retail formats & theories

RETAIL FORMATS & THEORIESRETAIL FORMATS & THEORIES

EVOLUTION OF RETAIL FORMATSEVOLUTION OF RETAIL FORMATS

Social Development and Their ImpactSocial Development and Their Impact

Over the ages development of trading is associated with Over the ages development of trading is associated with social development social development

Development of railroad and telegraph affected the Development of railroad and telegraph affected the growth of retail trade in the eighteenth centurygrowth of retail trade in the eighteenth century

Orders could be confirmed by telegraphOrders could be confirmed by telegraph Wholesale business actually developed with the advent Wholesale business actually developed with the advent

of the traveling salesmanof the traveling salesman Success of the wholesale business led to the emergence Success of the wholesale business led to the emergence

of the department storeof the department store The first department stores “Bon Marche” was set up in The first department stores “Bon Marche” was set up in

1852 in Paris1852 in Paris Bon Marche revolutionized retail at time by relying on Bon Marche revolutionized retail at time by relying on

volume rather than on high mark up.volume rather than on high mark up.



Social Development and Their ImpactSocial Development and Their Impact

Success of Bon Marche led to other department stores Success of Bon Marche led to other department stores coming up in Europe and Americacoming up in Europe and America

The world witnessed the new form of retail when The world witnessed the new form of retail when Montgomery Ward launched the first mail order Montgomery Ward launched the first mail order catalogue in 1870catalogue in 1870

Most rural dwellers encountered mass merchandising in Most rural dwellers encountered mass merchandising in the form of mail order cataloguesthe form of mail order catalogues

Success of mail order business led to the emergence of Success of mail order business led to the emergence of chain storeschain stores

The first chain store was A&P (Atlantic & Pacific)-a The first chain store was A&P (Atlantic & Pacific)-a grocery store founded in 1859 by George F Gilmangrocery store founded in 1859 by George F Gilman

Another important chain store was F W Woolworth, set Another important chain store was F W Woolworth, set up in 1879up in 1879



Industrial RevolutionIndustrial Revolution

Industrial revolution necessitated dramatic change Industrial revolution necessitated dramatic change on the retail fronton the retail front

The increase in urbanization meant that customers The increase in urbanization meant that customers were clustered in smaller geographic areas were clustered in smaller geographic areas

Firstly this led to the emergence of shops to serve Firstly this led to the emergence of shops to serve the needs of the localsthe needs of the locals

The middle income customers increased and mass The middle income customers increased and mass transportation became a way of life transportation became a way of life

Secondly mass manufacturing made it possible to Secondly mass manufacturing made it possible to manufacture goods in very large quantitiesmanufacture goods in very large quantities



Industrial RevolutionIndustrial Revolution This meant that a manufacturer could rarely This meant that a manufacturer could rarely

sell the produce directly to consumerssell the produce directly to consumers Since quantities were high the number of Since quantities were high the number of

customers required was also largecustomers required was also large Thus longer distribution channels evolved as Thus longer distribution channels evolved as

did mass merchandisersdid mass merchandisers Importance of food to the working class and Importance of food to the working class and

the difficulty in procuring them led to the the difficulty in procuring them led to the emergence of co-operative societies in the emergence of co-operative societies in the United KingdomUnited Kingdom

By the year 1900, these societies had By the year 1900, these societies had achieved six to seven percent of the retail achieved six to seven percent of the retail sales in the countrysales in the country



Emergence of Self serviceEmergence of Self service

Retail evolved in many ways over the twentieth Retail evolved in many ways over the twentieth centurycentury

Self service as a concept started in 1916 when Self service as a concept started in 1916 when Clarence Saunders started their first self-service Clarence Saunders started their first self-service store “Piggly Wiggly” in Memphis, Tennesseestore “Piggly Wiggly” in Memphis, Tennessee

The concept of self-service helped the retailer The concept of self-service helped the retailer reduce costs, as fewer workers were required to reduce costs, as fewer workers were required to service the customersservice the customers



SupermarketsSupermarkets

1930’s saw the emergence of supermarkets1930’s saw the emergence of supermarkets

The end of World War II reordered the retail scene – though The end of World War II reordered the retail scene – though the retail boom continuedthe retail boom continued

It also saw the emergence of discount storesIt also saw the emergence of discount stores

These stores appeared o meet the needs of the blue-collared These stores appeared o meet the needs of the blue-collared workersworkers

The first hypermarket that as developed was Carrefour in The first hypermarket that as developed was Carrefour in France, in 1963France, in 1963

New formats gave an opportunity to pick up products, New formats gave an opportunity to pick up products, compare with others and then taking a decision of buyingcompare with others and then taking a decision of buying

Providing all information regarding price, weight, date of Providing all information regarding price, weight, date of manufacture and expiry on the product itself became manufacture and expiry on the product itself became necessary to aid decision makingnecessary to aid decision making



SupermarketsSupermarkets

The mass merchandisers worked on three principles, which The mass merchandisers worked on three principles, which have now become the fundamental principles of modern have now become the fundamental principles of modern sellingselling

1.1. They fixed product prices before sale, and customers bought They fixed product prices before sale, and customers bought at the set pricesat the set prices

2.2. Prices were determined on the basis of stock turns and the Prices were determined on the basis of stock turns and the amount of profit that would be generated from the productamount of profit that would be generated from the product

3.3. They departmentalized the products. Accounting systems They departmentalized the products. Accounting systems were devised to determine the contribution of various were devised to determine the contribution of various departments. This enabled them to drop unprofitable goodsdepartments. This enabled them to drop unprofitable goods



Speciality Stores, Malls and Other FormatsSpeciality Stores, Malls and Other Formats

The needs of the customers grew and changedThe needs of the customers grew and changed

This ensured the emergence of commodity specialized mass This ensured the emergence of commodity specialized mass merchandisers in 1970smerchandisers in 1970s

Seventies also saw the use of technology by way of introduction of Seventies also saw the use of technology by way of introduction of the “barcode”the “barcode”

Speciality chains developed I the 1980s as did the large shopping Speciality chains developed I the 1980s as did the large shopping mallsmalls

Shopping malls were created o provide for all of he consumer’s Shopping malls were created o provide for all of he consumer’s needs in a single self contained shopping areaneeds in a single self contained shopping area

Visitors spend an average of three hours in a mall, which is three Visitors spend an average of three hours in a mall, which is three times the national average for shopping mallstimes the national average for shopping malls

The Mall of America is one of the most visited destinations in USA The Mall of America is one of the most visited destinations in USA attracting more visitors annually than Disney World, Grace Land and attracting more visitors annually than Disney World, Grace Land and the Grand canyon combinedthe Grand canyon combined



Rise of the WebRise of the Web The world of retail changed yet again when in 1995, Amazon. The world of retail changed yet again when in 1995, Amazon.

COM opened its doors to a world wide market on the webCOM opened its doors to a world wide market on the web

Evolution of retail formats worldwide has been largely Evolution of retail formats worldwide has been largely influenced by a constantly changing social and economic influenced by a constantly changing social and economic landscapelandscape

One of the main reasons for new formats emerging is the One of the main reasons for new formats emerging is the consumer himselfconsumer himself

Today's consumer is more demanding and is focused on what Today's consumer is more demanding and is focused on what he wants he wants

Retailer on the other hand has been influenced by Retailer on the other hand has been influenced by availability of real estate and its increasing pricesavailability of real estate and its increasing prices

He is faced with the challenge of adding on new services and He is faced with the challenge of adding on new services and the need for differentiationthe need for differentiation

This has led to specialization and the emergence of This has led to specialization and the emergence of specialistsspecialists

Supply chain complexities and increasing pressure on Supply chain complexities and increasing pressure on margins has also forced the retailers to look at new formatsmargins has also forced the retailers to look at new formats

retail formats & theories

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