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York University
Administrative Studies
ADMS 1010

Business in the Canadian Context ADMS1010 – Summer 2012 – Troy Young Lecture 8 – The Rise of the Canadian Consumer and Canadian Retail – June 28 2012 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. o Greater output=more goods available o More goods available=lower prices for goods o 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: o The enjoyment of a good and the pleasure it brings to the consumer. o The brand recognition of a good; Is it well made? Expensive? Enjoyed by those I admire? o Advertising and Marketing play a large roll in consumerism. - Businesses have begun to target wealthier consumers because that is where the largest profit margin exists. o Luxury goods are consumerism at its extreme. o Not-so-wealthy consumers want to purchase similar goods to show the appearance of wealth. o People wish to emulate those in 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 malaises 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 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. - 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 o Formed by Royal Charter in May, 1670 granting the lands of the Hudson Bay watershed to the company. o Was once the largest landowner in the world, owning 15% of the North American continent. o Forts were built throughout the area. Natives would bring furs to the forts in exchange for goods produced in England (knives, kettles, blankets). o Eventually expanded along rivers deeper into the West, with outposts eventually growing into cities (Winnipeg, Calgary and Edmonton) o Merged with the North West Company in 1821 and had spread to the Pacific Northwest and the North. th o As the fur trade waned in the 19 century, started turning more and more to retail operations. o 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. o In 1912, opened its first department stores in Victoria, Vancouver, Edmonton, Calgary, Saskatoon and Winnipeg. o Became a truly Canadian company in 1970. o Diversified its product offering and purchased many different competitors (Zellers, Simpsons, K-Mart). - Eaton’s o Eaton’s was founded in Toronto in 1869 by Timothy Eaton. o 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. o 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). o Expanded into the West with its catalogue business. o They opened a store in Winnipeg to handle the western business. o This department store was considered the most profitable in the world, with locals spending 50% of their retail dollars in this store. o By the 1930’s, Eaton’s controlled over 60% of all department store sales. o Eaton’s started its catalogue business in 1884. o As the department store was an urban phenomena, the catalogue business allowed them to access r
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