2. 4 STAGES OF RETAIL
LIFE CYCLE
• INNOVATION OR EMERGING
• The emerging stage in the retailing lifecycle is when the company is new in the
market; it focuses on developing and innovating new products or services in the
market in order to marginalize opportunities. Companies in the emerging stage
are in the initial phase of the retailing lifecycle, where the profitability would be
low due to the high expenses. The customers would have limited familiarity
with the brand because of being new in the market, but it has a great growth
opportunity.
• The innovation of the retailer is in various ways like logistic system, business
hours, sales promotion, store design, store selection, sales, customer service,
and product mix. The emergence and innovation could either become the
target of hit or receive retaliation blows from the competitors. It is the stage
where the company would have a small impact on the prevailing competitive
structure due to its limited market share.
• For instance, Amazon Go is the latest example of Amazon’s new form of the
grocery store. It is a new type of grocery store of its kind that Amazon has
launched; the customers don’t have to wait in line for checkouts. They have
speed-up the process by removing the convention registry pay station.
3. GROWTH
• Growth is a very important stage in the retailing lifecycle; where the company
has developed familiarity with the customers. It has earned a place in the
market, where the customers would appreciate and trust them. The company
has recognized its competitors in the market and developed a forceful
reputation in the industry. The growth means loyal customers, high user
engagement, new investment opportunities for products or services, and
increased profitability.
• The customers of the already established companies with no innovation would
buy the products from the innovative company. Those established companies
would face the challenge of losing customers and applying the new format and
method over the existing one.
•
4. • In the later stage of the growth, the competitive companies that have
successfully applied the new method and format would start emerging
in the market. Now, there is competition among different types of new
formats in the market, and those with limited competence would leave.
• The remaining companies would take action in the form of improving
shopping facilities, expanding portfolios, and high service standards.
Along with the direct production cost, the indirect promotion would
continue to increase and even becomes higher than the sale.
5. MATURITY
• Maturity is the stage in the retailing lifecycle where the company has won the
growth stage, and it has now maintained its market share. The company can no
longer amplify its database of customers and market share. The new format
and method won’t give the company any competitive edge over others and the
profitability would start declining. In order to deal with the competition, the
company would lower the price to stabilize its position.
• In such a situation, the chain retailers should close down the non-performing
stores and open up new shops in good locations and diversify their market
share. Even, you can improve the retail format in the maturity stage and return
to the growth stage of the retailing lifecycle. Many chain stores in the US have
been in the growth and maturity stage since WWII. It is because they have
reformed and changed over time.
6. DECLINE
• The declining stage in the retailing lifecycle is when your format becomes
conventional, the introduction of the new format in the market, and the change
in customers’ shopping preferences. The market size of the traditional format
(that was once new) would start decreasing along with its sales and
profitability. Some companies plan to leave the market at this stage.
• However, the competition among different retail formats is not the same and it
would become highly intense. The profitability of the traditional format
companies would start decreasing and they have to fight over the price. The
innovative format would have a competitive edge over others in terms of
operating style, product quality, design, and service. The situation in the
declining and innovation is the same in terms of traditional formats.
7. EXAMPLE RETAIL
LIFE CYCLE
• BLOCKBUSTER
• Blockbuster was a rental movie store company, and the brand opened up
approximately more than 8000 chain stores across the US in 1985. It was a new
way of watching movies in your house rather than going to the cinema.
However, the company opened up more than 3400 stores by the end of 1993.
• 10 years later in 2003, Blockbuster was in the maturity stage with more than
9000 retail stores across the US. It was the same time for the foundation of
Netflix and it was using internet technology. In 2010, Blockbuster filed for
bankruptcy, and it shut down all of its stores in 2013. In short, YouTube and
Netflix became the cause of death of Blockbuster Company.
