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04 theories and classification of retailing
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04 theories and classification of retailing

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Presentation from the book of Swapna Pradhan

Presentation from the book of Swapna Pradhan

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  • 1. THEORIES OF RETAILLecture 4
  • 2. Classification of the Theories Environmental Theory  Where a change in retail is attributed to the change in the environment in which the retailers operate Cyclical Theory  Where change follows a pattern and phases can have definite identifiable attributes associated with them Conflictual Theory  The competition or conflict between two opposite types of retailers leads to a new format being developed
  • 3. Attributes of Environmental Theory Ability to adapt to change successfully is the core of the theory Works on Darwin’s theory of ‘Survival of the Fittest’ Retailers are Economic Entities Confront Environment made up of customers, competitors and changing technology Alters Profitability High Susceptibility to environmental change can spell death in the competition Identification of the Point of Precipice
  • 4. Attributes of Cyclical Theory Also known as the Wheel of Retailing From Innovators to Traditional Retailers to Mature Retailer Creates Cyclical Trends in due course of time Constant evolution of the retailers as they start adding products unto confused state thus entailing a negative cycle i.e. from Niche retailing to general retailing to moving away from the tenets of its own niche business (e.g. IBM)
  • 5. Attributes of Cyclical Theory
  • 6. Attributes of Conflict Theory Thesis: Individual Retailers as corner shops all across the country Antithesis: A position opposed to the thesis which challeges thesis i.e. department stores Synthesis: Blending of Thesis and Antithesis resulting into supermarkets, hypermarkets etc. Synthesis is the basis for the next evolution.
  • 7. Life Cycle in Retail
  • 8. Life Cycle in Retail
  • 9. Business Models in Retail Format adopted by retailers to reach the customer Challenges to Business Models  New Information  Communication Technologies  Shorter PLCs  Global markets  Tougher Competition What Business Model in retail means:  Product & Services offered by the retailer  Pricing policy  Reaching to the customer using various means of communication  Size, look and location of the store
  • 10. Critical Success Factors Trends in market positioning Competition The Organizational capabilities
  • 11. Classification of Retail Formats
  • 12. Classification Based on Ownership Independent Retailer (Standalone Kirana Stores)  Operated by single person  Passed on generation to generation  Ease of Entry and Exit  Good CRM  No Economies of scale  Limited Bargaining Power A Chain Retailer or a Corporate Retail Chain (Westside)  Two or more outlets under a common ownership  Similarity in merchandise, ambience, advertising and promotions  Good bargaining power  Cost effective advertising and promotions  No accommodation of local preferences  Loss of control on greater scale of operations
  • 13. Classification Based on Ownership Franchising  Product or trademark franchise (Archie’s)  A business format Franchise (McDonald’s, Domino’s)  Franchising can be for one store or multiple stores within the region Leased Departments (Stores for Perfumes, jewellery, watches)  Shop-in-shops  Good method of expanding product offerings  Presence in the form of small express outlets in malls, multiplexes, airports, railway stations Consumer Co-operatives (Apna Bazar, Khadi Gramodyog)  Essential commodities at reasonable prices  Encouraged in the interest of the common man  A significant employment provider
  • 14. Questions???