RETAIL MARKETING

AMEER.VP
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 RETAIL TEORIES

• THREE MAIN CATOGARIES OF RETAIL

THEORIES
• Environmental theory
• Cyclical theory
• Conflictual theory

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 RETAIL THEORY
• Theories of retail development can broadly be classified
as
1.  ENVIRONMENTAL: where a change in retail is attributed to
the change in the environment in which the retailers
operate.
2. Cyclic- where change follows a pattern and phase can
have definite identifiable attributes associated with
them.
3. Conflict: where the competition or conflict between two
opposite types of retailers, leads to a new format being
developed.

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 Environmental theory :

• Retail institution are economic entities and

retailers confront an environment which is
made up of customers, competitors and
changing technology.

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 Cyclic Theory :
• Cyclic 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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 RETAIL Theory :

• Theory of cyclical or circular development

• Retail firms enter as low margin, low price, low
status stores, with few customers service
• Entry phase: Decide on competitive strategy
say discount pricing. Stores are designed & built,
merchandise assortment selected & distribution
system developed to offer broad range of
general merchandise at lowest possible price
(Wal-mart)

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 The wheel of Retailing :

• Trade-up phase : stores become more

profitable & competitive, begin to upgrade
offerings, design,layouts,add more services
&amenities & upscale the merchandise &
prices
• Vulnerability phase :stores evolve into high
cost merchants thereby becoming
vulnerable to low cost, low service
competitors in the entry phase
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 The wheel keeps on turning and department stores,
supermarkets, and mass merchandise went through this
cycles

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 Conflict theory (dialectic Process) :

• Conflict always exit between operators of similar

formats or within broad retail categories.
• Retail innovation does not necessarily reduce the
number of formats available to the consumer,
instead , it leads to the development of more
formats.
• Retailing involves through a dialectic process,
i.e. blending of two opposite to creates a new
format. This can be applied to development in
retailing like;
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 A. Thesis: Individual retailers as corner shops all
across the country (discount store)
B. Antithesis: A position opposed to the thesis
develops over a period of time . (department
store). The antithesis is a challenge to the
Thesis.
C. Synthesis: There is a blending of the Thesis
and antithesis. The result position between the
thesis and antithesis. Supermarkets and
hypermarkets flourish. This “synthesis” for the
next round of evolution.

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 The Concept of Life Cycle in Retail :
• Retail organization pass through
identifiable stages of innovation,
development, maturity and decline. This is
commonly termed as the “Retail Life Cycle”

• The retail life cycle is a theory about the

changes through time of the retailing
outlets

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 A. Innovation:

• A new organization is born; it improves the

convenience or create other advantages for the final
customers, which differ sharply from those offered by
other retailers. This is the stage of Innovation.

• In Innovation organization have very few competitors.

• Because it is new concept , the rate of growth is fairly

rapid and the management fine-tunes its strategy
through experimentation.

• At this stage the level of profitability re moderate and

7-13 this stage can last up to five years, depends on the
organization
 B. Accelerated Growth:

• The retail organization faces rapid increase in sales.

• As organization moves to stage two of growth ,which is

the stage of development, a few competitors emerge.

• As company has been in the market for a while it is

now in a position to pre-empt the market by establishing
a position of leadership.

• At this stage since growth is imperative, the investment

level is also high as is the profitability

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 C. Maturity:
• The organizational this stages still grows, but competitive
pressures are felt acutely from newer forms of retailing that
tend to arise.

• Thus growth rate tends to decreases.

• Gradually as marketers become more competitive and direct

competition increases, the rate of growth slows down and
profits also start declining.
• 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:
• The retail organization looses its competitive
edge and there is a decline.

• At this stage organization needs to decide is it is

still going to continue in the market.

• The rate of growth is negative, profitability

declines further and overheads are high.

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