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Retail management: The Benefits from combination of Traditional Commerce

with e/m-Commerce in Albania


Genti ELA
Management Department, Economic Faculty
Tirana University
genticela@hotmail.com

Abstract
The combination of traditional commerce with electronic commerce is stimulated by the
businesses needs to keep up with the increasing competition of online retailing. Through this
research paper we analyze the possible benefits that retail businesses may have by using e/m
commerce nowadays when communication technology is developing rapidly. The internet and
mobile technology users are growing up, so the retail industry is examining and analyzing the
benefits of each of the forms of the retail process, traditional and electronic ones, in order to
evaluate how to combine the benefits from both of them. The benefits of each form of retail
commerce are studied by confronting updated retail management theories with consumer
surveys and interviews. The paper is divided in two parts. The first one will treat theoretical
issues related with Retail Management. In this research paper we are based at the latest studies
for retail management by well known professors and their research in this field. At the second
part we will present the empirical studies that have been qualitative and quantitative research,
with a consumer survey with 265 consumers. We did also two interviews with managers of retail
stores. Both interviews are made in special stores category part of biggest shopping mall in
Albania, one of them in City Park and the other in TEG.

Keywords: Retail management, traditional commerce, e-commerce, m-commerce,

Introduction
The study of retail development is one of the newest and most challenging branches of the
broader disciplines of management science. Retail development deals with the economic, social,
and political environment. It tells the level of improvement in the standard of living.
Retailing is the set of business activities that adds value to the products and services sold to
consumers for their personal or family use.(1) Retailing is a common part of our everyday lives.
Commerce is the traditional way of doing business, where two or more parties interact and
exchange value by money, products, or services. The traditional form of commerce that involves
selling of goods to the final customer is known as retailing. This kind of commerce takes place in
a physical building, which can be a store or a market. Literally this business model of selling a
good or service in a physical place is referred to as a bricks-and-mortar business, which means
that businesses have a physical presence and offer face-to-face customer experiences.(2) First
known use of bricks-and-mortar term was in 1992.
The main development in retail industry that is considered a challenge these two last decades is
technology. Technology is the process that retailers need to continuously promote and is seen as
the centre of the economic and social transformation.
(1)
Levy & Weitz Retail Management 8th edition McGraw-Hill Irvin
(2)
Merriam-Webster Dictionary
Retail as a business part has a high relation with IT development. The commercialization of the
internet in early 1990 and introduction of world wide web in 1993 provided a great
opportunity for retailers to expand the markets finding consumers out of shop. This form of
commerce named e-commerce. It facilitated the search, payment, and delivery of a product.
Based on Encyclopedia Britannica Electronic commerce commonly known as 'e-
commerce' is the buying and selling of product or service over electronic systems such as the
Internet and other computer network.(3)
Nowadays retailing is considered a high-tech, global, growth industry that plays a vital economic
role in society increasingly using communications and information systems technologies and
analytical models to increase operating efficiencies and improve customer service.(4)
Retail industry is a very dynamic one, with new ideas and formats developing. Traditional
retailers are constantly adapting new ways to sell more or to survive in the competition
environment. The most important changes in the retail industry are:
- The increasing role of the Internet in retailing;
- New ways to communicate with customers;
- The growing of social responsibility by retailers;
- The use of technology and analytical methods for decision making, and
- Globalization;
The online retail market in Europe grew by 41% from 2008 to 2010, and was increase by 18.7%
during 2011.(5) They are able to grow at a far higher rate than bricks-and-mortar businesses
because of the absence for the need to invest in infrastructure and the ability to access a large
amount of consumers on one channel.(6) Stores operating over the internet have seen massive
growth in their customer numbers and sales.
E-commerce (clicks-only) and bricks-and-mortar businesses both however, have their advantages
and disadvantages. The benefits of E-commerce when it comes to information exchange,
efficiency, and convenience far exceeds that of the traditional bricks-and-mortar company.
Bricks-and-mortar companies on the other hand have the benefit of the physical presence of the
store, the use of the physical goods, and human interaction to create value through trust and
security. The benefits and drawbacks of each of these business models have led to a trend of
convergence of the two as to try to eliminate the drawbacks.(7)
This convergence of the traditional bricks-and-mortar business and of e-commerce created a new
business model clicks-and-mortar. The clicks refers to the action of using a computers mouse
to interact online while the mortar is connected to the physical store.

(3)
Encyclopedia Britannica
(4)
Levy & Weitz Retail Management 8th edition McGraw-Hill Irvin
(5)
Center for Retail Research
(6)
e-Business and e-Commerce Management 4 edition Dave Chaffey
(7)
Enders, A. and Jelassi, T., 2000. The converging business models of Internet and bricks-and-mortar retailers.
European Management Journal, 542-550
Clicks-and-mortar businesses use both the physical store and the internet to interact with
customers, opposed to bricks-and-mortar and pure-players (clicks-only) that operate solely in the
physical world and the internet.
The clicks-and-mortar model strives to integrate the online aspects from E-commerce with the
physical aspects of traditional commerce (bricks-and-mortar). The trend has been for retail stores
to develop their own web site or non-store based sales areas as to keep up with the changing
environment.(8) Clicks-and-mortar businesses combine the benefits they receive from their
physical storefronts and presence with those from their websites or online presence.
Nearly 80 percent (314.6 million users) of the European internet audience accessed online retail
sites. Despite the backdrop of continued economic uncertainty, 2011 was a strong year for retail
e-commerce. Throughout the year, growth rates versus the prior year remained in double-digits
to significantly outpace growth at brick-and mortar retail. Consumers remained cautious
spenders overall, but increasingly turned to digital commerce due to two prevailing factors: price
and convenience. In Europe, retail Sites attracted nearly 310 million unique visitors and reached
81.2% of the European online audience. Users spent a combined total of 19.3 million minutes on
sites like Amazon.com and Apple.com in December 2011. Since December 2010, visitors
increased by 14.0% and engagement saw an even stronger growth rate of 26.3% during the past
year. The typical EU consumer spends the equivalent of a day (an average of 25.9 hours), online
per month. 3 in 4 Europeans visited a Retail sites.(9)
Over the past few years there have been significant growth in the adoption of advanced mobile
devices in the form of Smartphones. The large adoption rates and ever increasing mobile
technology now means that more people are connected to the World Wide Web than ever before.
E-commerce and E-marketing practices have also expanded into the quickly evolving mobile
phone industry in the form of M-commerce and M-marketing. This means that people can
purchase, browse, and sell products over the mobile phone.
The theory on the advantages available to retail stores from M-commerce is however thin since
the available technology is relatively new and constantly evolving.
Nowadays the rapid development of technology extends the reach of M-commerce. The
developments and widespread usage of mobile technology along with the new hybrid clicks-and-
mortar business model could make a rather interesting pairing as Smart phones might bring the
benefits of both traditional bricks-and-mortar and E-commerce together.
The possible effect of M-commerce on clicks-and-mortar retail businesses could perhaps then be
determined by the abilities of mobile devices to potentially deliver the benefits of both traditional
commerce (bricks-and-mortar) and E-commerce (clicks-only).
In a recent analysis of the digital payments industry, comScore found that 65 percent of
Smartphone users perform retail or shopping activities on their devices, with 1 in 5 Smartphone
users purchasing goods or services via their mobile phone. (10)
(8)
Kotler & Keller, 2006
(9)
http://ystats.com/en/home/index.php
(10)
http://www.businessweek.com/magazine/content/10_27/b4185027420770.htm
Such adoption of mobile retail behaviors and unprecedented innovation in financial services has
put the spotlight on the payments industry and digital wallets.
In Europe, the computer is no longer the only access point for digital content. Researches show
that a lot of website traffic originates from non-computer devices such as Mobiles and Tablets by
market. (11)

It is expected that approximately 30% of smartphone users in Europe are going to use their
devices to shop online in 2017. By growing more than +20% annually, the number of mobile
shoppers worldwide is projected to approach 600 million in 2014. It is expected that
approximately 30% of smartphone users in Europe are going to use their devices to shop online
in 2017. The share of mobile shoppers on total consumers in EU increased to more than 10% in
2011, with the age group 14-28 Years accounting for most mobile shoppers. The number of
people worldwide who purchase via mobile reached approximately 400 million in 2012. About
40 percent of all retailers offered their customers the option to purchase goods via mobile
devices. Compared to traditional B2C E-Commerce, M-Commerce has increased especially in
the travel and ticketing sectors. (11) A large number of males conduct mobile purchases. Females
were especially active, when it came to procuring discounts for mobile purchases. While in 2011
nearly 30 million customers made mobile purchases in the USA, this number is expected to
increase to double until 2015. Some European Countries more open toward B2C M-Commerce
than others according to forecasts, approximately one third of all smartphone users in Europe
will use their devices to conduct purchases within the next years. M-Commerce will then account
for approximately five percent of all retail business. Figures on how many consumers make
mobile purchases vary largely across Europe. (12)

European Directive - Consumer Protection (Distance Selling)


The E-Commerce Directive (ECD) is the main legislative tool dealing with information society
services. Following its adoption in 2000, the Directive has been complemented by other EU
legislation, covering various aspects such as data protection and consumer affairs. (13)
The Consumer Protection (Distance Selling) Regulations 2000, Statutory Instrument
2000/2334, incorporates European Directive 97/7/EC. The legislation provides rights to the
consumer and obligations which the seller must fulfill. Typical cases where the Regulations
apply include goods or services ordered by telephone or over the Internet. (13)
E-Commerce Directive
The Electronic Commerce Directive, adopted in 2000, sets up an Internal Market framework for
electronic commerce, which provides legal certainty for business and consumers alike. It
establishes harmonized rules on issues such as the transparency and information requirements for
online service providers, commercial communications, electronic contracts and limitations of
liability of intermediary service providers. (13)
(11)
http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats/f#m-commerce
(12)
Global E-Commerce Delivery Report 2012
(13)
European Commission Health and Consumers Centers Network
Objectives and methodology
This research study aims to review the usage of online buying in Albania at its actual stage of
development. Resent researches show that the usage of internet in Albania has experienced a
high rate of growth last years. The internet penetration in Albania has changed from 4.8% in
2005 to 60% in 2012. It must be highlighted that the figures of internet users and above all of e-
customers are encouraging. In 2005 according to the The Networked Readiness Index Rankings
2005, Albania ranked 106 with -1.04 points, whereas the The Networked Readiness Index
Rankings 2010-2011, ranks Albania in the 87th place or the 23rd place on global standing
(within income group).
To accomplish the objectives of this research study, an online questionnaire with 16 questions in
Albanian language was developed. The questionnaire was formulated with questions that
gathered information on demography, education, the usage of debit/credit card, the type of
purchase, the clients experience during the transaction. A total of 265 people fulfilled the
questioner giving their experience in online buying.
The following report presents the findings of online survey. The purpose of the survey was to
show:
- The rate usage of debit/credit for buying;
- The reason of buying online;
- The issues that most concerned customers when buy online;
- Online shopping consumers confidence;
- Which king of market domestic or international one they use;
- What kind of equipments they use for online buying;

Albanian Case
Retail Market Overview
Albania's supply system had little in common with the retail sector in the western countries
before 1990. The centralized economy from 1944 to 1990 provided for the state to fix prices, to
determine which goods would produce and appear on store shelves, to decide on the salaries of
the shop sales or managers, etc. The ratio of shops for inhabitants changed from 1:896 in 1950 to
1:278 in 1988. There were two supply networks: one operated directly by the state, the other
administered by local farms under state supervision. The consumers had a small range of goods
to choose from. These products were, except in rare cases, domestically produced. The Ministry
of Domestic Trade controlled about 85 per cent of the retail network. The Ministry of Health
managed pharmaceutical products; the Ministry of Education ran arts and bookshops stores. The
rest of the services were under the jurisdiction of the Ministry of the Communal Economy.
The rural population clearly depended on the personal parcels for basic food
products. Sales of food products constituted about 61.5 per cent of the retail trade at about
10,600 shops in 1983. The economic reforms of the early 1990s broke down the barriers that for
decades blocked private entrepreneurs from the retail marketplace. Small shops, restaurants, and
workrooms opened their doors and began hiring workers. The government privatized about
25,000 retail stores and service enterprises - about half of the small state enterprises in the retail
and service sectors - mostly through direct sales to workers.
The retail market in Albania has experienced a significant growth in the past
few years. Many international retailers entered into the market. The development of shopping
centres has been very fast during 5 last year, where four big shopping centres are opened. Small
and medium size shopping centres have the fastest growing rate, because of faster construction,
easier commercialization and lower costs. The first shopping center opened in Albania was QTU
(Qendra Tregtare Univers) developed by a local investor. Casa Italia followed it, bringing to the
market approximately 20,000 square meters of retail space and Citypark with 67.000 square
meters of retail space. Compared with the other regional markets Albania has the lowest
presence of the international brands, but a lot of them like Zara, H&M, and IKEA are expected to
consider Albania as a potential market to enter. Due to the financial global crisis they have
postponed expansion plans. The major tenants that have already entered in the Albanian market
are Carrefour, Delhaize, Conad, Euronics, Trony, JYSK, Coin, Armani, GEOX, Swarovski,
United Colors of Benetton, Mango, Mexx, Celio, Esprit, Koton, Springfield, Motivi, Miss
SIXTY, etc.
As in western European cities, potential buyers wish to shop in well-located galleries that
accommodate highly specialized retailers.

The data of the online questionnaire


The tables below show that 73% of the total people that filled the questionnaire belong to female
gender.
Female Male Total
194 71 265
73% 27% 100%

Showing the level of education, the database data from questionnaire are as following:
High School University Post Graduation Total
7 95 163 265
3% 36% 62% 100%
The ages of the answered people are:
Thinking about the possession of debit/credit card, the answers were:
74% of them poses debit card 26% dont poses

52% of them poses credit card 48% of them dont poses credit card

69% of them have credit card in their family 31% dont poses

The usage level of debit/credit card: In which market do they buy?

To the question: Which king of purchase do they do in the domestic market, the answers were:
P.S. People may select more than one checkbox, so percentages may add up to more than 100%.

The frequency of online purchase in the international market was (251 persons answered this
question):
Which are the reasons of purchasing online?
People may select more than one checkbox, so percentages may add up to more than 100%

How secure do you fill in an ONLINE purchase?

In which kind of ONLINE pages do you make the purchase?


People may select more than one checkbox, so percentages may add up to more than 100%
Which of the following elements affect the Online Buying?
People may select more than one checkbox, so percentages may add up to more than 100%

Do you use your Smartphone for buying ONLINE?

Conclusions and recommendations


Online shopping is an important part of the retail and it is growing as a distribution and service
channel by many retailers around the world. The expansion of internet and PDA devices
application gives the possibility to be in touch with the upcoming events and products of many
companies. Retail businesses use both the physical store and the internet to interact with
customers.
Despite of growing online purchase in western country, our research show that the online buying
in Albania is in the beginning phase. The Albanian consumers continue to purchase goods and
services by cash in domestic market. They use their debit cards generally to get money from
ATM and not to do payment by it.
Our study asked online shoppers to select some issues that concerned them when buy goods
online. The research shows that the persons/families who poses credit card use it for online
buying to international retailers. They buy products that cant find in domestic market and those
relating to prices or they think that the products in Albania are fake. This suggests that the
volume of buying transactions could be considerable.
The potential for increased levels of shopping in domestic spending is higher but the level of
education and security of transaction are items that prevent online purchase in local markets.
Confidence in online shopping is linked to experience. 41% of the respondents have high level of
confidence when they buy outside their domestic market, although 59% dont know or are less
confident when buy goods and services online. This indicates that the more a consumer buys
online from web sites of companies, the more confident they are about doing so, or that
consumers who are already confident continuously buy online.

Based on the research which presents that Albanians are not confident in using debit/credit cards
for buying in domestic retail its needed to recommend the extension usage of debit card in
purchasing goods and service in domestic market. This thing will affect to formalize the market
and reduce having cash money in the costumers pocket. Also, this will make them confident in
electronic transactions.

Education of the consumers is another item that we recommend through this paper. It has to be
seen in two points of views. First, all companies and franchisees that sell registered trades mark
products and services has to invest in marketing and public relation to tell the customers that the
product that they sell is a protected brand by law and no one can sell or produce a copy or a fake
one. The second one is education in the electronic transaction field. The customers had to know
the rules of electronic payments, how to find secure web pages for buying online, etc.

Another recommendation goes for second level banks in Albania. Some kind of debit cards
doesnt give the rights to do payment online. For example: Raiffeisen Bank, the biggest one in
Albania has limited the usage of debit card only for domestic purchase in the outlets where they
have installed their POS. This is a limitation items in purchasing on international market.

Another recommendation goes for government institutions which in one side are progressing in
implementation of e-government through implementing the National Cross Cutting Strategy on
Information Society and on the other side are not progressing with the same rate in the e-
commerce implementation.

For customers we recommend to use more and more the PDA (personal digital assistant) devices
because nowadays all local and international retailers are investing a lot of money in adapting
their web pages for all kind of PDA devices. Using this kind of devices the customers will be
informed for their interests and can fulfill their needs by only one click.