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. f) Super Centers Andg) Flea Market. 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. They priced their goods 20 per cent below the prices of the department stores. Internet retailing is the fourth disruption. These retail formats are characterized by very large retail spaces that are leased out to various brands. 4. 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. 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. Competing against full-price department stores is easier than competing against the category specialists. Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. This chapter explains the different types of retail store and also talk about the theories that explains the evolution of retail in the world. Sooner than later, these innovative cost-cutting procedures will most probably attract competitors if the entry barriers are not high enough. 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 … iv. The rivalry can be over attainment of any exclusive goal, including recognition:(e.g. CHAIN STORES: • Chain stores are retail outlets that share a brand and central management, and usually have standardized business methods and practices. 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. The choice of the brands offered conveys the depth of the category, image of the store and reflects the intended target market. Part 2 Retail Management 2. 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. 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. Replicating the pattern of department stores, most of the discounters had to leave the hard-goods market and are now concentrating on soft goods. Let us see these retailers in detail − Independent Retailers − They own and run a single shop, and determine their policies independently. A company can develop insights into the behaviour of its customers as they shop in the retail … There is no involvement of the retail store. See our Privacy Policy and User Agreement for details. environment, retail theories and retail change. 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. Cyclical- where change follows a pattern and phases can have definite identifiable attributes associated with them. Competition includes rivalry between entities such as organisms, individuals, economic and social groups, etc. The retail mix will differ based on the store and the type of product offered to the customer. Perspectives on Retail Format Innovation: Relating Theory and Practice By Jonathan Reynolds, Latchezar Hristov, Christine Cuthbertson and Elizabeth Howard Year: 2007 Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. 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. Barriers to the advancement of modern food retail formats: theory and measurement 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. Cyclical Theories Wheel of Retailing Stage 1:Low Price, Low Service, limited product offerings. Any new entrant poses a threat to the existing players as it can decrease the profit share of existing players. The empirical study, a customer satisfaction survey, is based on a quantitative research method. Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. 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. Prohibited Content 3. Image Guidelines 5. The aggregation of customers and products enabled departmental stores to charge lower prices. 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). 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. • In retail, dining and many service categories, chain businesses have come to dominate the market in many … Discounters followed a business model of low-cost, high turnover that enabled them to achieve five inventory turns at around 20 per cent. Perspectives on Retail Format Innovation: Relating Theory and Practice By Jonathan Reynolds, Latchezar Hristov, Christine Cuthbertson and Elizabeth Howard Year: 2007 customer satisfaction and at the end the basic theory of retail markets and how important it is to satisfy customers in the retail markets. 2. It can therefore be a useful tool in business settings that deal with fierce competitors. Malls did not have a distinct business model of its own—it simply aggregated category focused retailers in one premise. The retail life-cycle theory is based on the product life-cycle theory. ii. Site location was an important competitive advantage and was managed scientifically. A condition of Bargain - where the customer negotiates with the retailer to reduce the price of the merchandise. We apply modern financial portfolio theory (MPT) to managing portfolios of retail formats. Store Retailing by Store based Strategy General Merchandise. 3) How can retailers successfully coordinate the implementation of their retail marketing program to culturally diversified markets? Strong retail formats have become marginal and new retail formats have often emerged to dominate the retailing scene. 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. Retailers have to learn to anticipate changes in environment and adapt to them. See our User Agreement and Privacy Policy. They also accelerated their inventory turnover rates. In this type, the customer generally serves himself which means he or she chooses their own products and makes their own decision. TOS 7. View Notes - RETAIL FORMATS AND THEORIES from MBA 111 at Maharishi University of Management. Although each one adopts a different perspective, all stress the importance of long-term strategic planning. The nature of a retail format What is Retail Format Life Cycle Theory? d) Food Based Superstore.e) Off Price Retailer. Department stores—Retailing was originally dominated by local merchants who kept large inventories, extended credit and offered personalized advice. Modern retailers are adapting new technology for marketing, retail operations, and business transactions. The easier it is for a new company to enter the industry, fiercer is the competition. Since no single theory applies to every market and every situation, knowing something about each one may help you better understand … The third was the rise of discount department stores. The fourth retailing disruption of internet retailing faces technological and economic factors that are different from those that were present in earlier retailing disruptions. A speciality store is one which focuses on one or two specific categories. What is my pricing strategy? Cyclical: Where change follows a pattern and phases can have definite identifiable attributes associated with them. Do it today! DOI: 10.1016/S0022-4359(02)00098-2 Corpus ID: 2360338. 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. Retail can be a tough industry to work in, particularly around the holidays. 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. b) Convenience Store.c) Full Line Discount. Course input Part I Introduction to retail retail formats theories and models from ECONOMIC 101 at Open University Malaysia 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? Retailers are changing their business formats, store designs, modes of communication with customers and ways of handling commercial dealings. To develop a general theory of retail change, we need to examine retail process and define related concepts. Forward-thinking retailers are using social media to communicate with the consumers. Copyright 10. You also want to think about profitability and relate this back to the goals of your area as well as your organization. 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. Barriers to the advancement of modern food retail formats: theory and measurement 2. 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! RETAIL FORMATS 1 TMH Swapna Pradhan Retailing Management 3ed. The retail life-cycle theory is based on the product life-cycle theory. 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. If you continue browsing the site, you agree to the use of cookies on this website. Retail Marketing strategy in the convenience store market. The second was the mail-order catalogue. The movement towards soft goods is more precarious. 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 … Discussing and evaluating your retail mix in the organization offers a number of benefits. Stage 2: Improve merchandise offering, better service, higher prices Stage 3: Conservatism, declining ROI, increased competition. For instance, Sears compensated for the lack of personal service with money-back guarantees. Now customize the name of a clipboard to store your clips. You must make sure you calculate your retail price based on the markup you receive and not the costs involved. The objective of MPT is to maximize overall portfolio return for a given level of portfolio risk. 3. 4. 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. The factors that limit new entrants are − 1. 10 Types of Retail Stores 1) Speciality Store. Content Guidelines 2. 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. Eventually the retailer trades up by improving displays and location, providing credit, delivery and by raising advertising expenditure. Say, for example, that you have a retail store that sells fitness equipment, and the people in the company that spend the most time with your customers are the delivery and install team. Such self-selling products were simple, branded products whose benefits and features customers could understand easily. Apart from opening online retail store, the retailers take t… Customer refers the consumer who … Retailers use this space to encourage impulse purchases of complementary merchandise while customers wait to pay. Explore Mobin ul Haque’s clipboard sdn on SlideShare, or create your own and start clipping your favorite slides. i. Internet retailing the fourth retailing disruption is internet retailing. They have a very narrow product line. This Trend Briefing has many hands on it. 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 … iii. 4. The pattern of evolution of internet retailing can be gauged from the past patterns in retailing disruptions. Retail Theories and Formats Retail Institutions by Store-Based Strategy Mix Theories of Retail development Theories have been propounded to explain such developments Traditional retailers (mom-and-pop stores) existing with malls, departmental stores and large price format stores. 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. It’s easy for employees to become demotivated and for standards to begin slipping. Read this article to get the important notes on the Classification of Retail Formats ! Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. At different times, different retail formats have been popular. Three retailing theories explain how different retail formats emerge, mature and are then replaced by another format. 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. Non Store Based Classification: Non Store retail organizations focus on establishing direct contact with the consumer. How difficult it is to access distribution channel? They have a very narrow product line. After two years, Prolific: A Podcast Journey Through Rhetoric, Composition, and Technical Communication makes its triumphant return—and with a new format! • These characteristics also apply to chain restaurants and some service-oriented chain businesses. The theories developed to explain the process of retail development revolve around… RETAIL FORMATS AND THEORIES GROUP 1: NIDHI GARG (07) JASMEET BEDI VAIBHAV GUPTA Evolution of Retail The three theories explain the evolution of retail formats, but the decline and demise of a retail format is not inevitable. 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. TYPES OF RETAIL FORMATS 1. How large is the amount of capital required to enter into the industry? 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. 2. No single theory can be universally applicable or acceptable. These huge retail formats have many single brand stores in many of the product categories. 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. There is intense competition during maturity, and a new retail format may start replacing it during its decline stage. A new retail format passes through the stages of birth, growth, maturity and decline as industries and products do. A number of theories surrounding retail change each attempt to explain how retail businesses grow and develop throughout the retail life cycle. … 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. Environmental- where a change in retail is attributed to the change in the environment in which the retailers operate. They sell a wide range of products of well-known brands, housewares, appliances, sporting goods, house furnishing, toy and automotive services, and clothing, etc. Clipping is a handy way to collect important slides you want to go back to later. The use of retail theories vary over time for a number or reasons. 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. Theories of Retailing: How different retail formats Emerge, Mature and are then Replaced By another Format? Retail life cycle theory explains how the existing retail formats develop and why the retail formats develop in this way. 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. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Another disruption also took place at around the same time. Food Retailers.b) Departmental stores. 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Fourth retailing disruption of internet retailing offerings and operations anyone, at time! Stage 3: Conservatism, declining ROI, increased competition and define related concepts are out! Of mind and foremost in all strategy decisions ( e.g strategy decisions economics of their retail program. Forward-Thinking retailers are using social media to communicate with the internet ones, would! Marginal and new retail format is not inevitable with relevant advertising this website are concentrating!

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