RETAIL FORMATS & THEORIES

EVOLUTION OF RETAIL FORMATS

Social Development and Their Impact

 Over the ages development of trading is associated with

social development
 Development of railroad and telegraph affected the
growth of retail trade in the eighteenth century
 Orders could be confirmed by telegraph
 Wholesale business actually developed with the advent
of the traveling salesman
 Success of the wholesale business led to the emergence
of the department store
 The first department stores “Bon Marche” was set up in
1852 in Paris
 Bon Marche revolutionized retail at time by relying on
volume rather than on high mark up.
 RETAIL FORMATS & THEORIES
EVOLUTION OF RETAIL FORMATS

Social Development and Their Impact

 Success of Bon Marche led to other department stores

coming up in Europe and America
 The world witnessed the new form of retail when
Montgomery Ward launched the first mail order
catalogue in 1870
 Most rural dwellers encountered mass merchandising in
the form of mail order catalogues
 Success of mail order business led to the emergence of
chain stores
 The first chain store was A&P (Atlantic & Pacific)-a
grocery store founded in 1859 by George F Gilman
 Another important chain store was F W Woolworth, set
up in 1879
 RETAIL FORMATS & THEORIES
EVOLUTION OF RETAIL FORMATS

Industrial Revolution

 Industrial revolution necessitated dramatic change

on the retail front
 The increase in urbanization meant that customers
were clustered in smaller geographic areas
 Firstly this led to the emergence of shops to serve
the needs of the locals
 The middle income customers increased and mass
transportation became a way of life
 Secondly mass manufacturing made it possible to
manufacture goods in very large quantities
 RETAIL FORMATS & THEORIES

EVOLUTION OF RETAIL FORMATS

Industrial Revolution
 This meant that a manufacturer could rarely
sell the produce directly to consumers
 Since quantities were high the number of
customers required was also large
 Thus longer distribution channels evolved as
did mass merchandisers
 Importance of food to the working class and
the difficulty in procuring them led to the
emergence of co-operative societies in the
United Kingdom
 By the year 1900, these societies had
 RETAIL FORMATS & THEORIES
EVOLUTION OF RETAIL FORMATS

Emergence of Self service

 Retail evolved in many ways over the twentieth

century

 Self service as a concept started in 1916 when

Clarence Saunders started their first self-service
store “Piggly Wiggly” in Memphis, Tennessee

 The concept of self-service helped the retailer

reduce costs, as fewer workers were required to
service the customers
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EVOLUTION OF RETAIL FORMATS

Supermarkets

 1930’s saw the emergence of supermarkets

 The end of World War II reordered the retail scene – though
the retail boom continued
 It also saw the emergence of discount stores
 These stores appeared o meet the needs of the blue-collared
workers
 The first hypermarket that as developed was Carrefour in
France, in 1963
 New formats gave an opportunity to pick up products,
compare with others and then taking a decision of buying
 Providing all information regarding price, weight, date of
manufacture and expiry on the product itself became
necessary to aid decision making
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EVOLUTION OF RETAIL FORMATS

Supermarkets

 The mass merchandisers worked on three principles, which

have now become the fundamental principles of modern
selling

9. They fixed product prices before sale, and customers bought

at the set prices

11. Prices were determined on the basis of stock turns and the
amount of profit that would be generated from the product

13. They departmentalized the products. Accounting systems

were devised to determine the contribution of various
departments. This enabled them to drop unprofitable goods
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EVOLUTION OF RETAIL FORMATS

Speciality Stores, Malls and Other Formats

 The needs of the customers grew and changed

 This ensured the emergence of commodity specialized mass

merchandisers in 1970s
 Seventies also saw the use of technology by way of introduction of
the “barcode”
 Speciality chains developed I the 1980s as did the large shopping
malls
 Shopping malls were created o provide for all of he consumer’s
needs in a single self contained shopping area
 Visitors spend an average of three hours in a mall, which is three
times the national average for shopping malls
 The Mall of America is one of the most visited destinations in USA
attracting more visitors annually than Disney World, Grace Land and
the Grand canyon combined
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EVOLUTION OF RETAIL FORMATS

Rise of the Web

 The world of retail changed yet again when in 1995, Amazon.
COM opened its doors to a world wide market on the web
 Evolution of retail formats worldwide has been largely
influenced by a constantly changing social and economic
landscape
 One of the main reasons for new formats emerging is the
consumer himself
 Today's consumer is more demanding and is focused on what
he wants
 Retailer on the other hand has been influenced by
availability of real estate and its increasing prices
 He is faced with the challenge of adding on new services and
the need for differentiation
 This has led to specialization and the emergence of
specialists
 Supply chain complexities and increasing pressure on