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
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
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)
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.
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
Critical Success Factors Trends in market positioning Competition The Organizational capabilities
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
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