THEORIES OF RETAIL DEVELOPMENT KRITHIKA G.K. Asst. Professor Fashion Mgt. Studies

No single theory can be universally applicable & acceptable Theories very from market to market – based on maturity & socio-economic conditions Explain process of –retail development, –importance of competitive pressures, –investments in organizational capabilities & –creation of sustainable competitive advantage etc.

Theories of Retail Development: Environment Theory Cyclical Theory Conflict Theory

1. Environmental Theory Darwinian approach “survival of the fittest” Change in retail is attributed to change in the environment in which retailers operate Core of the theory - ability to adapt to change successfully

2. Cyclical Theory “The Wheel of Retailing” Theory – by McNair Retail innovators (RI)– low-price operators, low cost structure, low profit margin requirements, offer real advantages, take customers away from competition RI prosper – deve. & estb. Business, lose focus on wht. was imp. earlier (trade-up), give space for new entrants to repeat process (discounters & low cost structures). Theory does not explain deve. Of retail of all markets.

The Wheel of Retailing Source: Entry Phase Vulnerability Phase Trading-up Phase

3. Conflict Theory Exists b/w operators of similar formats or broad retail categories Retail innovation leads to development of more formats & does not reduce no. of formats available to consumer. Retail - dialectic process – blend two opposites – develop new format Thesis – Individual retailers Antithesis – Department stores (opposite of thesis) Synthesis – Supermarkets & Hypermarkets (blending of thesis & antithesis)

Theory of Retail Conflict Discount StoreDepartment Store Discount Department Store