Theories of Retail Development
Theories of Development
In retail management, theories can be broadly classified as follows −
Environmental Theory (Natural Selection)
It is based on Darwin’s theory of survival: “The fittest would survive the longest”. The retail sector comprises consumers, manufacturers, marketers, suppliers, and changing technology. Those retailers that adapt to changes in demography, technology, consumer preferences, and legal changes are more likely to survive for long and prosper.
McNair represents this theory by Wheel of Retailing that explains the changes taking place in retailing.
According to him, the new entrant retailers are often into low cost, low profit margin, low structure retail business, which offers some unique, real benefit to the consumers. Over some time they establish themselves well, prosper, and expand their products with more expensive facilities, without losing focus on their core values.
This creates a place for yet new entrants in the market thereby creating threat of competition, substitution, and rivalry.
Conflict Theories (Evolution through Dialectic Process)
Within a broad retail category, there is always a conflict between the retailing of similar formats, which leads to the development of new formats. Thus, the new retail formats are evolved through dialectic process of blending two formats.
Say, Thesis is a single retailer around the corner of the residential area. Antithesis is a large departmental store nearby the same residential area, which develops over some time in opposition to Thesis. Antithesis poses a challenge to Thesis. When there is conflict between Thesis and Antithesis, a new format of retail is born.