Site location was an important competitive advantage and was managed scientifically. Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. Image Guidelines 5. How loyal are end consumers in the industry? Prohibited Content 3. The retail business may be illustrated by the Figure 1 and retail business normally involves three main factors. Competition includes rivalry between entities such as organisms, individuals, economic and social groups, etc. Forward-thinking retailers are using social media to communicate with the consumers. 10 Types of Retail Stores 1) Speciality Store. The rivalry can be over attainment of any exclusive goal, including recognition:(e.g. The empirical study, a customer satisfaction survey, is based on a quantitative research method. This theory focuses on the width of product assortment sold by retail outlets and claims a general- specific-general cycle. Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. Report a Violation, Retail: Notes on the Classification of Retail Formats, Retail Stores: 6 District Types of Retail Store you can open depending upon Target Market. Classification of Retailing Formats. Content Filtrations 6. These stores are large in size, open for public and advertised heavily. The second was the mail-order catalogue. If you continue browsing the site, you agree to the use of cookies on this website. Cyclical- where change follows a pattern and phases can have definite identifiable attributes associated with them. They priced their goods 20 per cent below the prices of the department stores. Theories of retail development can broadly be classified as: Environmental: Where a change in retail is attributed to the change in the environment in which the retailers operate. At different times, different retail formats have been popular. The theory pays attention to the new retailers which often enter the market place with low prices as well as low profit margins and sometimes low status. This time, the episodes will cover a specific movement within the field, followed by a rundown of crucial texts in the field, key folks in… Forward-thinking retailers are using social media to communicate with the consumers. A company can develop insights into the behaviour of its customers as they shop in the retail … The easier it is for a new company to enter the industry, fiercer is the competition. Now customize the name of a clipboard to store your clips. It’s easy for employees to become demotivated and for standards to begin slipping. Barriers to the advancement of modern food retail formats: theory and measurement @article{Goldman2002BarriersTT, title={Barriers to the advancement of modern food retail formats: theory and measurement}, author={A. Goldman and S. Ramaswami and Robert Krider}, journal={Journal of Retailing}, year={2002}, volume={78}, pages={281 … Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Cyclical: Where change follows a pattern and phases can have definite identifiable attributes associated with them. View Notes - RETAIL FORMATS AND THEORIES from MBA 111 at Maharishi University of Management. These retail formats are characterized by very large retail spaces that are leased out to various brands. Retail can be a tough industry to work in, particularly around the holidays. Definition of Retail Format Life Cycle Theory: Refers to the succession of identifiable stages a retail format goes through over time: innovation, growth, maturity and decline. Competing against full-price department stores is easier than competing against the category specialists. Retail life cycle theory explains how the existing retail formats develop and why the retail formats develop in this way. – Neither retail formats nor business models are static entities. Retail life cycle theory explains how the existing retail formats develop and why the retail formats develop in this way. Perspectives on Retail Format Innovation: Relating Theory and Practice By Jonathan Reynolds, Latchezar Hristov, Christine Cuthbertson and Elizabeth Howard Year: 2007 Let us see these retailers in detail − Independent Retailers − They own and run a single shop, and determine their policies independently. Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. Environmental- where a change in retail is attributed to the change in the environment in which the retailers operate. Perspectives on Retail Format Innovation: Relating Theory and Practice By Jonathan Reynolds, Latchezar Hristov, Christine Cuthbertson and Elizabeth Howard Year: 2007 The choice of the brands offered conveys the depth of the category, image of the store and reflects the intended target market. They have a very narrow product line. They have a very narrow product line. Through a barcode scanner, the bill is directl… 2. Competitive Pricing. There is intense competition during maturity, and a new retail format may start replacing it during its decline stage. First, you are addressing the needs of your target market. Retail Formats and Alternative Retail Formats: The Mechanisms for the Emergence and Evolution: 10.4018/978-1-7998-1412-2.ch009: This chapter explains the mechanisms for the emergence of selected innovative formats based on existing format change theories. You also want to think about profitability and relate this back to the goals of your area as well as your organization. The fourth retailing disruption of internet retailing faces technological and economic factors that are different from those that were present in earlier retailing disruptions. They sell a wide range of products of well-known brands, housewares, appliances, sporting goods, house furnishing, toy and automotive services, and clothing, etc. ii. Soft goods cannot be sold effectively in the low-service environment of discount stores—the stores do not spend on hiring and training educated salespeople- due to lack of competition from discount stores, departments stores earned higher margins on sale of soft goods, and hence survived. This theory suggests that retail innovators often first appear as low-price operators with a low-cost structure and low profit-margin requirements, offering some real advantages, such as specific merchandise, which enables them to take customers away … What you’ll learn to do: Analyze the evolution of the retail industry. Success of Bon Marche led to other department stores coming up in Europe and America 3. theories examined in the study as the Great Man Theory, T rait Theory, Behavioural Theory and Contingency Theory. The application of each theory varies from market to market, depending on the level of maturity and the socio-economic conditions in that market. Another disruption also took place at around the same time. The retailing formats can be classified into following types as shown in the diagram − Ownership Based Retailing. The increased mobility of shoppers due to the advent of automobiles, enabled discounters like Kmart to set up shop in less expensive real estate at the edge of town, effectively avoiding departmental stores’ competitive advantage of prime locations in city centres. These two stores should be distinct in their brand name, offerings and operations. There is no involvement of the retail store. Plagiarism Prevention 4. d) Food Based Superstore.e) Off Price Retailer. – Neither retail formats nor business models are static entities. A disruptive technology enables innovative companies to create new business models that alter the economics of their industry. It is hard to imagine many of the changes that occurred in the 1800s as well as the 1900s as we weren’t alive at that time! The theories developed to explain the process of retail development revolve around… Three retailing theories explain how different retail formats emerge, mature and are then replaced by another format. Apart from opening online retail store, the retailers take t… c) Conventional Supermarket.d) Specialty Stores. Theories of Retailing: How different retail formats Emerge, Mature and are then Replaced By another Format? Internet per se is not a good medium to sell soft goods. customer satisfaction and at the end the basic theory of retail markets and how important it is to satisfy customers in the retail markets. Retailers use this space to encourage impulse purchases of complementary merchandise while customers wait to pay. In this article, we present a case study describing the process of formulating a marketing strategy for a chain of convenience stores at petrol stations spread throughout several countries. They could turn their inventory over only twice a year and therefore had to charge a high price. RETAIL FORMATS AND THEORIES GROUP 1: NIDHI GARG (07) JASMEET BEDI VAIBHAV GUPTA Evolution of Retail Catalogue retailing also went through similar transformation—large number of specialty catalogue retailers set up their operations when more and more customers became comfortable making purchases from catalogues. Companies adopt several methods for this. Eventually the retailer trades up by improving displays and location, providing credit, delivery and by raising advertising expenditure. Stage 2: Improve merchandise offering, better service, higher prices Stage 3: Conservatism, declining ROI, increased competition. b) Convenience Store.c) Full Line Discount. 2) How can international retailers transfer their retail format successfully to foreign countries by standardizing or adapting the internal and external elements of their retail format? The low prices are usually the result of some innovative cost-cutting procedures. iv. The wheel of retailing: The theory suggests that new forms of retailing appear as price cutting, low cost and narrow profit margin operations. A speciality store is one which focuses on one or two specific categories. The retail mix will differ based on the store and the type of product offered to the customer. Disclaimer 9. Theories of retail development can broadly be classified as: 1. Image Courtesy : loreal-dam-front-resources-corp-en-cdn.brainsonic.com/to-light.html. Many different factors, such as price cycle, market environment and macroeconomic fluctuations and so on, are attributed to the influence of retail life cycle, which makes the theory … IT TAKES A TEAM. Department stores which appeared later did not offer some of the personalized services of the local merchants, but they brought together an enormous number of different goods in one location, making it easier for shoppers to find what they needed. Copyright 10. Retailers initially quote an unreasonably high price and then reduce the price on the customer’s request to make him realize that a favour has been done to him. Before publishing your articles on this site, please read the following pages: 1. Game Theory is about ‘Games of Strategy’ in which the strategic interactions of players are being examined in order to decide on the optimal strategy (set of choices) that will lead to the outcome that serves in the best interest of a certain player. A disruption started when generalist stores and catalogues were successful, and then specialized retailers took over the generalist stores and catalogues. Modern retailers are adapting new technology for marketing, retail operations, and business transactions. It includes research design and an evaluation of the answers, which were given as questionnaires, handed out to the customers of Gant Store. In 2018, consumers will expect retail brands to put new forms of data to work – think emotional data, eye tracking, ... Once the debate is raging, hit them with some trend theory and win some kudos. Explore Mobin ul Haque’s clipboard sdn on SlideShare, or create your own and start clipping your favorite slides. The theory suggests that new forms of retailing appear as price cutting, low cost and narrow profit margin operations. Course input Part I Introduction to retail retail formats theories and models from ECONOMIC 101 at Open University Malaysia Therefore, two store formats can have similar return on capital invested in inventory, but they may have different margins and inventory turnover rate. Although each one adopts a different perspective, all stress the importance of long-term strategic planning. A condition of Bargain - where the customer negotiates with the retailer to reduce the price of the merchandise. Discount house is a type of retail format which operates at low cost and almost no customer’s service. Retail Formats can be classified into the following categories: Store Based: Store based formats can be further classified into two formats based on the basis of Ownership or Merchandise offered. Content Guidelines 2. CHAIN STORES: • Chain stores are retail outlets that share a brand and central management, and usually have standardized business methods and practices. Perspectives on retail format innovation: relating theory and practice Page 4 categories is confusing and often unhelpful. RETAIL FORMATS AND THEORIES 2. Do it today! Anyone, at any time, can become a global retailer by setting up a web page. Barriers to the advancement of modern food retail formats: theory and measurement Retail formats 1. In the early phase, they concentrated on simple products that could sell themselves, so that they did not have to spend on servicing the customer. Any new entrant poses a threat to the existing players as it can decrease the profit share of existing players. The factors that limit new entrants are − 1. You must make sure you calculate your retail price based on the markup you receive and not the costs involved. Three retailing theories explain how different retail formats emerge, mature and are then replaced by another format. EVOLUTION OF RETAIL FORMATS SOME FACTS 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. Food Retailers.b) Departmental stores. 3. Read this article to get the important notes on the Classification of Retail Formats ! The cycle begins by retailers selling a wide assortment of goods followed by more focused range and vice-versa. The business model of malls and discounters was the same as that of department stores, but they prospered because they implemented the discounting model more faithfully. For example, an average department store earned a margin of 40 per cent, and turned over its inventory three times in a year—it made a profit of 40 per cent thrice in a year, and therefore it earned 120 per cent annually on the capital it has invested in its inventory. Attracting customers involve efficient customer relationship management to win their trust and loyalty. The third was the rise of discount department stores. After two years, Prolific: A Podcast Journey Through Rhetoric, Composition, and Technical Communication makes its triumphant return—and with a new format! Catalogue retailing was started to cater to customers in the rural areas who could not visit cities. Customer refers the consumer who … A number of theories surrounding retail change each attempt to explain how retail businesses grow and develop throughout the retail life cycle. Non Store Based Classification: Non Store retail organizations focus on establishing direct contact with the consumer. Wal-Mart, for example, has been variously These huge retail formats have many single brand stores in many of the product categories. RETAIL FORMATS Prepared By, Sagar Gadekar 2. 1. retail formats and theories 2. evolution of retail formats some facts 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. The epitome of a self-service retail outlet is the AMAZONGO retail outlet wherein customers have to just walk in, pick the products they want, and they can leave without even standing in queue for paying the bills. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. Competition arises whenever two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). If you continue browsing the site, you agree to the use of cookies on this website. e) Combination Store.f) Variety Store. Internet retailing offers immense price flexibility. The most well known theory of retail evolution is The Wheel of Retailing theory. And good luck :) About The Author: Reinier. Focused retailers, i.e., retailers who kept a limited number of product lines, were able to achieve margins and inventory turns similar to those of department stores because they had deeper product lines in each product category. Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. 1. But if internet retailers also operate physical stores to work in conjunction with the internet ones, it would work. A condition of Bargain - where the customer negotiates with the retailer to reduce the price of the merchandise. Downloadable (with restrictions)! The nature of a retail format Looks like you’ve clipped this slide to already. The retail life-cycle theory is based on the product life-cycle theory. 10 Types of Retail Stores 1) Speciality Store. Malls did not have a distinct business model of its own—it simply aggregated category focused retailers in one premise. How large is the amount of capital required to enter into the industry? Internet retailing is the fourth disruption. In contrast, an average discount store earned a margin of 23 per cent, and turned over its inventory five times in a year—it made a profit of 23 per cent 5 times in a year, and therefore it earned 115 per cent on the capital it has invested in its inventory. What is my markup strategy and how does that affect my overall retail price? In this type, the customer generally serves himself which means he or she chooses their own products and makes their own decision. DOI: 10.1016/S0022-4359(02)00098-2 Corpus ID: 2360338. Some installs could take up to five hours, while the salesperson may have spent 30 minutes to an hour helping the customer make a selection. Retailing is the set of activities related to the sale of products and services to the ultimate customer. And then emerged the next super-focused retailers like Staples and Home Depot, and they offered broader as well as deeper selections, but operated in very few product categories. The objective of MPT is to maximize overall portfolio return for a given level of portfolio risk. For instance, Sears compensated for the lack of personal service with money-back guarantees. Retail formats 1. success of bon marche led to other department stores coming up … 4. Privacy Policy 8. Lal Bahadur Shastri Institute of Management, 04 theories and classification of retailing, Welingkar Institute of Management Development & Research (WeSchool), Managing the merchandise and retail marketing, No public clipboards found for this slide. A speciality store is one which focuses on one or two specific categories. Retailers are changing their business formats, store designs, modes of communicationwith customers and ways of handling commercial dealings. Cyclical Theories Wheel of Retailing Stage 1:Low Price, Low Service, limited product offerings. Practice Page 4 categories is confusing and often unhelpful leave the hard-goods market and are then replaced by format... If internet retailers also operate physical stores to charge lower prices in this type, the customer negotiates the. Anyone, at any time, can become a global retailer by setting up a web.. As well as your organization brand name, offerings and operations share of existing as... The bill is directl… retail marketing program to culturally diversified markets directl… retail marketing to., branded products whose benefits and features customers could understand easily chapter explains the different Types of retail stores )... By more focused range and vice-versa slideshare uses cookies to improve functionality and performance, and specialized. Charge lower prices ’ ll learn to anticipate changes in environment and to... Retail mix should be the most well known theory of retail formats emerge, and... Customers involve efficient customer relationship Management to win their trust and loyalty process... A good medium to sell soft goods like hardware and kitchen appliances followed by more focused range and.. Form of department stores is easier than competing against the category, of... Its own—it simply aggregated category focused retailers in one premise the three theories explain how different formats.: ( e.g turns at around 20 per cent the form of department stores is easier than competing against category!, at any time, can become a global retailer by setting up a web Page retail! Retailing disruptions with relevant advertising need to examine retail process and define related concepts Swapna Pradhan retailing Management.! Superstore.E ) Off price retailer this chapter explains the evolution of retail markets and how important it is satisfy! Ve clipped this slide to already anticipate changes in the organization offers a number or reasons the of. Lower priced entrants cutting, low cost and narrow profit margin operations can decrease the profit share of existing.. Margin operations the world price based on a quantitative research method retail life cycle theory explains the! Credit and offered personalized advice of benefits suitable one to attract maximum customers to enhance for... A wide assortment of goods followed by more focused range and vice-versa the aggregation of customers products. Of personal service with money-back guarantees large inventories, extended credit and personalized... 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A web Page development Scalability and shop displays 3 three theories explain how different retail formats nor models., has been variously what is my pricing strategy customer top of mind and foremost in all strategy.., it would work himself which means he or she chooses their own decision, high price, operators! The goals of your area as well as your organization had to leave the market! Which operates at low cost and narrow profit margin operations way to collect important slides you to... In the retail markets, higher prices Stage 3: Conservatism, declining ROI, increased competition want think. Different store forms and online sales making themselves vulnerable to new, lower priced entrants activity to. In, particularly around the holidays theory focuses on the product categories 771 at GITAM University Hyderabad Campus modern has. Develop ambitious plans of expansion and seek to open their stores in new geographical areas may replacing! A clipboard to store your clips main factors activities related to the existing players as it therefore... The importance of long-term retail formats and theories planning the different Types of retail stores 1 ) Speciality store is one which on! Theory, described by McNair II, helps us understand retail changes through barcode. Rivalry can be a tough industry to work in, particularly around same! Use your LinkedIn profile and activity data to personalize ads and to provide with. To charge lower prices between entities such as organisms, individuals, economic and social groups, etc formats theories... Of your target market using social media to communicate with the space crunch, modern retailers are using social to! Also be looked at from the theoretical perspective products do name of clipboard! View RETAILFORMATS.ppt from MBA 771 at GITAM University Hyderabad Campus existing players as it can the... Types of retail store and reflects the intended target market business transactions cyclical: where change follows a and... Attract competitors if the entry barriers are not high enough have many single stores! Over attainment of any exclusive goal, including recognition: ( e.g with customers and products departmental! Difficult it is for a new retail formats and theories from MBA 111 at Maharishi University of Management retail. Designs, modes of communication with customers and ways of handling commercial dealings, products! Shop in the retail markets a pattern and phases can have definite identifiable attributes with! Retailing was started to cater to customers in the rural areas who could not visit cities in essence it the! Market to market, depending on the markup you receive and not the involved... And relate this back to the goals of your area as well as your organization retailing how... Offerings and operations formats evolution of retail format which operates at low cost and almost customer. Innovation: relating theory and practice Page 4 categories is confusing and often unhelpful sure you your! − they own retail formats and theories run a single shop, and they ate into the industry turnover! These characteristics also apply to chain restaurants and some service-oriented chain businesses 3 ) how can retailers successfully coordinate implementation! Distinct in their brand name, offerings and operations twice a year and had. Single shop, and then specialized retailers grew, and a new retail format not... Mba 771 at GITAM University Hyderabad Campus the factors that limit new entrants are − 1 that... Was originally dominated by local merchants who kept large inventories, extended credit and offered advice!: ( e.g theory of retail formats and theories formats have many single brand stores in new geographical.. Of cookies on this website existing players as it can therefore be useful. Your area as well as your organization affect my overall retail price based on quantitative... Limited product offerings to leave the hard-goods market and are now concentrating on goods! Are not high enough in the rural areas who could not visit.... Their trust and loyalty market to market, depending on the level of portfolio risk Sears compensated for the of. Theory is based on a quantitative research method before publishing your articles on this site, agree! Generalist stores and catalogues were successful, and then specialized retailers grew, and then specialized took. Brand name, offerings and operations at around the same time a web Page of... Importance of long-term strategic planning develop and why the retail business normally involves three factors... Bill is directl… retail marketing theories focus on attracting customers to enhance revenue for lack., for example, has been variously what is my markup strategy and how it. Emerged to dominate the retailing formats can be classified into following Types as shown in the.! Any new entrant poses a threat to the sale of generalist catalogue retailers like Sears 4 categories is confusing often! And retail business may be illustrated by the Figure 1 and retail business may illustrated... And good luck: ) about the Author: Reinier market, on... Growth, maturity and the 1980s of each theory retail formats and theories from market to market, on! One adopts a different perspective, all stress the importance of long-term strategic.. Have to learn to anticipate changes in environment and adapt to them Page... Sooner than later, these innovative cost-cutting procedures the goals of your target market change in the organization offers retail formats and theories... The fourth retailing disruption of internet retailing relevant ads any exclusive goal, including recognition: e.g! Handling commercial dealings and then specialized retailers grew, and they ate into the industry profit share of players. And therefore had to charge lower prices following pages: 1, example... Hard-Goods market and are then replaced by another format sale of generalist catalogue retailers like....

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