Edited by Emek Basker
Chapter 4: Distribution services, technological change and the evolution of retailing and distribution in the twenty-first century
AbstractThe first part of this chapter explains the role of distribution services in understanding important features of the evolution of retailing in the first decade of the twenty-first century. Their main features as outputs of retail institutions enhance our understanding of the evolution of Walmart and big-box retailers, warehouse clubs such as Costco, limits of Internet channels, and features of shopping centers. Their role underlying the demand for retail products enhance our ability to use and interpret scanner data in the estimation of cost of living indexes and results with externalities generated through advertising by industry associations and Internet channels. Both demand and supply features of distribution services play a role in determining customer satisfaction in retail industries and in revealing neglected aspects of productivity analysis in retailing. In the second part, the chapter explains the role of distribution services in understanding the impact of information and communication technologies on the evolution of retailing and distribution in the twenty-first century. These technologies (ICT) are critical in allowing the separation of consumption, distribution and production of distribution services across space. Spatial separability with respect to distribution services, in particular accessibility of location to acquire the product and breadth and depth of assortments, provides the basis for the powerful economic impact of the Internet in many industries, for example, Amazon´s role in book distribution. Furthermore, this separability combined with the difficulties in separating the cost of distribution from the cost of production in the case of industries where the products sold are core services lead to important aspects of relational contracts prevalent in business format retail franchises. Both parts are integrated through a discussion of a number of novel organizational forms arising in twenty-first century retailing and distribution which are a consequence of this spatial separability of distribution services. At least one feature of this process, illustrated by home delivery and sometimes called customization quality, applies to all service sectors as a result of ICT penetration.
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