NEW DELHI – The last two decades were the era of hypermarkets – massive superstores that could dazzle customers with an astonishing array of standardized products. But there are signs that the superstore’s age of dominance may be over. In recent months, hypermarkets around the world – Walmart, Tesco, Carrefour – have announced results that fell short of expectations. Conventional wisdom is that this reflects the economic cycle, but it may be the first sign of a more fundamental shift.
The world’s economic history can be seen as a race between transportation and communications. Transportation innovations allow supply chains to carry increasingly large quantities, which thereby encourages standardization. Communications innovations, on the other hand, allow for better specification of design, quality, quantity, and time of delivery, which tends to encourage customization. The dominant economic model of any era emerges from the relative evolution of these two technologies.
In ancient times, transportation technology was poor, and the production of most goods was local. Since consumers and producers could communicate directly with each other, artisan manufacturing was mostly customized. This was the age of the village blacksmith, weaver, potter, and cobbler.
In the eighteenth century, shipping technology improved enough to allow the creation of global supply chains. Cotton was one of the first industries to witness this shift. Slaves from Africa were used to grow cotton in the southern United States, which was then shipped to English mills. The finished cloth was then exported to the rest of the world. The impact of this change on India’s artisan weavers and spinners was profound. It is no coincidence that Mahatma Gandhi used the hand-turned spinning wheel as his symbol of protest against colonial rule.