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THEORIES OF RETAIL DEVELOPMENT

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,

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THEORIES OF RETAIL DEVELOPMENT

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

  2. 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.

  3. Theories of Retail Development: • Environment Theory • Cyclical Theory • Conflict Theory

  4. 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

  5. 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.

  6. The Wheel of Retailing Entry Phase Vulnerability Phase Trading-up Phase Source: http://www.emeraldinsight.com/fig/0701030703001.png

  7. 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)

  8. Discount Store Department Store Discount Department Store Theory of Retail Conflict

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