A C T A U N I V E R S I T A T I S L O D Z I E N S I S FO L IA OECONOMICA 17, 1982
M artti Salo *
N O TES ON TH E STR U C TU R A L CH A N G ES O F D ISTR IB U TIO N FROM CONSUM ERS PO IN T O F VIEW
1. TH E PR E SSU R E S O F CHANGE IN TH E D IS T R IB U T IO N SYSTEM The c e n tra l function of th e d istrib u tio n system is to m ake goods and services av ailable fo r consum ption as effectiv ely as possible. T his ta sk can also be approached fro m th e po in t of view of e q u a lity b e tw e en v a -rio u s consum er groups a n d regions in th e society. Thus, th e objective is to en su re e v e ry consum er sim ilar possibilities to rea c h services offered b y th e system 1.
In spite of th e fac t th a t th e com petitive groups of tra d e m ay m a in -ta in u n p ro fi-tab le re -ta il facilities because of th e ir prestig e value *, in a m a rk e t econom y th e long ru n p ro fita b ility of th e fu n ctio n s is a n unavoidable q u alification perfo rm ed 3. This re q u ire s bo th su fficien t d e-m an d and efficient u tiliz a tio n of av ailable resources.
In addition to e n tre p re n e u ria l facto rs th e re a re e.g. changes in th e society, d ev elopm ent of technology, consum ers changing consum ption and buying hab its and activ ities tak e n b y public a u th o ritie s th a t a ll h a v e effects on th e e n v iro n m en t and th e possibilities of tra d e 4.
T he changes in th e tra d e and in its e n v iro n m e n t a re th e m ost p ro -m in e n t factors in th e s tru c tu ra l develop-m ent of d istrib u tio n , re su ltin g i.e. in cen tralizatio n .
* P ro f. Dr, T he T u rk u School of Econom ics a n d B usiness A dm inistra tio n , T u rk u (Finland).
1 Y rity ste n k a lp a ilu k e in o je n k ä y ttö ja k u lu tta ja p o litiik k a , „E lin k ein o h a lli- tu s, K u lu tta ja -a s ia in ”, o sasto n ju lk a isu ja , 1978, s a rja A : 2, p. 70.
* E. U t t e r , Vä h ittä isk a u p a n ra k e n te e n k e h ity s S u o m essa v. 1952—70, H el-sinki 1971, p. 41.
3 K y lä k a u p p a to im ik u n n a n m ie tin tö , „ K o tite a n m ie tin tö ” 1979, 10, H e lsin k i 1979, P- 1.
T he firs t fe a tu re in th e process of c e n traliza tio n is th e decreasing n u m b er of shops and th e in creasing size of reta il-sto re s. G eographic c o n c en tra tio n of th e re ta il stores c a n be considered as th e second form of the developm ent. L ocation of th e stores is on one h a n d c o n c en tra te d in tow ns and in o th er c en ters and on th e o th er han d th e sto res form in th ese u rb a n areas c en ters of d iffe re n t levels. T he th ird phenom enon in d istrib u tio n is the c e n traliza tio n of ow nership in h ands of few big e n te rp rise s 5.
In re ta ilin g th e re have been a tte m p ts to control th e increase in d e liv e ry costs and prices of goods and services by ratio n alizatio n . T h e re -fore th e follow ing activ itie s have tak e n place in re ta ilin g : increase in self-service, packaging level, ratio n aliz a tio n of th e h an d lin g of goods, p lan n in g of the sales area, education of th e sales personnel, a d ju s tm e n t of th e sales p erso n n el to th e v a ria tio n s in th e n u m b er of custom ers, tran sm issio n of c e rtain activities to o th er u n its in th e d istrib u tio n sy -stem , ratio n aliz a tio n of th e ord erin g sy-stem and new m ethods in m an a-gem ent, increase in effective sales are a by decreasing sto rag e and o th er a re a s and increasing cooperation b etw een in d u stry , w holesailing and re ta ilin g 6.
Ow ing to th e d evelopm ent m entioned above it has been possible to give u tility to sales p ersonnel and consum ers. H ow ever, a t th e sam e tim e th e s tru c tu ra l changes have c re a te d g re a t problem s to th e tra d i-tional, sm all, neighbourhood stores and to som e consum er groups also. F in n ish consum er policy has given a tte n tio n e.g. to th e follow ing problem s and d raw backs in th e d istrib u tio n : risk of regional m onopoly, d ecreasing n u m b er of re ta il stores, consum ers, increasing problem s of tra n sp o rta tio n and storage, m ore d ista n t shopping trip s and d iffic u l-ties in tra ffic 7.
2. CONSUM ERS SIT U A TIO N AS A U N IT OF D IS T R IB U T IO N SYSTEM C onsum ers can be said to form one level in th e d istrib u tio n system 8 and th e y have th e sam e functions as th e o th e r levels, th a t is g a th e rin g
5 A b o u t th e b en e fits of c e n tra liz a tio n see e.g. H. L a r s , K oncen tra tio n so ch jo rd e ln in g sp ro b lem in o m m a rk n a d se k o n o m in , S tockholm 1975; S. S a n e s s o n , K o n s u m e n tv a r u d istrib u tio n , S tockholm 1970; G. R i b r a n t , S to rd r iftsfö rd e la r in o m in d u strip ro d u k tio n e n , K o n c en tra tio n su tre d n in g e n V II, S tockholm 1970.
“ F. L a r s s o n , A r h a n d eln e f fe k tiv , S tockholm 1973, p. 8.
7 K u lu tta ja p o litiik a n s u u n n itte lu k o m ite a n m ie tin tö , „K o m ite a n m ie tin tö ” 1972, A 26, H elsinki 1973, pp. 15— 16.
я See e.g. J. G a 11 m a n, C hannels o f d istrib u tio n , „ E u ro p ea n J o u rn a l of M a rk e tin g ” 1978, Vol. 12, No. 7, p. 479.
a n d h an d lin g of in form ation, planning, g a th e rin g of a sso rtm e n t and p u r -chasing, tra n sp o rta tio n and sto rag e of th e goods. T his appro ach w h ere th e consum er is considered as an econom ic u n it like th e firm s is g re a tly influenced by th e d e v elo p m en t of consum er p o lic y 9.
To be able to u n d e rs ta n d th e situ a tio n of co nsum ers in th is system it is useful to m ake some considerations ab o u t th e households. T he ob jectiv e of a household is to satisfy th e h u m an needs of its m em bers. T h is m eans th a t th e household has to tak e care of th e physical, psychic and m en ta l w ell-being 10.
T he concept of w ell-b ein g is v e ry com plex and d iffic u lt to be defi-ned. In th is connection w e can only s ta te th a t th e pro b lem how th e co n sum ers have succeeded in f u lf illin g th e task s m en tio n ed above can be ap proached from tw o d iffe re n t po in ts of v i e w n .
O ne can divide th e consum ers in to d iffe re n t groups according to th e level of th e satisfactio n of h u m an needs m easured by some norm s. T h e o th er approach is based on a p e rso n ’s resources. A ccording to this view th e m ore reso u rces th e consum er has th e b e tte r h e can a c t as a consum er in th e m ark e t. This la tte r appro ach can be considered m ore usefu l th a n th e form er, because; it is m uch easier to find out objective m easu res of av ailable resources th a n to d efine th e levels v arious p e rsons rea c h in satisfactio n of th e ir needs. The follow ing in te rn a l r e so urces a re of g re a t im p o rtan ce fo r a consum er as a u n it of d istrib u -tio n system : econom ic-, know ledge and experience-, tim e-, tra n s p o r-ta tio n - and storage resources.
In changing e n v iro n m en t th e consum ers are m ain ly th e group w hich h a s to a d ap t to a lte ra tio n s. T his assu m p tio n can be based on th e unequal p ow er re la tio n s b etw e en firm s and consum ers. P e rh ap s, th e situ a tio n of in e q u a lity is n ot due to th e to ta l sum of th e reso u rces b u t to th e w ay in w hich th e y a re organized 12.
H ouseholds re p re s e n t m u tu a lly in d ep e n d e n t sm all units. If th e y a re com p ared w ith en te rp rises, a t lea st tw o decisive d ifferen ces a re to be se en in th e perform ance. I t is im possible to ratio n alize th e fu n ctio n s of a household to th e degree w hich can be reach ed in firm s. O n th e o th e r
• S ta te n s O ffe n tlig a U tredningar, S a m h ä lle t och d istrib u tio n e n , SOU 1975, 69, p. 367.
10 E. К i 1 p i ö, K o tita lo u s tu o ta n to y k sik k ö n ä , K u lu tta ja p o liittin e n tu tk im u s s e - m in a a ri, „E lin k ein o h a llitu s, K u lu tta ja -a s ia in ”, osaston ju lk a is u ja 1977, s a rja В : 1, p. 55.
11 S. H o h a n s s о n, O m le v n a d sn iva u n d ersö kn in g e n , S to ck h o lm 1970, pp. 24— — 25.
han d a household m u st su rv iv e and it can n o t be closed up because of its upro fitab ility .
The living conditions of th e consum ers and th e stores a re also d iffe-ren t. In the e n tre p re n e u ria l sector th e re exists all th e tim e com petition, in w hich a rra n g e m e n ts m ade by a single firm have an im m ediate effect on th e o th er units. T he firm s a re v e ry conscious of th is situ atio n . As to th e household it can be sta te d th a t th e behavior of one consum er has only a m arginal effect on o th ers and, th ere fo re , it is u su a lly ignored.
O w ing to th e sm all size of households and th e insu fficien t coopera-tion, consum ers a re su b je c t to changes to w hich th e y have to a d a p t them selves. The activ ities th e households p e rfo rm in th is new situ a tio n m ay a t th e ag g reg ate level have a g re a t influence on a single consu-m er. The decision a consuconsu-m er consu-m akes consu-m ay v ery well be co rrect froconsu-m th e decision m ak e r s point of view , b u t re su lts in un ex p ected outcom e a t th e agg reg ate level.
It m ay not be fair to assum e th a t a consum er is in th e long ru n able to m ake economic calcu latio n s and in a changing en v iro n m en t, to tak e social costs into consideration.
If one com pares consum ers m u tu a l situ a tio n in th e system one can recognize th a t d istrib u tio n is firs t of all developed according to th e needs and in te rests of th e m ore reso urceful consum ers. C ritica lly it can be said th a t th e resourceful consum ers m ake decisions both on th e ir ow n a n d th e w eak co nsum ers’ b eh alf 13.
3. FU N C TIO N S OF R E TA ILIN G W ITH REFEREN CE TO TH E CONSUM ER F rom a co n su m er’s point of view th e functions of re ta ilin g can be divided into p rim a ry — and secondary task s 4 The p rim a ry function includes th e a v a ilab ility of goods and services, w hich m eans th a t con-su m ers h ave possibilities to aq u ire p ro p er and reasonable p ro d u cts and services, su fficien tly and in a reasonable w ay. This is a question of asso rtm en t, q u ality , price and availability.
In addition to th e su p p ly fu n ctio n re ta ilin g has an im p o rta n t social m ilieu -task , w hich can be reg a rd e d as th e secondary function.
E. S k a u d a 1, N ä r b u tik e n frä n k o n s u m e n te m sy n v in k e l. R apport frä n d en 4 n o rd iska d istrib u tio n sk o n fe re n sse n o m G lesbyggnadshandeln i de n o rd iska länderna: P roblem och lö sn in g sm ö jlig h eter, H elsin k i 1977, p. 120.
14 S. G r e n m o , F o rb ru kern es situ a sjo n se tt i fo rh o ld til va ru d istrib u sjo n e n s u tv ik lin g . R apport fr a n o rd isk d istrib u tio n s k o n fere n ce om D eta ilh a n d elen i fr e m - tid e n s byer, K o p en h a v n 1976, p. 1 7 5.
4. S U P P L Y FUN CTIO N AND IT S CHANGES
The g re a te st change in su p p ly has u n d o u b ted ly h ap p en ed in av ailab i-lity of retailin g . This problem is v e ry m uch of reg io n al n atu re.
The to ta l decrease in th e n u m b er of food sto re s d u rin g 1964— 1974 w as 25,3% and even g re a te r in ru ra l areas. D uring 1975— 1977 th e n u m -b e r of stores decreased in ru ra l a re a s on th e av erag e -by 4,8% per y e a r 1S. T his developm ent h as n a tu ra lly increased d istan ces to th e n e a re st shops.
A ccording to th e research m ade by L ä h ik au p p a to im ik u n ta (the F i-n i-n ish com m issioi-n of i-neighbourhood stores) ii-n som e ru ra l areas ii-n 1977, 32% of th e population had poor or passable a v ailab ility . In 1972 th e corresponding n u m b er w as 28% ie.
In tow ns the g re a te s t increase in distan ce has tak e n place in th e sp h ere of su p e rm a rk e ts and discounthouses, w h ere neighbourhood sto -res have closed up because of th e ir u n p ro fitab ility .
The increase in distan ce causes d isad v an tag es to consum ers, p a rti- c u la ry to groups w ith poor tra n sp o rta tio n resources. These a re w om en w ith sm all children, consum ers w ith bad h e a lth , people w ith no possi-bilities to use p riv a te or public vehicles and consum ers w ith irre g u la r w orking tim es.
O th e r problem s in th is connection a re storage of goods and opening h o u rs of th e stores.
On th e o th er h an d th e consequences of th e d ista n c e can be reg ard ed in m an y cases as p rete n d ed . As th e n u m b e r of sto res has decreased, th e size of stores has a t th e sam e tim e increased. In 1970 sales are a per capita in food stores w as 0,32 m 2 w hile it in 1974 w as 0,37 m 217. This m eans th a t a sso rtm e n ts have been b roadened and, th ere fo re , consum ers can m ore often purch ase food and o th e r convenience goods at one place. The to ta l costs m easured by m oney or tim e sp e n t on shopping m ay th e n be sm aller com pared w ith th e costs of visting m an y specialized r e -tailers.
The broadened asso rtm e n ts give th e consum er a b e tte r choice of possibilities, b u t th e y re q u ire th e increasing lev el of self-service.
It is d iffic u lt to get e x a ct n u m b ers of th e d ev elopm ent of se lf-se r-vice in Finland. In 1975 th e sh are of self-serr-vice food stores w as about
15 „K o m itea n sm ie tin tö " 1979,10, pp. 13, 15. “ Ibid., p. 35.
17 K o tim a a n k a u p a n s u u n ta v iiv a t vo u te e n 1990, „ P ä iv ittä is ta v a ra k a u p p a K esk i--S uom en T alo u d ellin en T u tk im u m u sk e s k u s” 1978, ju lk a is u ja 32, Jy v ä sk y lä 1978, p. 91.
72% of th e to ta l sales 18. T he n u m b er of self-service shops am ong th e com petitive groups (Kesko Oy, SOK, OTK, a n d TUKO) w as in 1969 ab o u t 2% and in 1975 about 36% lfl.
T he g a th e rin g and packaging of goods has, to a g re a t e x te n t, been tra n s fe rre d to consum ers. The change from tra d itio n a l fu ll-serv ice to self-service m eans th a t th e role of th e sales sta ff as a source of in fo r-m atio n has dir-m inished and packages h ave tak e n th a t role to a large e x te n t. Even though the in fo rm atio n on packages m ay be m ore reliable a n d a c cu ra te th a n th a t of sales p e rs o n n e l20, th e change assum es th a t co nsum ers a re able to g a th e r and utilize in form ation. This depends g re a tly on consum ers’ education. T he p o o rer th e know ledge th e con-su m e r has about various choice a lte rn a tiv e s th e sm a lle r a re also his possibilities to behave ra tio n a lly in th e m ark e t. P oor education can be com pensated by experience. T hus c h ild ren a n d o th e r young people w ith sm all experience in th e m a rk e t a re in a d ifficult situation. E ducation has effects in th e long ru n and, th ere fo re , activities of public policy h av e been developed to give consum ers useful in fo rm atio n and to p ro -m ote its utilization.
As reg a rd s the q u a lity facto r it m ay be assum ed th a t ce n traliza tio n h as re stra in in g influence on p ro ducts of bad q uality. B ecause of th e c e n tralize d purch asin g activities tra d e can b e tte r control th e q uality. On th e o th e r hand, cen tralizatio n m ay have negative effects on new in n o -vations.
As s ta te d e a rlie r th e ratio n aliz a tio n activities in re ta ilin g h ave s tr i-ved a t keeping dow n th e costs and th e prices of goods and services. In th e fu tu re th e m ain q u estion w ill, to a g re a t e x te n t, be how m uch w eig h t is given on one h an d to th e dim inishing a v ailab ility and on th e o th e r h a n d to o th er su p p ly functions.
5. SOC IA L FUN CTIO N IN R E T A IL IN G
R etailin g has tra d itio n a lly perfo rm ed an im p o rta n t social function in th e society. P a rtic u la rly th e neighbourhood stores give consum ers possibilities of re g u la r social contacts and also help people to in te g ra te them selves to th e m ilieu th e y a re living in 21. This function can be said
« Ibid., p. 157.
w N. H o m e , K y lä k a u p a sta su p e rm a rk e ttiin , H elsin k i 1977, p. 46, a n d ,,Ko- m u te a n m ie tin tö ” 1979,10, p. 20.
20 L a r s s o n , op. cit., p. 9.
!1 S. G r 0 n m o, N a e rb u tik k e n fra k o n s u m e n te n s sy n sv in k e l. R apport fr ä n
d e n 4 n o rd iska d istrib u tio n sk o n fe re n se n o m G lesbyggnadshandelm i de n o rd iska länderna: P roblem och lösnin g sm ö jlig h eter, H elsin k i 1977, p. 129.
to be th e m ore im p o rta n t th e few er occasions consum ers have to m eet o th e r people outside th e ir hom es. T his concerns, fo r exam ple, w om en a t hom e w ith sm all c h ild ren and pensioners.
R etailing has, how ever, lost its social im p o rtan ce as a re s u lt of th e d ev elopm ent. As self-service has increased, and perso n al contacts w ith sa le s personnel have dim inished, co n sum ers’ in te re sts have m ain ly been d iv e rte d to im personal g o o d s 22. A t th e sam e tim e distances b etw een hom es and sto res have increased and, th ere fo re , co n su m ers’ possibilities of m eeting frien d s and neighbours have becom e few er.
Because of th e com plexity and im p erso n ality of th e m odern m a rk e t-place, a tte n tio n is paid to re ta ile rs to give m ore a tte n tio n to m ilieu/so-cial facto rs 2S. P u rc h asin g trip s a re com peting fo r con su m ers’ fre e -tim e a n d , th erefo re, larg e shopping c e n te rs and su p e rm a rk e ts have develo-p e d activities for th e w hole fam ily.
6. FIN A L COMMENTS
The s tru c tu ra l change of tra d e has em phasized co n su m er’s role as o n e u n it in th e d istrib u tio n system . N ow adays consum ers p e rfo rm m a-n y activities, w hich tra d itio a-n a lly h ave beloa-nged to th e trad e. A t th e sa m e tim e a v ailab ility has becom e w orse, especially in r u ra l areas.
How re ta ilin g w orks out th e fu tu re from a consum er view point d e-p e n d s m uch on th e w eights given to th e objective of e q u a lity b etw een reg io n s and b etw een consum ers w ith d iffe re n t reso urce-basis and on th e o th e r han d how m uch w eight is given to th e effectiveness of r e -tailin g .
It can be asked, how ever, if th e big u n its w ith la rg e r and la rg e r a sso rtm e n ts a re to th e a d v a n ta g e of all consum ers. One m ay assum e th a t consum ers w ith poorer resources can behave even m ore irra tio -n a lly th a -n before. N e ith e r ca-n o-ne fo rg e t th e q u estio-n w ho shall pay th e increasing costs for th e society of th ese units.
In try in g to solve th e problem s of re ta ilin g it is im p o rta n t to r e -m e-m b e r th a t social aspects belong to th e p e rso n ’s ro le as a consu-m er. E specially w h a t th e services concern consum er w a n ts p erso n n el to post th em se lv e s up on co n su m er’s problem s individually.
” M. S. M o y e r , T o w a rd m ore resp o n sive m a rk e tin g channels, „ J o u rn a l of R e ta ilin g ” 1975, Vol. 51, No. 1 (Spring), p. 19.
28 P. K o t i e r , A tm o sp h erics as a m a rk e tin g tool, „ J o u rn a l of R e ta ilin g ” 1973—1974, Vol. 49, N u m b er 4 (W inter), p. 52.
M artti Salo
UW AGI O STR U KTU RA LN YC H ZM IANACH W DY STRY BU C JI Z PUN K TU W IDZENIA KONSUM ENTÓW
A rty k u ł o m aw ia przyczyny i k ie ru n k i ew olucji w system ie d y stry b u c ji po -s tę p u ją c e w w y n ik u zm ian w ro zm iarac h i w -s tru k tu rz e p ro d u k cji i k o n -su m p cji poszczególnych tow arów . N a ty m tle d o k o n an a została an a liz a sy tu a cji k o n su m e n ta ja k o elem e n tu system u d y s try b u c ji. A u to r k o n c e n tru je sw o ją u w ag ę ró w -nież n a fu n k cja ch , tech n ice i społecznych za d an iac h h a n d lu detalicznego.
