Retail Formats & Theories

RETAIL FORMATS & THEORIES EVOLUTION OF RETAIL FORMATS Social Development and Their Impact       

Over the ages development of trading is associated with social development Development of railroad and telegraph affected the growth of retail trade in the eighteenth century Orders could be confirmed by telegraph Wholesale business actually developed with the advent of the traveling salesman Success of the wholesale business led to the emergence of the department store The first department stores “Bon Marche” was set up in 1852 in Paris Bon Marche revolutionized retail at time by relying on volume rather than on high mark up.

RETAIL FORMATS & THEORIES EVOLUTION OF RETAIL FORMATS Social Development and Their Impact  

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Success of Bon Marche led to other department stores coming up in Europe and America The world witnessed the new form of retail when Montgomery Ward launched the first mail order catalogue in 1870 Most rural dwellers encountered mass merchandising in the form of mail order catalogues Success of mail order business led to the emergence of chain stores The first chain store was A&P (Atlantic & Pacific)-a grocery store founded in 1859 by George F Gilman Another important chain store was F W Woolworth, set up in 1879

RETAIL FORMATS & THEORIES EVOLUTION OF RETAIL FORMATS Industrial Revolution     

Industrial revolution necessitated dramatic change on the retail front The increase in urbanization meant that customers were clustered in smaller geographic areas Firstly this led to the emergence of shops to serve the needs of the locals The middle income customers increased and mass transportation became a way of life Secondly mass manufacturing made it possible to manufacture goods in very large quantities

RETAIL FORMATS & THEORIES EVOLUTION OF RETAIL FORMATS Industrial Revolution  This meant that a manufacturer could rarely sell the produce directly to consumers  Since quantities were high the number of customers required was also large  Thus longer distribution channels evolved as did mass merchandisers  Importance of food to the working class and the difficulty in procuring them led to the emergence of co-operative societies in the United Kingdom  By the year 1900, these societies had

RETAIL FORMATS & THEORIES EVOLUTION OF RETAIL FORMATS Emergence of Self service 

Retail evolved in many ways over the twentieth century

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

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

RETAIL FORMATS & THEORIES EVOLUTION OF RETAIL FORMATS Supermarkets 

1930’s saw the emergence of supermarkets

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

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It also saw the emergence of discount stores

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

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

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

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

RETAIL FORMATS & THEORIES EVOLUTION OF RETAIL FORMATS Supermarkets 

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

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

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

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

RETAIL FORMATS & THEORIES EVOLUTION OF RETAIL FORMATS Speciality Stores, Malls and Other Formats 

The needs of the customers grew and changed

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

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

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

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

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

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

RETAIL FORMATS & THEORIES EVOLUTION OF RETAIL FORMATS Rise of the Web  The world of retail changed yet again when in 1995, Amazon. COM opened its doors to a world wide market on the web 

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

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

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

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

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

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This has led to specialization and the emergence of specialists

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Supply chain complexities and increasing pressure on