Storia economica (inglese)

The roots of modern retailing

Course will talk about the discussion of historical processes back to places in the 19th-20th centuries. Now let’s begin talking about roots of retailing: an important point is the urbanization (the growth of cities), today we live in a planet of cities; today over the half of the world population lives in cities. In Europe the roots of modern retailing are deeply related to the development of the Medieval city.

Today there are nearly 50 megacities with over ten million inhabitants (47 cities to be precise, like London, New Delhi, Shanghai). However, this process of urbanization isn’t new; in the past cities are often at the core of historical changes. They are the place where complex challenges are tackled and often are solved, with different proportions from time to time. Always complex issues emerge when we refer to cities.

Important turning points of history are urbanization in ancient Roman empire (the building of aqueducts), the urban revolution between the 11-13 century, another turning point is the 19-century process of urbanization.

To provide some data

At the beginning of 19 century there were 24 cities with more than 100 000 habitants; in 1914 cities with more than 100 000 habitants were 281 and it was 10 times the number of cities (such as London). For example, the population of London from 1800 to 1914 went from 1 million inhabitants to 7 million; this development posed huge logistic challenges, two retail systems.

Before the urban revolution

Let’s go back to medieval urban revolution (in Europe the roots of modern retailing are deeply related to the development of the medieval city). Before the urban revolution constraints were a lot, in the early Middle Ages, these limitations made self-consumption prevail (people produced what they consumed directly); in the 11-12 century a process (urban revolution) begins that will give to Europe the identity that still has today and this is triggered by the growth of population.

The growth of population causes the transition from self-consumption to people producing and selling to the market (market economy). And this triggers the crises of economic that functioned for centuries before the feudal system. How did the feudal system function, its main features from our point of view?

This system in the early Middle Ages made exchanges and retail very rarely, because self-consumption prevailed, there was no division of labour (no specialization), use of money is extremely limited (coins are used as a treasure to bury some important person like king-prince or they are kept in churches), there was no market for factors of production (like land) because feudalism didn’t allow the possibility to buying and selling lands. At the same time labour wasn’t for sale (serves were connected/tied/bond to their land and they had to work the land on behalf of a noble that provided the land to them).

These constraints are linked together, to bypass them a cluster of innovation is needed; the cities starts the sequence of innovation that concern product/process/organization and institutions that have a deep impact with reference to retailing. The increase of population and growth of cities breaks the feudal balance, supports change and triggers urban revolution.

Urban revolution is initially concentrated in two European areas: central north Italy and Flander region (parts of Belgium), later spreading to France, Spain and Germany, England, eastern Europe and Scandinavia in the 15th century (le ultime 3).

In the beginning the urban revolution has relevant impact on food retailing; in every city there was a sort of a silent/social/unwritten/unformal pact between rulers and those who were ruled. The inhabitants of the city who were ruled allowed rulers to rule them as long as they feed them and this kept together people who lived in cities. The main concern of public institutions (rulers), was to supply with food cities, given that the city was unable to produce its own food but only transform it, because there were no country field/countryside (agricultural production) to produce food in the cities.

In this period retailing was characterized by this distinction of social path of rulers and ruled. Stable food supply (bread) is under public control, it mostly concerns wholesale trade but also influences food retailing (with control of prices, licences and regulation). So, there is a special part of retail that is connected to stable food which is separated from every other type of retail, and its heavily controlled by the public power.

The second food/non-food product considered not stable/not essential are retailed by private individuals, but as a consequence of public control over stable foods, even private retailing is heavily controlled. So, the output in this time is quite complex and multi layered supply system: for example, setting regulation against frauds, organizing transportation of products to and within the city, giving money to food producers, regulation of market and store when they could open, providing a license to retailers who want to open a store.

A number of features/elements are under direct/indirect control of public authority; keep in mind that preindustrial cities weren’t tech so they had dramatical lack of infrastructure, transport, electric power, tap water. The set of rules coming from public control, had the positive effect of stabilizing the retail system; so many rules and controls set up shared rules that allowed to carry out retailing activity.

Moreover, in this period, retailing starts interacting with producers and consumers; the former (producer) adapt their production to the demand coming from the retail (distributor); the consumers adapt their pattern of consumption according to what retailers can offer. So there is an interaction between production-distribution and consumption.

However, this system that is developed after the urban revolution, is an expensive system that can’t hold up the increase of population in the beginning of the end of Middle Ages.

After the end of Middle Ages

After the end of Middle Ages (1500) there is a relevant increase of population and the consequence is that the system set up with strong public control that progressively gives space to private retail. However the public never disappear from retailing, food retailing in particular almost returning in all moments of crises (like covid-19 emergency food retailing was a stable activity where other non food activities where closed). Classic examples are military supplies and rationing events in wars; retail and food retailing can be put under strict control in case of war.

In the cities, all discovers uses multiple formats/institutions, the most relevant one is the urban city market at the beginning, in the end the shop (store) will prevail, the third one is the flexible format and its itinerary trade (those who bring their commodities on their shoulders). When private retail prevails, a stabilizing trend is set, and it designs a pattern that appears to be moving from more provisional, more occasional to more established form of retails.

Retailing from being a temporary activity to settle in a shop (in the cities retailing becomes a complex system acquiring over time stable forms). The market shifts from being occasional to occurring on weekly or daily basis. Retailing from being a temporary activity to settle in a shop. For example, markets that are held occasionally to markets that are held in fixed dates, or from markets to shops that are open every day.

Retailing is framed in the guild system, that represent a way to limit competition and to implement or enhance a city of control on behalf of public authorities. This does not prevent that over time we see specialization of activities in the regulated context of these guilds (corporazioni). Changes in retailing go along with specialization.

Specialization of retailers are often are an answer to the progressive diversification in consumption, for example overtime in the industrial period we see the distinction between those who sells food and those who retail vegetables (greengrocer). Another type of specialization that we see in European cities in early modernity is the division within guilds dealing the same product, between those who are making or transforming with their hand and those who are retailing it (selling it).

There also cases of specialization depending on the raw materials: guilds dealing with fresh products and guild dealing with preserved/cured/transform products. Example: fresh fish or preserved/conserved fish. Last distinction is according to the status of the retailers; between citizens and non citizens who come from the countryside in the city to sell products.

In general, the guild system manages to exercise strong control over the retail sector even when some freedom is left for operator who aren’t part of the guild. Guilds are private associations with public functions, but the public power finds it very useful to give some of its control, its power, to these private associations. The private association acquire, from the public power, public function, they rule and regulate trade within their guild.

Urban market, guilds and shops

The public urban market is among the most important institution in this period, but it will last until the 19t century; it proves being resilient in Europe as well USA (country of large scale modern retailing). Retail change overtime due to urban growth (urban cities). For example the urban market can interact with two other formats, and therefore we can have shop keepers who have accoutre at the market but also a shop at the same time or itinerary retailers (peddlers) who stock up and buy in the city market and go around the city to sell what they bought.

Or the markets see undergo changes related to the double function of being a retailing institution and a wholesaling institution. In the beginning wholesale and retail market were carried out/held in the same market but overtime there is a separation giving rise to the general market and markets who offered specialized products (fish/meat market).

Another change we see in market is the frequency of opening: originally, they were occasional, then they stabilize, often they are held 1 day every week, the more the population grows the more days of opening; markets which opens 2/3 days a week and in the end every day.

Another type of change that involves urban market is specialization (originally it concerns fish and meat sector; and they are separated because one is near the port and the other near where animals are killed ossia slaughterhouses). Until the 17th century an important historically trend, concerning urbanization, it’s the graphical growth of cities; they are larger and more extended; this growth went along with a generalized relocation of market places.

Because we have more market places located in more different places of the cities as compared to the original situation where we had one market situated in the centre of the city. Guilds, markets and shops. From 16 to 18 century we move to the weekly city market in the centre (urban city market) to a network of shops located all over the city.

The model is the shop operated by a retailer that also produces or transform what is sold: a tailor who sells its own clothes or a baker who sells his bread. The ones who are simple re sellers of a product transformed by another are less common. Even shops are organised in guild roles; this will last for long; the influence of guilds is visible well in the 18 century, from the Middle Ages to 18 century; we see changes.

For example imagine routes (vie): concentration of shops of the same kinds from the same streets (related from same professions like via dei lavatoi, dei tessitori, ecc.. saranno poi dispersi in città). So there is concentration of shop and after there will be dissemination and relocation to the city, which however goes along with rules to limit competition; for example shops willing to sell the same products must be opened at a given distance measured by the steps needed to go from one shop to another shop.

At the end of 17 century, there are cities with 500 000 inhabitants (Paris, London) and others with more than 100 000. At this stage, the traditional retail solutions are under stress because population grows. Usually the growth of population is followed by an increase in outlets, but guilds can create/hinder obstacles/problems and delay the process by favouring oligopolio (a limited number of retailers).

Giving the pressure of the growing population, the guild system enters in an irreversible crises: the increasing number of shops becomes even more substantial (like in England during 18 century, in France after the revolution end 18 century). Guild restrictions are now taken off, lose their power and are replaced by public licences released by public authorities to open a shop. In other words there was no longer the possibility for a guild to hinder the opening of shops if the public authority thinks if it is needed, because it is her that decides to provide licences or not.

Itinerant retail and the development of modern retailing

During this entire period, itinerant retail (a modern retail system) was common in European cities: i loro nomi tecnici sono peddlers and hookers; it had a notable growth during the 17-18 century when retailing began to spread even in country areas, which until then was mainly based by self consumption (in early medieval pattern, but only in the city it wasn’t self-sufficiency).

However guild limitations also affected peddlers, who were seen as a threat by those working in markets and shops under the umbrella of the guild system. The guild system will be influencing retail until the 18th century. For ex in Germany, in the middle 19 century regulations limited itinerary trade, but peddlers and hookers resist because they are very flexible and fill the gaps that others institutions aren’t able to close in this period of expansion. They are very resilient peddlers and hookers.

The abolition of guild organizations opens the way to the development of a modern retailing system. This turning point was clearly also favored by two other events: the Industrial Revolution (innovations in manufacturing) and the rise of the modern state (the making of a national market). The end of guilds is not the only elements that support the roots of modern retailers, much important turning point was the innovation in manufacturing brought by industrial revolution or the increase in scale of markets that nation building supported (the creation of national markets).

Innovation coming from retail industry are very important, in the centuries predating before industrial revolution, trade was much more vital and innovative than manufacturing. Innovations and skilled one could find long distances trade, concerned with luxury products, gradually became known and used by retailers that were operating on shorter scale (locally example). These are crucial steps to prepare the consumer from massive supply that comes from industrial production; consumerism as a state of mind; the idea that you were interested in consumption predated the industrial revolution and the creation of large scale national markets. Retailing had relevant role before and during the industrial revolution.

Ps: ripassino su economia feudale

Ps: ripassino su economia feudale: economia feudale si basa sulla relazione padrone-servo. Le terre sono una proprietà del regno che il re distribuisce, sotto forma di feudi, ai nobili. Questi ultimi svolgono la funzione del padrone, concedono ai servi di coltivare la terra, ottenendo da loro una parte del raccolto, servizi economici e politici.

Non esiste un vero e proprio diritto di proprietà dei nobili sulla terra, poiché quest'ultima appartiene al regno. Le terre non sono possono essere vendute, né acquistate. In qualsiasi momento il re può trasferire la titolarità di un feudo da un nobile a un altro.

Pur svolgendo un'attività lavorativa, i servi non sono dei lavoratori nel senso moderno del termine. Nel medioevo non esiste un mercato del lavoro. I servi sono rigidamente legati alla terra e obbligati a coltivarla, e il vincolo si trasmette di padre in figlio. Gran parte della produzione agricola (sovrappiù o surplus) viene restituita al feudatario.

Ai servi resta soltanto una minima parte del prodotto agricolo, quella appena sufficiente a soddisfare il bisogno alimentare di sussistenza della famiglia. In cambio i servi ottengono dai nobili (signori) la protezione per sé e per la propria famiglia. L'intera società feudale in Europa si regge su un ordine.

The study of retail development

Riguarda theoretical issues about transformation in retail. Retail is a neglected topic (stuck in between production and consumption): retail is a function of the economic system. Retail is a neglected topic: economics and historians considers it as a minor activity if compared to production and consumption (supply and demand) that are the two main protagonists of economic change.

In other words, retailing would be largely depending on products place on the market and on what consumer are able willing to buy or best depending on the join action of both these players. The existing literature depicts retail as a confused mix of experiences, making it impossible to draw a general interpretation.

Retails appears to be never independent, on the contrary distribution and retailing represent constitutes apart from the economic system that makes much more visible and recognisable economic changes; a lot more than what production and consumption do. Retail and trade are the point of contact between everyday material life and economic structure, this point of contact allow us to understand how the relationships between everyday material life and economic structure change overtime.

Consequently, because of this stereotype idea of trade and retailing, retailing system remains in the background of most studies. The only studies trying to define the transformations undergone in the medium-long run by the retail system discuss solely the USA context. These researches follow however extremely different approaches.

No efforts to introduce comparative elements to look for some general rules and processes (such as rules of transformation of change in retailing system); this also derives from the fact that scholars that have dealt with retailing, did it with different approaches and methods so it is difficult to trace general rules of the process of change of transformation.

Although this general mechanism allows us to understand innovation in retailing today, by looking at the inputs that came in previous periods. Among scholars, those who try more to formulate and elaborate theories about evolution and change in retailing, were above all those who studied marketing in USA. This had quite a long lasting impact on the approach