If you continue browsing the site, you agree to the use of cookies on this website. Read this article to get the important notes on the Classification of Retail Formats ! Report a Violation, Retail: Notes on the Classification of Retail Formats, Retail Stores: 6 District Types of Retail Store you can open depending upon Target Market. Barriers to the advancement of modern food retail formats: theory and measurement Clipping is a handy way to collect important slides you want to go back to later. Competitive Pricing. First, you are addressing the needs of your target market. Barriers to the advancement of modern food retail formats: theory and measurement Do it today! The third was the rise of discount department stores. RETAIL FORMATS AND THEORIES GROUP 1: NIDHI GARG (07) JASMEET BEDI VAIBHAV GUPTA Evolution of Retail Replicating the pattern of department stores, most of the discounters had to leave the hard-goods market and are now concentrating on soft goods. Modern retailers are adapting new technology for marketing, retail operations, and business transactions. IT TAKES A TEAM. Success of Bon Marche led to other department stores coming up in Europe and America 3. i. What you’ll learn to do: Analyze the evolution of the retail industry. The use of retail theories vary over time for a number or reasons. 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… 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. Competitive Pricing. A disruption started when generalist stores and catalogues were successful, and then specialized retailers took over the generalist stores and catalogues. Sooner than later, these innovative cost-cutting procedures will most probably attract competitors if the entry barriers are not high enough. The aggregation of customers and products enabled departmental stores to charge lower prices. The movement towards soft goods is more precarious. Through a barcode scanner, the bill is directl… But if internet retailers also operate physical stores to work in conjunction with the internet ones, it would work. Retailers have to learn to anticipate changes in environment and adapt to them. This Trend Briefing has many hands on it. ii. 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. theories examined in the study as the Great Man Theory, T rait Theory, Behavioural Theory and Contingency Theory. 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. The second was the mail-order catalogue. They have a very narrow product line. Retail Formats can be classified into the following categories: Store Based: Store based formats can be further classified into two formats based on the basis of Ownership or Merchandise offered. The stores were located at the busiest part of the city. 2. A new retail format passes through the stages of birth, growth, maturity and decline as industries and products do. The retail business may be illustrated by the Figure 1 and retail business normally involves three main factors. Cyclical- where change follows a pattern and phases can have definite identifiable attributes associated with them. 3. How difficult it is to access distribution channel? The theories developed to explain the process of retail development revolve around… Theories of Retailing: How different retail formats Emerge, Mature and are then Replaced By another Format? This theory, described by McNair II, helps us understand retail changes. The factors that limit new entrants are − 1. The rivalry can be over attainment of any exclusive goal, including recognition:(e.g. For instance, Sears compensated for the lack of personal service with money-back guarantees. What is my markup strategy and how does that affect my overall retail price? 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. A disruptive technology enables innovative companies to create new business models that alter the economics of their industry. The cycle begins by retailers selling a wide assortment of goods followed by more focused range and vice-versa. Food Retailers.b) Departmental stores. 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. In retailing, the first disruption came in the form of department stores. However, the advantage of a speciality store is that you will find many things in that store related to that speciality which you … They have a very narrow product line. Forward-thinking retailers are using social media to communicate with the consumers. These retail formats are characterized by very large retail spaces that are leased out to various brands. Internet retailing offers immense price flexibility. Competing against full-price department stores is easier than competing against the category specialists. Three retailing theories explain how different retail formats emerge, mature and are then replaced by another format. See our Privacy Policy and User Agreement for details. Companies adopt several methods for this. The easier it is for a new company to enter the industry, fiercer is the competition. 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 With the space crunch, modern retailers have learnt how to use every inch of the floor constructively. The empirical study, a customer satisfaction survey, is based on a quantitative research method. … 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. Any new entrant poses a threat to the existing players as it can decrease the profit share of existing players. 5. Perspectives on Retail Format Innovation: Relating Theory and Practice By Jonathan Reynolds, Latchezar Hristov, Christine Cuthbertson and Elizabeth Howard Year: 2007 You must make sure you calculate your retail price based on the markup you receive and not the costs involved. Catalogue retailing was started to cater to customers in the rural areas who could not visit cities. 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. Retail Marketing strategy in the convenience store market. Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. 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. 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 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. The retailing formats can be classified into following types as shown in the diagram − Ownership Based Retailing. 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. The theory suggests that new forms of retailing appear as price cutting, low cost and narrow profit margin operations. 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 application of each theory varies from market to market, depending on the level of maturity and the socio-economic conditions in that market. Wal-Mart, for example, has been variously A number of theories surrounding retail change each attempt to explain how retail businesses grow and develop throughout the retail life cycle. The three theories explain the evolution of retail formats, but the decline and demise of a retail format is not inevitable. success of bon marche led to other department stores coming up … It includes research design and an evaluation of the answers, which were given as questionnaires, handed out to the customers of Gant Store. Since no single theory applies to every market and every situation, knowing something about each one may help you better understand … The nature of a retail format Eventually the retailer trades up by improving displays and location, providing credit, delivery and by raising advertising expenditure. The low prices are usually the result of some innovative cost-cutting procedures. A condition of Bargain - where the customer negotiates with the retailer to reduce the price of the merchandise. 10 Types of Retail Stores 1) Speciality Store. The retail mix should be the most suitable one to attract maximum customers to enhance revenue for the firm. However, the advantage of a speciality store is that you will find many things in that store related to that speciality which you … Plagiarism Prevention 4. 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). These stores are large in size, open for public and advertised heavily. Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. 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. 3) How can retailers successfully coordinate the implementation of their retail marketing program to culturally diversified markets? Store Retailing by Store based Strategy General Merchandise. And they ate into the sale of generalist catalogue retailers like Sears. They sell a wide range of products of well-known brands, housewares, appliances, sporting goods, house furnishing, toy and automotive services, and clothing, etc. Stage 2: Improve merchandise offering, better service, higher prices Stage 3: Conservatism, declining ROI, increased competition. Attracting customers involve efficient customer relationship management to win their trust and loyalty. A speciality store is one which focuses on one or two specific categories. Since its birth, modern retail has significantly changed over time. 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 … 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. 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. 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. We apply modern financial portfolio theory (MPT) to managing portfolios of retail formats. 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 … – Neither retail formats nor business models are static entities. The department store stopped selling hard goods, and started concentrating on soft goods like clothing, cosmetics and home furnishings—they moved upmarket. However, some of you might be familiar with some of the changes in the 1970s and the 1980s. 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 … 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. Competition includes rivalry between entities such as organisms, individuals, economic and social groups, etc. Retailers are changing their business formats, store designs, modes of communication with customers and ways of handling commercial dealings. And good luck :) About The Author: Reinier. Cyclical Theories Wheel of Retailing Stage 1:Low Price, Low Service, limited product offerings. In essence it forces the retailer to make the customer top of mind and foremost in all strategy decisions. 10 Types of Retail Stores 1) Speciality Store. Theories of retail development can broadly be classified as: 1. Although each one adopts a different perspective, all stress the importance of long-term strategic planning. Forward-thinking retailers are using social media to communicate with the consumers. RETAIL FORMATS AND THEORIES 2. Discount house is a type of retail format which operates at low cost and almost no customer’s service. e) Combination Store.f) Variety Store. Before publishing your articles on this site, please read the following pages: 1. How large is the amount of capital required to enter into the industry? Strong retail formats have become marginal and new retail formats have often emerged to dominate the retailing scene. The most well known theory of retail evolution is The Wheel of Retailing theory. 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. Apart from opening online retail store, the retailers take t… Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. These two stores should be distinct in their brand name, offerings and operations. 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. Internet per se is not a good medium to sell soft goods. Course input Part I Introduction to retail retail formats theories and models from ECONOMIC 101 at Open University Malaysia b) Convenience Store.c) Full Line Discount. Non Store Based Classification: Non Store retail organizations focus on establishing direct contact with the consumer. DOI: 10.1016/S0022-4359(02)00098-2 Corpus ID: 2360338. • These characteristics also apply to chain restaurants and some service-oriented chain businesses. Definition of Retail Format Life Cycle Theory: Refers to the succession of identifiable stages a retail format goes through over time: innovation, growth, maturity and decline. The choice of the brands offered conveys the depth of the category, image of the store and reflects the intended target market. About 80 per cent of its product portfolio consisted of branded hard goods like hardware and kitchen appliances. 1. Image Courtesy : loreal-dam-front-resources-corp-en-cdn.brainsonic.com/to-light.html. Discounters followed a business model of low-cost, high turnover that enabled them to achieve five inventory turns at around 20 per cent. Internet retailing is the fourth disruption. Retailers develop new formats, manage existing formats and discard formats over time, as a consequence of many contributory factors in the retail environment. 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. customer satisfaction and at the end the basic theory of retail markets and how important it is to satisfy customers in the retail markets. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. View RETAILFORMATS.ppt from MBA 771 at GITAM University Hyderabad Campus. After two years, Prolific: A Podcast Journey Through Rhetoric, Composition, and Technical Communication makes its triumphant return—and with a new format! iii. The retail life-cycle theory is based on the product life-cycle theory. 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. At different times, different retail formats have been popular. There is no involvement of the retail store. This chapter explains the different types of retail store and also talk about the theories that explains the evolution of retail in the world. Perspectives on retail format innovation: relating theory and practice Page 4 categories is confusing and often unhelpful. Looks like you’ve clipped this slide to already. Let us see these retailers in detail − Independent Retailers − They own and run a single shop, and determine their policies independently. Retail can be a tough industry to work in, particularly around the holidays. How hard it is to acquire new skills for t… 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 … iv. You can change your ad preferences anytime. A condition of Bargain - where the customer negotiates with the retailer to reduce the price of the merchandise. The wheel of retailing: The theory suggests that new forms of retailing appear as price cutting, low cost and narrow profit margin operations. 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. Classification of Retailing Formats. Cyclical: Where change follows a pattern and phases can have definite identifiable attributes associated with them. Three retailing theories explain how different retail formats emerge, mature and are then replaced by another format. TYPES OF RETAIL FORMATS 1. Retail formats 1. In this type, the customer generally serves himself which means he or she chooses their own products and makes their own decision. The retail mix will differ based on the store and the type of product offered to the customer. 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. There is intense competition during maturity, and a new retail format may start replacing it during its decline stage. Privacy Policy 8. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. Site location was an important competitive advantage and was managed scientifically. Retail marketing theories focus on attracting customers to different store forms and online sales. It can therefore be a useful tool in business settings that deal with fierce competitors. CHAIN STORES: • Chain stores are retail outlets that share a brand and central management, and usually have standardized business methods and practices. 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