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1010 Class 6: The Rise of the Canadian Consumer and Retail. What is Consumerism?. Economic theory that individual consumers drive the market. Any purchase or exchange of goods beyond the fulfillment of a person’s basic needs is at the heart of consumerism. Mass consumption drives consumerism.
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What is Consumerism? • Economic theory that individual consumers drive the market. • Any purchase or exchange of goods beyond the fulfillment of a person’s basic needs is at the heart of consumerism. • Mass consumption drives consumerism. • While consumerism has always exists as long as there was civilization, the Industrial Revolution changes the theory of consumerism.
Industrial Revolution and Consumerism • Industrial Revolution leads to an increase in the production of goods by moving from production by individual artisans to lesser skilled workers using machines to increase total output. • Greater output=more goods available • More goods available=lower prices for goods • Lower prices=more people can afford to purchase
Consumerism • Because these are goods we do not need (we want them, but do not need them) there is a certain new element that comes into play: • The enjoyment of a good and the pleasure it brings to the consumer. • The brand recognition of a good; Is it well made? Expensive? Enjoyed by those I admire? • Advertising and Marketing play a large roll in consumerism.
Consumerism • Businesses have begun to target wealthier consumers because that is where the largest profit margin exists. • Luxury goods are consumerism at its extreme. • Not-so-wealthy consumers want to purchase similar goods to show the appearance of wealth. • People wish to emulate those in a higher socio-economic strata than they are in.
Problems with Consumerism • The demand for unnecessary products can cause problems as consumers get into debt trying to emulate those above them. • The quest for the newest and best creates turnover of products, which can increase waste created by products, uses up limited resources quicker creating new products, contributing to global warming and other environmental disturbances. • Societal malaise as people are never happy, always wanting more. Consumption of goods becomes a never ending quest.
Department Stores • The first department store ever was opened in England in 1734. • In North America they evolved from dry goods establishments, i.e. businesses selling fabric, patterns, and sewing notions such as thread, ribbons and lace. • The rise of the department store was an urban phenomenon. As cities grew, larger numbers of customers dictated a broadening of items for sale. Roads and rapid transit such as trains, subways and streetcars, converged on downtown areas, concentrating populations and encouraging retailers to locate there.
Department Stores • Department stores became the source of new trends and innovations in architecture and engineering, such as escalators, elevators, air conditioning, electric lighting, steel frame construction, and fire-proofing, to the general public. • In their heyday department stores were the biggest importers, the largest employers, and had the greatest sales volumes of any sector. • Thanks to the department store and innovations like credit, mail order and catalogue sales, distribution chain, inventory control, visual presentation and media promotion developed rapidly.
Department Stores • It helped spur mass production and gave rise to the culture of consumption and "fashion". • It also turned out to be a great force for social change. Credit democratized consumption by allowing those of limited means the ability to pay for purchases over time. Now, anyone could manage to acquire goods previously available only to the well-to-do. • But it is democratization of another kind - namely, the development of women's rights - that is perhaps the department stores' most lasting legacy. • Department stores were one of the first places in which a woman could find a job outside of the home, and helped to further break down barriers and promote women’s equality.
History of Canadian Retail • Hudson’s Bay Company • Eatons • Simpsons
Hudson’s Bay Company • Formed by Royal Charter in May, 1670 granting the lands of the Hudson Bay watershed to the company. • Was once the largest landowner in the world, owning 15% of the North American continent. • Forts were built throughout the area. Natives would bring furs to the forts in exchange for goods produced in England (knives, kettles, blankets). • Eventually expanded along rivers deeper into the West, with outposts eventually growing into cities (Winnipeg, Calgary and Edmonton)
Hudson’s Bay Company • Merged with the North West Company in 1821 and had spread to the Pacific Northwest and the North. • As the fur trade waned in the 19th century, started turning more and more to retail operations. • HBC sold much of its land holdings over to the new country being formed and found new clients with the rise of the Gold Rush.
Hudson’s Bay Company • In 1912, opened its first department stores in Victoria, Vancouver, Edmonton, Calgary, Saskatoon and Winnipeg. • Became a truly Canadian company in 1970. • Diversified its product offering and purchased many different competitors (Zellers, Simpsons, K-Mart).
Eaton’s • Eaton’s was founded in Toronto in 1869 by Timothy Eaton. • The original store was a dry goods and haberdashery at 178 Yonge St. and had a staff of 4. Moved to 190 Yonge St in 1883. • Continued to grow; by 1911, Eaton’s employed over 17,500 people and by 1919 covered over 60 acres of space between Yonge and Bay, north of Queen St (coincidently, the current location of the Eaton Centre).
Eaton’s • Expanded into the West with its catalogue business. • They opened a store in Winnipeg to handle the western business. • This department store was considered the most profitable in the world, with locals spending 50% of their retail dollars in this store. • By the 1930’s, Eaton’s controlled over 60% of all department store sales.
Eaton’s • Eaton’s started its catalogue business in 1884. • As the department store was an urban phenomena, the catalogue business allowed them to access rural consumers by offering them products they would otherwise not have access to.
Eaton’s • By the 1950’s, Eaton’s was the largest and most successful retail organization in the British Empire. • Things started to change in the 1970’s and 1980’s: • The catalogue was discontinued, as 60% of the population now lived within 30 minutes of an Eaton’s store. • Suburban retail development allowed Sears, Hudson’s Bay and Zellers to take some of its market share. • Poor decisions by the family eventually led to Eaton’s filing for bankruptcy in 1997, when it was bought by Sears Canada.
Simpsons • Simpsons was started in 1858 in Newmarket as a dry goods store. • Eventually moved to Toronto in 1872. • Simpsons moved into 178 Yonge St. the former first Eaton store. This is the site of the current HBC flagship store immediately south of the Eaton’s Centre. • Simpsons and Eaton’s were major competitors, located across the street from one another. • The crosswalk at that location was the busiest in Canada as people went back and forth to shop at both stores.
Simpsons • Simpsons partnered with Sears in 1952 to create a new catalogue and retail chain separate from the Simpsons chain. • No stores of this partnership, called Simpsons-Sears, could be constructed within 25 of current Simpsons stores. Simpsons could not create new stores outside of Toronto, Montreal, Halifax, Regina and London.
Simpsons • Simpsons was purchased by the Hudson’s Bay Company in 1978. • The partnership with Sears was ended by this, with Sears acquiring the Simpsons-Sears chain. • HBC continued to operate Simpsons as its own brand until 1991. • The HBC flagship store at Yonge and Queen is the largest department store in Canada, and at one time had the largest cosmetics section of any department store in the world.
Retailers as a Cultural Institution • Hudson’s Bay Company is synonymous with Canada: • Fur trade was of major importance to the development of Canada. • Would the English have been as interested in the lands held by the French without this venture into the fur trade? • Much of the exploration of the Canadian West was done by Hudson’s Bay Company traders. • Hudson’s Bay Company is the oldest publically traded company in the English speaking world.
Two Approaches to Running the Economy • The other camp argues for tax cuts and a reduction of governments role in the running of citizens lives. • This they argue is the only way to achieve productivity. • One camp favors government intervention believing politicians and bureaucrats can orchestrate the economy from above.
The Mixed Economy of Canada • Governments enact a wide range of laws • They establish crown corporations • Deliver and array of services and financial aid packages • Purchase goods and services.
Government Control • Compared to the United States, Canadian governments control approximately 7 to 8 percent more of the G.D.P.
Contributing Factors to the Growth of Government • Growing industrialization • Inflation • Urbanization • Ideological changes • Technological changes • Federal provincial fiscal arrangements • The nature of the bureaucratic structure. • Rising incomes
What do you do in a Depression? • If you are a government? • A business owner? • A minimum wage worker?
Farmers and Progressives • Free traders • Anti-National Policy • Anti business interests. • Allied with socialist groups until in power, then allied with the Liberals
Conservatives • Early 1930’s—protect industry and obtain imperial preference
Conservatives 44 • In 1935 he called for • more progressive taxation system, • a maximum work week, • a minimum wage, • closer regulation of working conditions, • unemployment insurance, • health and accident insurance, • a revised old-age pension and • agricultural support programs). • Defeated shortly thereafter
Liberals—Mackenzie King • Maintain support among such ideologically opposed groups as western free-trade farmers and protectionist manufacturers in central Canada; • His shrewd recognition of the importance of sustaining Québec support, especially during WWII; • His talent for attracting to his Cabinet strong ministers with regional power bases and making the best use of their abilities and connections; • His success in presenting a progressive face to the electorate by gradually initiating social-welfare programs while mollifying the business community.
Increased participation in workforce • From the 1880s on, women's participation rate in the Canadian workforce • climbed steadily along with increased immigration, industrial expansion, and the • transformation of agricultural and home production to workshop and factory • production. In 1891, women made up about 11 per cent of the total workforce; by • 1921, this had increased to 15 per cent, and by 1951, women composed 22 per cent • of the workforce.
Political Response to Lowered Standards of Living • Why did RB Bennett not act to improve the economy? • Why the Royal Commission on Price Spreads? • Does it happen now? • http://www.cbc.ca/news/business/story/2011/05/12/clement-gasoline-prices.html
Eatons and Corporate Interest Groups • While many benevolent and charitable interest groups do exist, perhaps the most influential and best funded interest groups are those run by the business community.
Why do they lobby? • Business have a great deal of common interests that they may work together on. • These include, political stability, legal rights, macro-economic stability, lowering taxes, and access to foreign markets. • In the areas of common interest business are usually represented by umbrella groups such as the Ontario Chamber of Commerce or the Association of Canadian Bankers.
