Some of the quality services perceived by the online customers are easily accessible, reliable, time-efficient, safe and secured as well. All these quality services bear a significant impact on customers as well as their satisfaction level. Online retailers also have to understand in depth as to what online customers exactly desire to be the features of their products and/or services in order to determine valuable measures to improve profitability. Generally, impersonal or non-verbal interactions are involved between the customers and the online retailers through internet based tools such as e-mail, chat room, message board or traditional communication channels. The interaction also helps the customer to find out valuable or necessary information which in turn assists them to place the order (Jun & et. al., 2003). However, as was noted by Dutzler & et. al. (2009), internet shopping involves more risks in comparison to that of traditional means in terms of quality aspects. For instance, a consumer is not able to check the quality of the product physically which are to be purchased and thereby may face dissatisfaction in receiving poor quality material and restrict themselves for any further online purchases (Jun & et. al., 2003). The trends of consumer behaviour in online purchasing of products have mainly focused on their compliance to participate into online shopping. The attitude of the customer towards online purchasing is an essential factor that affects their buying behaviour as well as the market trend to a large extent. Several indicators are categorized in online retailing to examine the customers’ behaviour such as experience of shopping, the value of the product, the service that is provided, the maintenance of quality that is offered and the perceptions of the risk among others (Shergill & Chen, 2005). Based on the similar context, Hart (1999) stated that the consumer behaviour has gained much importance due to the trend of online shopping. For the success of online shopping the retailers should develop a brand name in order to create a unique and innovative shopping experience. The retailers must also bring out some of the strategies to capture more and more customers so that it can survive for a longer period of time. New internet technologies and ventures are created that affects the market and assists the firms to build up a healthy relationship between the retailers and the customers (Hart, 1999). Apart from online shopping, a large number of consumers are observed to use internet may be for dealing with banking issues, making travelling arrangements, or gaining in-sight of the weather report. All these highly affect the retail trade at a broader perspective. A vast number of stores also use internet for marketing purpose which in turn increases the profitability of the online stores. Observed the current scenario, it can be stated that the online retail has developed a high pace and continues in developing which helps to distribute products and market in an effective manner. The online retail creates much more opportunities for both the customers and even for the companies for selling and buying of the products which ultimately aims at growth and development of the company (Dutzler & et. al., 2009). Factors Influencing Consumer Behaviour in Online Shopping Online retailing has generated a rapid growth in last few years all over the world. It became very popular and easier for the customers for buying and selling of the products. As online retail business is accepted by a large number of populations and is growing rapidly, it often observed to become difficult in attracting the customers for buying the product, providing good service quality and even satisfying the customers with efficiency. As stated by Sahney (2008), it is due to this reason that application of new technology is being provided in online retailing assisting the sellers to render their efficient and influential services. The retailers or the marketers are also observed to focus more on managing, constructing and even evaluating their service quality at frequent instances for delivery of the product through internet. Furthermore, to identify the performance which is evaluated for the success of online retailing, ‘The Quality Function Deployment Technique’ is applied (Dutzler & et. al., 2009). By applying this technique the retailers can easily understand or identify the wants or needs of the customers that will satisfy them to a large extent. Notably, the marketing strategies must be constructed and managed well before applying it. It is worth mentioning that online retailing is widely considered as an attempt to attract the customer to buy the product and ensure the buyer’s satisfaction and loyalty. The sellers are also vital in online retailing as it uses internet for selling purpose and are able to reach a large number of consumers at a short span of time. Other factors such as creating trust and confidence among the customers are important elements that highly affect the customers’ acceptance and loyalty in relation to online shopping. The survival and success of business of online retailing is generally based on customer satisfaction. During the use of online retail system, ease of navigation is considered to be another vital point and is facilitated by the better internet connectivity and innovative website designs. For instance, the websites act as an intermediary of interaction between an online retailer and a buyer. To be illustrated, website design elements such as the audio-visual impact create an interest in the mind of customers to buy the products online. The retailer must even provide details about the product such as warranty services, return and exchange policies, valuable features, price, delivery schedules, post sales service, related technical support and others (Sahney, 2008). Competitive Advantage of Online Retail Online shopping is one of the mostly applied mediums over traditional way of shopping which makes the contemporary retail industry unique in its nature. The main aim of online shopping is to clearly understand the benefits of internet shopping. It is worth mentioning that online shopping provides numerous benefits to the customers. For instance, online shopping offers its customers convenience and time-saving benefits. Consumers face much difficulty to shop at physically located stores which is both time and cost consuming in comparison to which online shopping benefits the customers with time and cost efficient services. Customers feel comfortable and convenient in shopping online also because they can attain the complete advantage of internet without the restriction of time and date. Moreover, internet facilities can be attained at any place around the world which increases the convenience of using online shopping. They can even purchase their goods which are not available at nearby stores. Online shopping also allows the shoppers to purchase the goods in other locations from vendors around the world. Hence, internet shopping allows customers to shop according to their own timetable. Online shopping is also beneficial because a number of customers are interested in convenience rather that the price of the product (Matthews & Hendrickson, 2001). Another benefit served by online shopping is the better price information served through internet which assists the customers to easily compare the prices of the product between vendors. The prices of the goods that are offered by the vendors are visible in the websites and by identifying the prices of different vendors, shoppers can easily compare and obtain the goods at their comfort. Notably, a few customers are observed to be more concerned about the price than features of convenience. With this concern, manufacturers’ or wholesalers’ prefer selling goods directly to different customers through internet even the price offered by them are lower than the other retail stores. In addition, online shopping does not include cost such as rent, operating cost, wages of staffs and others as it is incurred in physical stores (Tan, 2003). Furthermore, online customers do not face much difficulty as all information regarding the product is offered in the websites that customers can easily view and purchase accordingly. Internet also offers a vast number of options of the products available along with the prices or discounts that are served. Internet stores also provides its customers inventory of products and their sizes and even guarantee the type and size of merchandise which are available (Matthews & Hendrickson, 2001). References Berni, P. & et. al., No Date. Objectives of the Research. Strategy of the Retail. [Online] Available at: http://ressources.ciheam.org/om/pdf/c15-2/CI011046.pdf [Accessed February 22, 2012]. Chan, H. & et. al., 2007. E-Commerce, Fundamentals and Applications. Media Wiley India. Doherty, M. & Harrob, J., 2003. Satisfying the Consumer Demand. Integrating the Retail Supply Chain. [Online] Available at: http://www.demandclarity.com/Integrating_the_Retail_Supply_Chain.pdf [Accessed February 22, 2012]. Dutzler, H. & et. al., 2009. The E-Commerce Imperative for Traditional Retailers Letting Go of Old Conventions. Booz & Co. [Online] Available at: http://www.booz.com/media/uploads/BoozCo-E-Commerce-Imperative-Traditional-Retailers.pdf [Accessed February 22, 2012]. Frieden, J. D. & Roche, S. P., 2006. E-Commerce: Legal Issues of the Online Retailer in Virginia. Richmond Journal of Law & Technology Vol. 13, No.2, pp. 1-40. Hart, S., 1999. E-Retailing — Trends and Opportunities. The Journal of Private Equity, Vol. 3, No. 1, pp. 67-79. Jun, M. & et. al., 2003. Customers’ Perceptions of Online Retailing Service Quality and Their Satisfaction. International Journal of Quality & Reliability Management, Vol. 21, No. 8, pp. 817-839. Kuan, H. & et. al., No Date. Literature Review. A Cognitive Dissonance Perspective of Customers’ Online Trust in Multi-Channel Retailers. [Online] Available at: http://is2.lse.ac.uk/asp/aspecis/20070092.pdf [Accessed February 22, 2012]. Matthews, H. S. & Hendrickson, C. T., 2001. Traditional Retailing Method. Economic and Environmental Implications of Online Retailing in the United States [Online] Available at: http://www.oecd.org/dataoecd/56/19/2662057.pdf [Accessed February 22, 2012]. Office of Fair Trading, 1997. Competition in Retailing. Research Paper. 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