THEORIES OF RETAIL DEVELOPMENT

THEORIES OF RETAIL DEVELOPMENT

These theories revolve around:
Importance of competitive pressures The investments in organizational capabilities and

Creation of a sustainable competitive advantage.

These are developed to explain the process of retail development: 1. Environmental Theory 2. Cyclical Theory 3. Conflictual Theory

ENVIORNMENTAL THEORY
A change in retail is attributed to the change in the environment in which the retailers operate Retail Environment: a. Customers b. Competitors c. Changing Technology Based on Darwin theory of survival of the fittest.

CYCLICAL THEORY

Where change follows a pattern and phases can have definite identifiable attributes associated with them

CYCLICAL THEORY

Mature retailer Top Heavy Conservative Declining ROI

Innovative retailer Low status and price Minimum service Poor facilities Limited product offering

Traditional retailer Elaborate facilities Higher rent More locations Higher prices Extended product offerings

Trading up Phase

A. Wheel of Retailing- described by McNair

CYCLICAL THEORY..
ACCORDIAN THEORY Open accordions: general retailers with broad product ranges Closed Accordions: narrowing range, focusing on specific merchandise

CONFLICTUAL THEORY

The competition or conflict between two opposite types of retailers leads to a new format being developed

CONFLICTUAL THEORY

Anti-thesis

Thesis

Department Stores

Individual retailers

Synthesis

Hypermarkets and Supermarkets Retailing evolves through blending of two opposites to create a new format.

Concept of LIFE CYCLE IN RETAIL

The concept of PLC as Philip Kotler is also applicable to retail organizations. This is because retail organization pass through identifiable stages of innovation, accelerated growth, maturity and decline. This is what is commonly termed as the RETAIL LIFE CYCLE

Concept of LIFE CYCLE IN RETAIL

INNOVATION ACCELERATED GROWTH MATURITY DECLINE