The managerial revolution in British and American retailing

 Photo courtesy of the John Lewis Partnership Archives.

James Walker and I examine the factors influencing the efficiency, growth and competitive advantage of large-scale retailing in Britain and the USA during the interwar years, using data assembled from academic/industry surveys.

Anglo-American comparisons of productivity differentials in retailing - and in services more generally - during the early twentieth century have typically indicated considerable lags in Britain's relative productivity. These have, in turn, been linked to Britain's alleged slow adoption, or even failure to adopt, high-volume, low-margin, trading methods of the kind that were said to characterise American large-scale retailing. However, such comparisons are based on very poor data - as there was no Census of Distribution in Britain prior to 1950, or other detailed official data for the sector.

Themes

This project examines the efficiency and productivity of interwar British mass retailing, in comparison with the United States. Retail distribution underwent a dramatic transformation during the interwar period, with unprecedented growth both in the absolute sales and market share of large-scale retailers (particularly nationwide multiples). As contemporaries on both sides of the Atlantic were critically aware, the rapid expansion in large scale retailing reflected the emergence of the 'mass market', combined with a constellation of information processing and other innovations, collectively termed the 'retail managerial revolution'. Ground breaking innovations in new semi-self service display methods, managerial and accounting techniques, and supply chain innovations, were viewed by contemporaries as having major impacts on efficiency and productivity. Many were, in turn, pioneered in the United States and diffused to Britain via a variety of mechanisms, including: foreign direct investment; research visits to the USA; and research links between British and American retail associations.

This project will provide a comparative analysis of the growth of non-food mass retailing in Britain and the United States. Previous authors have suggested that Britain failed to develop an efficient large-scale retail sector, during a period when the United States underwent a rapid process of 'service sector industrialisation'. The applicants have conducted a comparative analysis of one significant segment of retailing, department stores - which constituted the most important category of large-scale retailer in the United States until the late 1920s. This has revealed that, contrary to received wisdom, British department stores actually enjoyed higher capital, and total factor, productivity, than their American counterparts, together with greater scale economies. The next phase of the project will extend the analysis to multiple retail chains, focusing on variety store, retail pharmacist/drug store, and stationery multiples.
 

Outputs to date

• 2009 Peter Scott and James Walker, "Sales and Advertising Rivalry in Interwar US Department Stores", Henley Management School Discussion Paper 078.  Download (PDF - 433 KB)
• 2008 Peter Scott and James Walker, "Advertising, promotion, and the competitive advantage of interwar UK department stores", Henley Management School Discussion Paper 056. Download (PDF - 381 KB)