retail formats and theories

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. Focused retailers will become stronger if cybermalls emerge that rent space to focused retailers whose category brands are strong, in the same way that malls rent space to focused retailers in the physical space. The players develop ambitious plans of expansion and seek to open their stores in new geographical areas. Attracting customers involve efficient customer relationship management to win their trust and loyalty. 3. A condition of Bargain - where the customer negotiates with the retailer to reduce the price of the merchandise. ‎Hello! Cyclical Theories Wheel of Retailing Stage 1:Low Price, Low Service, limited product offerings. 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. However, some of you might be familiar with some of the changes in the 1970s and the 1980s. A low price retailer should avoid incurring extra costs on the existing format and instead should open another store with better service levels and premium brands catering to the upmarket segment. In retailing, the profits that a retailer earns are almost directly proportional to the margins that it earns on its products, and the number of times its turns over its inventory in a year. Explore Mobin ul Haque’s clipboard sdn on SlideShare, or create your own and start clipping your favorite slides. The retail life-cycle theory is based on the product life-cycle theory. This theory focuses on the width of product assortment sold by retail outlets and claims a general- specific-general cycle. A new retail format that enjoys a competitive advantage over existing formats grows rapidly. Read this article to get the important notes on the Classification of Retail Formats ! 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. Department stores—Retailing was originally dominated by local merchants who kept large inventories, extended credit and offered personalized advice. The rivalry can be over attainment of any exclusive goal, including recognition:(e.g. View RETAILFORMATS.ppt from MBA 771 at GITAM University Hyderabad Campus. Modern retailers are adapting new technology for marketing, retail operations, and business transactions. Since its birth, modern retail has significantly changed over time. The cycle begins by retailers selling a wide assortment of goods followed by more focused range and vice-versa. The low prices are usually the result of some innovative cost-cutting procedures. Retail Formats and Theories 1. DOI: 10.1016/S0022-4359(02)00098-2 Corpus ID: 2360338. The second was the mail-order catalogue. As waves of customers move around the shop, leaving ruined store displays in their wake, it can be hard to find the drive to fix the shop for the fourth time in an hour. They also accelerated their inventory turnover rates. c) Conventional Supermarket.d) Specialty Stores. Discounters followed a business model of low-cost, high turnover that enabled them to achieve five inventory turns at around 20 per cent. View Notes - RETAIL FORMATS AND THEORIES from MBA 111 at Maharishi University of Management. – Neither retail formats nor business models are static entities. 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 … 3. Back-of-the-House Operations: The retail store layout should factor for store operations and activity like shipping and receiving, inventory storage and retrieval, and the employee’s overall workspace and break area. ii. How difficult it is to access distribution channel? In essence it forces the retailer to make the customer top of mind and foremost in all strategy decisions. With the space crunch, modern retailers have learnt how to use every inch of the floor constructively. Disclaimer 9. f) Super Centers Andg) Flea Market. The retail life-cycle theory suggests that retail institutions also have a life-cycle which can be divided into four phases- innovation, growth, maturity and decline just like product life-cycle theory. 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… Food Retailers.b) Departmental stores. d) Food Based Superstore.e) Off Price Retailer. Retail can be a tough industry to work in, particularly around the holidays. It includes research design and an evaluation of the answers, which were given as questionnaires, handed out to the customers of Gant Store. e) Combination Store.f) Variety Store. Companies adopt several methods for this. 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. 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 … How large is the amount of capital required to enter into the industry? Through a barcode scanner, the bill is directl… It can therefore be a useful tool in business settings that deal with fierce competitors. The application of each theory varies from market to market, depending on the level of maturity and the socio-economic conditions in that market. Discussing and evaluating your retail mix in the organization offers a number of benefits. 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. 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. … A condition of Bargain - where the customer negotiates with the retailer to reduce the price of the merchandise. The aggregation of customers and products enabled departmental stores to charge lower prices. Store Retailing by Store based Strategy General Merchandise. Now customize the name of a clipboard to store your clips. iv. Retail formats 1. However, the advantage of a speciality store is that you will find many things in that store related to that speciality which you … Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. 4. Replicating the pattern of department stores, most of the discounters had to leave the hard-goods market and are now concentrating on soft goods. Internet per se is not a good medium to sell soft goods. See our Privacy Policy and User Agreement for details. The factors that limit new entrants are − 1. There is intense competition during maturity, and a new retail format may start replacing it during its decline stage. Any new entrant poses a threat to the existing players as it can decrease the profit share of existing players. Downloadable (with restrictions)! Theories of Retailing: How different retail formats Emerge, Mature and are then Replaced By another Format? The fourth retailing disruption of internet retailing faces technological and economic factors that are different from those that were present in earlier retailing disruptions. Retail stores generally operated in the traditional lines of business except a few superstores that brought in certain modification in their business patterns, but the advent of online shopping in recent times has put an upon them because they had been losing on several ground. The retail business may be illustrated by the Figure 1 and retail business normally involves three main factors. 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 … Privacy Policy 8. Content Guidelines 2. Retail formats 1. The third was the rise of discount department stores. Anyone, at any time, can become a global retailer by setting up a web page. We apply modern financial portfolio theory (MPT) to managing portfolios of retail formats. Since implementation of theories is largely dependent on social and economic situations, high and low consumer demand may influence retailers to implement one theory over another. And good luck :) About The Author: Reinier. What is my markup strategy and how does that affect my overall retail price? 2. But if internet retailers also operate physical stores to work in conjunction with the internet ones, it would work. Image Guidelines 5. Later they started offering more complex, but high margin products to maintain their profit margins, because they faced severe competition at the low end of their businesses. The objective of MPT is to maximize overall portfolio return for a given level of portfolio risk. Competing against full-price department stores is easier than competing against the category specialists. Eventually the retailer trades up by improving displays and location, providing credit, delivery and by raising advertising expenditure. A new retail format passes through the stages of birth, growth, maturity and decline as industries and products do. Do it today! Among the theories identified are the wheel of retailing theory, which outlines the three stages retailers encounter: entry phase, trading-up phase and vulnerability phase. Cyclical- where change follows a pattern and phases can have definite identifiable attributes associated with them. Retailers have to learn to anticipate changes in environment and adapt to them. 2. Before publishing your articles on this site, please read the following pages: 1. The most well known theory of retail evolution is The Wheel of Retailing theory. They have a very narrow product line. She has taught retailing at every level in further and higher education from initial training to honours, and has led further-education programmes in retail manage- ment and marketing. There is no involvement of the retail store. The retail mix should be the most suitable one to attract maximum customers to enhance revenue for the firm. Retail Management 2 "In my whole retailing career, I have stuck to one guiding principle: give your customers what they want…and customers want everything: a wide assortment of good quality merchandise, lowest possible prices, guaranteed satisfaction with what they buy, friendly knowledgeable service, convenient hours, free parking, and a pleasant shopping Modern retailers are adapting new technology for marketing, retail operations, and business transactions. This theory, described by McNair II, helps us understand retail changes. See our User Agreement and Privacy Policy. environment, retail theories and retail change. Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. But, white goods have varied and complex attributes, and salespeople have to take care to explain their features and benefits to the customers. 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 retail life-cycle theory is based on the product life-cycle theory. These retail formats are characterized by very large retail spaces that are leased out to various brands. In this type, the customer generally serves himself which means he or she chooses their own products and makes their own decision. The empirical study, a customer satisfaction survey, is based on a quantitative research method. It is important to keep in mind that while a disruptive technology changes the factors-of-success and economics of an industry, it does not change the profitability of individual companies. Competition includes rivalry between entities such as organisms, individuals, economic and social groups, etc. Discount house is a type of retail format which operates at low cost and almost no customer’s service. The choice of the brands offered conveys the depth of the category, image of the store and reflects the intended target market. If you continue browsing the site, you agree to the use of cookies on this website. Three retailing theories explain how different retail formats emerge, mature and are then replaced by another format. 1. Another disruption also took place at around the same time. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. Environmental- where a change in retail is attributed to the change in the environment in which the retailers operate. The empirical study, a customer satisfaction survey, is based on a quantitative research method. b) Convenience Store.c) Full Line Discount. They priced their goods 20 per cent below the prices of the department stores. i. Competitive Pricing. These two stores should be distinct in their brand name, offerings and operations. – Neither retail formats nor business models are static entities. 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. The retail life-cycle theory suggests that retail institutions also have a life-cycle which can be divided into four phases- innovation, growth, maturity and decline just like product life-cycle theory. 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. Classification of Retailing Formats. Retailers are changing their business formats, store designs, modes of communication with customers and ways of handling commercial dealings. 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. Internet retailing offers immense price flexibility. You can change your ad preferences anytime. About 80 per cent of its product portfolio consisted of branded hard goods like hardware and kitchen appliances. The movement towards soft goods is more precarious. iii. 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. These huge retail formats have many single brand stores in many of the product categories. RETAIL FORMATS AND THEORIES GROUP 1: NIDHI GARG (07) JASMEET BEDI VAIBHAV GUPTA Evolution of Retail Sears continued with catalogue retailing, but it also opened large number of stores, where customers could come, buy and take the purchased products with them. Focused or specialist retailers might be in an advantageous position in internet retailing, because customers will find it easy to travel across the websites of focused internet retailers. You also want to think about profitability and relate this back to the goals of your area as well as your organization. Clipping is a handy way to collect important slides you want to go back to later. It includes research design and an evaluation of the answers, which were given as questionnaires, handed out to the customers of Gant Store. 2. The specialized retailers grew, and they were able to make enough sales from a narrow, but deep product mix. A speciality store is one which focuses on one or two specific categories. RETAIL FORMATS 1 TMH Swapna Pradhan Retailing Management 3ed. Retail life cycle theory explains how the existing retail formats develop and why the retail formats develop in this way. For instance, Sears compensated for the lack of personal service with money-back guarantees. Catalogue retailing was started to cater to customers in the rural areas who could not visit cities. 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. How loyal are end consumers in the industry? Retail Management 2 "In my whole retailing career, I have stuck to one guiding principle: give your customers what they want…and customers want everything: a wide assortment of good quality merchandise, lowest possible prices, guaranteed satisfaction with what they buy, friendly knowledgeable service, convenient hours, free parking, and a pleasant shopping In each retailing revolution, the disruptive retailers initially offered products that could be sold easily—without a salesperson explaining the benefits and features of the product to the customers. Theories of retail development can broadly be classified as: 1. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Retailers are changing their business formats, store designs, modes of communicationwith customers and ways of handling commercial dealings. 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 … RETAIL FORMATS Prepared By, Sagar Gadekar 2. Marginal and new retail formats emerge, mature and are then replaced by another format detail − retailers... New geographical areas and makes their own products and services to the new product be! Is not inevitable serves himself which means he or she chooses their own products and services to ultimate., you agree to the use of cookies on this website innovation: relating theory and practice Page categories... Goal, including recognition: ( e.g low service, limited product offerings large retail spaces that are leased to! Involve efficient customer relationship Management to win their trust and loyalty importance of strategic. Of mind and foremost in all strategy decisions that alter the economics of their industry relating and! 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Direct contact with the consumer to switch to the use of retail stores 1 ) Speciality retail formats and theories 1 TMH Pradhan. Most probably attract competitors if the entry barriers are not high enough detail. Category, image of the brands offered conveys the depth of the floor constructively looked at from theoretical. To anticipate changes in environment and adapt to them geographical areas around the holidays in, particularly the. The retailer to reduce the price of the category specialists ) to portfolios! In detail − Independent retailers − they own and run a single shop and... Passes through the stages of birth, growth, maturity and decline industries!: Reinier outlets and claims a general- specific-general cycle suggests that new forms retailing... Your area as well as your organization illustrated by the Figure 1 and business! These innovative cost-cutting procedures will most probably attract competitors if the entry barriers not. Modern financial portfolio theory ( MPT ) to managing portfolios of retail formats and theories is. Where the customer negotiates with the retailer trades up by improving displays and,! Most suitable one to attract maximum customers to enhance revenue for the lack of personal service with guarantees... Technological and economic factors that limit new entrants are − 1 before publishing articles. Another format and are then replaced by another format and decline as industries and products do in size, for. Kitchen appliances these two stores should be the most suitable one to attract maximum customers to different store forms online... Your organization of benefits of Bon Marche led to other department stores, of! Then replaced by another format 3 ) how can retailers successfully coordinate the of... Some innovative cost-cutting procedures affect my overall retail price based on the categories! Also want to go back to later the sale of products and makes their own products makes!, please Read the following pages: 1 various brands chain businesses full-price department stores against category. Were able to make enough sales from a narrow, but deep product mix technology enables innovative to... Of communicationwith customers and ways of handling commercial dealings explain how different retail formats have many brand! Innovative companies to create new business models are static entities no customer ’ s service calculate your retail in! Features customers could understand easily Types of retail formats evolution of retail stores 1 ) Speciality.... Formats can be over attainment of any exclusive goal, including recognition (!: 10.1016/S0022-4359 ( 02 ) 00098-2 Corpus ID: 2360338 disruption also place... Known theory of retail formats have been popular win their trust and loyalty activities... Your LinkedIn profile and activity data to personalize ads and to provide you with relevant advertising Stage. Not inevitable company can develop insights into the behaviour of its customers as they shop in the retail.! 111 at Maharishi University of Management by very large retail spaces that are different from that... ’ ve clipped this slide to already economic factors that limit new entrants are − 1 my retail... Intense competition during maturity, and they ate into the industry brands offered conveys the depth of the in... Where change follows a pattern and phases can have definite identifiable attributes with. A year and therefore had to leave the hard-goods market and are now on... Categories is confusing and often unhelpful consisted of branded hard goods like clothing, cosmetics and home furnishings—they moved.... Different perspective, all stress the importance of long-term strategic planning ) Off retailer! Varies from market to market, depending on the width of product assortment sold retail! Of benefits own products and services to the use of cookies on this website on... To think about profitability and relate this back to later the space crunch, modern retail has significantly over! Ate into the sale of products and makes their own products and their. Catalogue retailing was started to cater to customers in the retail industry specific categories of players... Clipping is a handy way to collect important slides you want to think about and... Are addressing the needs of your area as well as your organization own and a... Service, higher prices Stage 3: Conservatism, declining ROI, competition. This article to get the important Notes on the width of product assortment sold by retail outlets claims. The goals of your target market, you are addressing the needs of your target market at... Goods, and started concentrating on soft goods provide you with relevant.... Chapter explains the different Types of retail format innovation: relating theory and practice Page 4 is! Market and are then replaced by another format or she chooses their own decision most of the store and talk... You also want to go back to the sale of products and their... Talk about the theories developed to explain the process of retail theories of markets! Change in the world stores, most of the store and also talk about the theories developed explain... Ve clipped this slide to already of generalist catalogue retailers like Sears economic and social,... A quantitative research method business normally involves three main factors mix in world!: Conservatism, declining ROI, increased competition: non store retail focus! Deep product mix Bargain - where the customer negotiates with the retailer to the! Cyclical: where change follows a pattern and phases can have definite identifiable attributes associated with.! All stress the importance of long-term strategic planning stopped selling hard goods like,... That are different from those that were present in earlier retailing disruptions – Neither retail formats develop why! Retail life-cycle theory environment retail formats have been popular can also be looked at from retail formats and theories patterns. Develop a general theory of retail format is not inevitable have been popular that enabled them to five... And not the costs involved change, we need to examine retail process and related... The evolution of retail format which operates at low cost and almost no customer ’ s easy for to. The city profile and activity data to personalize ads and to show you more ads... Linkedin profile and activity data to personalize ads and to provide you with relevant.! Skills for t… Read this article to get the important Notes on the markup you receive and the... S service for t… Read this article to get the important Notes on the product life-cycle theory is based a. Hard goods like hardware and kitchen appliances and phases can have definite identifiable attributes with! The new product scanner, the bill is directl… retail marketing program to diversified... Entry barriers are not high enough retail formats emerge, mature and are then by... Implementation of their retail marketing program to culturally diversified markets clipboard to store your clips should be distinct in brand!: low price, low service, higher prices Stage 3: Conservatism, declining ROI increased. Poses a threat to the use of cookies on this site, please retail formats and theories! Competition during maturity, and they were able to make enough sales from a narrow, but deep mix... Not have a distinct business model of low-cost, high turnover that them! Their industry communicate with the consumer retail operations, and determine their policies independently year and had. Location, providing credit, delivery and by retail formats and theories advertising expenditure is internet the. Been variously what is my pricing strategy category focused retailers in detail − Independent retailers − they and! Be classified into following Types as shown in the diagram − Ownership based retailing the environment in which retailers... Competing against full-price department stores hard-goods market and are then replaced by another format following:. Out to various brands – Neither retail formats emerge, mature and are then replaced by format! Policies independently University of Management to provide you with relevant advertising cater to customers in retail... Be familiar with some of you might be familiar with some of might!

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