Theories of Retailing

KRITIKA KUMAR
 Theories of Retailing

Cyclical Theories
Wheel of Retailing
Accordian Theory

Evolutionary Theories
Dialectic Process
Natural Selection
 Cyclical Theories

Wheel of Retailing

Stage 1:Low Price, Low Service, limited product

offerings.
Stage 2: Improve merchandise offering, better
service, higher prices
Stage 3: Conservatism, declining ROI, increased
competition
Wheel of Retailing
 Cyclical Theories

Accordion Theory
Evolution of retail institutions from general, broad-
based outlets with wide assortments, to narrow-
based institutions carrying specialised assortments,
and back to general, broad-based assortments.
Synonymous with general-specific-general theory.
 Evolutionary Theories

Dialectic Process
Retailers mutually adapt in the face of competition
from “opposites”.
When challenged by a competitor with a differential
advantage, the established retailer will adopt
strategies and tactics in the direction of that
advantage (making the innovator less attractive)
Dialectic Process
 Evolutionary Theories

Natural Selection
Retailing institutions that can most effectively adapt
to environmental changes are the ones most likely to
prosper or survive.
Environmental need for a certain kind of retailing
institution → it will evolve
Need ceases to exist → the institution will tend to
disappear
Institutions that most effectively adapt to
environmental changes are most likely to survive
 Retail Life Cycle

Retail organizations pass through identifiable stages of

innovation, development, maturity and decline.

Stages of Retail Life Cycle:

Innovation
Accelerated Growth
Maturity
Decline
Innovation
Differentiated services, product and format.
Few competitors
Rapid growth
Moderate profit

Accelerated Growth
Increase in sales
Emergence of competitors
Organization try to attain leadership
Higher investment
Cost pressure
Maturity
Increased competition
Decrease in growth rate
Repositioning: strategy, format & merchandise mix

Decline
Loses Competitive edge
Negative rate of growth
Profitability decline
Cost run higher
Retail Life Cycle