Impact of Globalization on Retail Malls
The main goal that countless have toward promoting globalization is to enhance trade across the geographical boundaries, improve their economic performance, and make the world a small place through efficient communication and sharing of information across the globe in matter of seconds or in real-time context (Pandey, Barik & Soni, 2015). The main foundation on which this globalization process has been built is the vast internet network and developed online platforms on which various crucial globalization elements are processed and completed. For instance, money transfer can take place in less than a minute across thousands of miles to pay for goods purchased in those areas for delivery. This development and promotion of the internet has eased most part of the people’s lives, including their shopping habits. Currently, most people can buy, and prefer buying goods at the comfort of the homes through the internet. Due to the various factors that the online shopping aspects have changed in the retail industry, most people are switching to online shopping and abandoning the shopping malls and retail property. This shift has negatively impacted to the retail malls and property leading to their demise (FRPT, 2014). In this paper, the focus will be on provision of an insight into the various major factors that are making people to increasingly prefer online shopping to visiting the retail malls and property to purchase their desired products and services.
While shopping for goods and services, every customer will search for the best access and convenience in the display or provision of these goods. Additionally, the world is highly price transparent, meaning that customers can use internet to easily and swiftly relate prices displayed in the online platforms. Using such websites as Shopbot and Static Ice, they can aggregate various retailers’ pricing and display in a sorted manner by price. From the comparison, the customer can choose the best price that suits or matches the quality of their desired product at a glance without any tiring efforts (Pandey, Barik & Soni, 2015). Moreover, the multinational retailers have been provided with a greater advantage of lower occupancy and labor costs thus have the capacity or room to offer their products cheaply online. Since the retail malls and property lack such services, the consumer has to visit several of them to compare prices; an activity that is time consuming and expensive (Hudson & O’Connell, 2009). Therefore, these consumers will find online shopping easily affordable and accessible in addition to being convenience. Therefore, more people move from shopping in the malls to shopping online, leading to collapse of these retail properties.
Various online retail sites such as Amazon have been established due to globalization. On these retail sites, there are no physical constraints preventing the retailers from placing their products on display and a wide range of goods can be displayed on a single page. A customer can view hundreds of thousands of goods available for them to buy on the internet within a few minutes and compare them against their substitutes and other related products at ease. The malls and other retail property cannot afford to get adequate space to have such a wide array of goods, which could possibly occupy more than the size of five football fields combined together. Also, the online retailers do not incur the costs of that these retailers get for keeping the goods on shelves and only get to pay postage and warehousing costs (Hudson & O’Connell, 2009). As an example, Amazon incurs only operational expenses to sales ratio half that of its in-store peer average (Barnes, 2005). Therefore, both the retailers in the industry and the consumers are shifting to online platform for business and closing down their malls to rent warehouses for storage.
The need for a customer to get the easiest access and convenience while shopping for their desired products, the whole experience highly influences their preference. Also, Both the retailers and consumers cite convenience as one of the significant reasons for shifting to online shopping and selling (Hudson & O’Connell, 2009). The retailers and consumers can do all their research on what products are demanded and offered, with their specifications and prices, order them and have them delivered to the consumers’ doorsteps without having to incur travelling costs (Barnes, 2005). All transactions are done over the mobile devices with internet connections or computers. The shopping malls thus get less visits thus very little sales written. Also, due to the availability of the capacity for the online retailers to economize on scale, they are able to offer their products to the customers at a cheaper price compared to retail mall sellers. This price relieve adds another advantage to the shopping experience.
Due to the developed technology, the online platform can comfortable accommodate the ever-increasing number of shoppers as opposed to malls that have very little capacity to grow. Moreover, as the queues at the malls increase, inconveniencing the shoppers, the internet is being made stronger to have more shoppers acquire goods simultaneously. Additionally, all the efforts are being made to develop the internet to have simultaneous transactions in a single system at the same time without causing delay or failure to the system (Hudson & O’Connell, 2009). Also, the mobile gadgets and the tablets or computers that the customers use to shop online have been enhanced to greater speeds of internet surfing thus easy to use the internet to shop online (Pandey, Barik & Soni, 2015).
From the above analysis, it is clear that online shopping is being preferred as a means to buy goods over retail malls due to the favorable price, a vast range of goods and services available, shopping experience convenience, and infrastructural capacity to support online shopping. From these factors, we can conclude without reasonable doubt that the retail malls are bound to entirely collapse in the near as they are already dying off slowly.
References
Barnes, N. G. (2005). The Fall of the Shopping Mall. Business Forum, 27(1), 4-7.
Hudson, K., & O’Connell, V. (2009, May 22). Recession Turns Malls into Ghost Towns. (Cover story). Wall Street Journal – Eastern Edition. pp. A1-A10.
Pandey, B. B., Barik, P., & Soni, V. (2015). Online shopping Catching Up Fast with The Trend-Chhattisgarh Context. Clear International Journal of Research in Commerce & Management, 6(4), 53-57.
Retail rentals halved from peak levels of 2007 due to less demand for shops in malls, customers preferring etailers. (2014). FRPT- Retail Snapshot, 1.