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Theories of Retail
Theories of Retail
•The origin of retail are as old as trade itself, for centuries most of
merchandise was sold in marketplace or by peddlers.
•The peddlers who provided people with the basic goods and
necessities could not be self sufficient. In prehistoric times the
peddler travelled long distance to bring products to locations which
were in short supply.
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Evolution of retail formats in different times
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The first department store which opened in US , was Stewart’s in
New York, which was followed by Macy’s post civil war.
The late 1800’s saw the rise of the so called 5 and 10 cent stores ,
which emerged to serve the needs of the poorer classes.
The industrial revolution call for dramatic changes on the retail front.
The increase in urbanization lead to the emergence of shops, to
serve the needs of the locals.
The middle income consumers increased and mass transportation
become a way of life
Mass manufacturing made it possible to manufacturing goods in
large quantities.
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3. The emergence of self service:
Retail evolve in many ways over the 20th century.
Self service as a concept started in 1916 when Clarence
Saunders started the first self service store.
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5. Speciality stores, malls & formats:
As the needs of the consumers grew and changed it was visible the
emergence of commodity specialized mass merchandisers in the
1970s.
The 70s were witness to the use of technology in the retail sector
with the introduction of the Barcode.
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Theories of Retail Development
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Classification
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Environmental theory
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Those retail institutes that are keenly aware of their
operating environment and which react without
delay, gain from the changes.
The most well know theory of retail evolution is the retail wheel of
retailing theory.
This theory suggests that retail innovators often first appear as low
price cost operators with a low cost structure and low profit margin
requirements, offering some real advantages.
As they prosper , they develop their business, offering a greater
range or acquiring more expensive facilities they lose the focus. (on
which they entered in the market). This phase is known as ‘trading
phase’. This in turn leave room for others to enter and repeat the
process.
They then become vulnerable to new discounters and lower cost
structure as they are now Mature retailers.
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The wheel keeps on turning and department stores, supermarkets,
and mass merchandise went through this cycles
Traditional retailer
Elaborate facilities
Higher rent
More locations
Higher prices
Extended product offerings
T
Trading up phase
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Conflict theory
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The Concept of Life Cycle in Retail
The retail life cycle is a theory about the changes through time
of the retailing outlets
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A. Innovation:
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B. Accelerated Growth:
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C. Maturity:
This is the time when the retail organization needs to rethink its
strategy and reposition itself in the market.
A change may occur not only in the format but also in the
merchandise mix offered.
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D. Decline:
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The Concept of Life Cycle in Retail
SALES
Maturity
Decline
Growth
Profit
Innovation
TIME
The retail business in India has only recently seen the emergence of
organized, corporate activity.. And traditionally most of the retail
business in India was constituted of small owner- managed
businesses.
Initially when shoppers stop opened its first outlet in Mumbai in 1991
they offers apparel, imitation, cosmetics and perfumes and home
fashion. That time they also offer loyalty programmes in place, which
did not offers by others.
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The store enjoyed an enviable position for sometime and
later the change in customer expectations and increases
competition in the form of other department stores like,
Globus, Westside, Lifestyle etc.
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Classification of Retail Formats
1. Form of Ownership
• Independent retailer: Example only one retail outlet
Premsons, Benzer etc.
• Chain retailer: examples, Wills Sports, Louis
Philippe, Van Heusen
• Franchise: examples Mc Donald, pizza hut,
Dominoes etc.
• Leased departments: airport, malls Multiplexes.
etc. Leased one
• Consumer co-operatives: kendriya bhandar,apna
bazar
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Basis of the Merchandise offered
• Convenience stores
• Supermarkets
• Hypermarket
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Classification of Retail Formats
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