Post on 21-Aug-2015
Theories of Retailing
Cyclical TheoriesWheel of RetailingAccordian Theory
Evolutionary TheoriesDialectic ProcessNatural 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
Cyclical Theories
Accordion TheoryEvolution 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 ProcessRetailers 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)
Evolutionary Theories
Natural SelectionRetailing 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:InnovationAccelerated GrowthMaturityDecline
InnovationDifferentiated services, product and format.Few competitorsRapid growthModerate profit
Accelerated GrowthIncrease in salesEmergence of competitorsOrganization try to attain leadershipHigher investmentCost pressure
MaturityIncreased competitionDecrease in growth rateRepositioning: strategy, format & merchandise
mix
DeclineLoses Competitive edgeNegative rate of growthProfitability declineCost run higher