THEORIES OF

RETAIL
DEVELOPMENT

KRITHIKA G.K.
Asst. Professor
Fashion Mgt. Studies
 No single theory can be universally
applicable & acceptable

Theories very from market to market

based on maturity & socio-economic
conditions

Explain process of
retail development,
importance of competitive pressures,
investments in organizational capabilities &
creation of sustainable competitive advantage
etc.
Theories of Retail Development:

Environment Theory

Cyclical Theory

Conflict Theory
1. Environmental Theory
Darwinian approach survival of
the fittest

Change in retail is attributed to

change in the environment in
which retailers operate

Core of the theory - ability to

adapt to change successfully
 2. Cyclical Theory
The Wheel of Retailing Theory by McNair

Retail innovators (RI) low-price operators, low cost

structure, low profit margin requirements, offer real
advantages, take customers away from competition

RI prosper deve. & estb. Business, lose focus on

wht. was imp. earlier (trade-up), give space for new
entrants to repeat process (discounters & low cost
structures).

Theory does not explain deve. Of retail of all

markets.
The Wheel of Retailing
Vulnerability Entry Phase
Phase

Trading-up
Phase
Source: http://www.emeraldinsight.com/fig/0701030703001.png
 3. Conflict Theory
Exists b/w operators of similar formats or broad retail
categories

Retail innovation leads to development of more formats &

does not reduce no. of formats available to consumer.

Retail - dialectic process blend two opposites develop

new format

Thesis Individual retailers

Antithesis Department stores (opposite of thesis)

Synthesis Supermarkets & Hypermarkets (blending of

thesis & antithesis)
Theory of Retail Conflict

Discount Store Department Store

Discount Department
Store