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 Innovative retailer

Top Heavy Low status and price
Conservative Minimum service
Declining ROI 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