The Mechanisms for the Emergence and Evolution of Retail Formats

The Mechanisms for the Emergence and Evolution of Retail Formats

Barbara Borusiak (Poznan University of Economics, Poland)
Copyright: © 2014 |Pages: 19
DOI: 10.4018/978-1-4666-6074-8.ch007
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Abstract

The main aim of this chapter is to explain the mechanisms for the emergence of selected innovative formats on the basis of the existing format change theories. The chapter comprises three main parts. First, the nature of a retail format is explored and the classification of retail formats is presented. Second, four groups of theories (cyclical, conflict, environmental, and integrated theories) explaining the emergence and evolution of retail formats are analysed. Third, retail formats theories are applied in explaining the emergence of two formats: pop-up store and m-commerce. The approach involves a review of literature and the analysis of some empirical data concerning the structure of the retail trade turnover in the chosen countries.
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Introduction

A retail format is one of the fundamental concepts in the retail sector, being a synthesis of the marketing strategy of a commercial company. The choice of retail format determines the choice of enterprise resources which are necessary to perform the sales function. Thus the decision regarding the choice of format by means of which a company operates on the market is one of the fundamental decisions that a retailer has to make, and it has far-reaching consequences (Yu & Ramanathan, 2008). This applies particularly to store-based retailing. The resources necessary to run them are capital-intensive (Dragun, 2004) and significantly specific in the context of the types of asset specificity distinguished by Williamson (1991). This means that the growing dynamics of market phenomena and the evolution of economic structures increases the level of risk for retailers connected with their choice of retail format. The retail formats which exist today are characterised by unprecedented variability: new formats are appearing, existing formats are evolving, and their life-cycles are becoming significantly shorter (Davidson et al., 1976; McGoldrick & Davies, 1995).

The aim of this chapter is to explain the mechanisms for the emergence of innovative formats on the basis of existing theories of format change. Therefore, the chapter presents the conceptualisation of a retail format, a critical analysis of the four groups of theories relating to format change (cyclical, conflict, environmental and integrated theories), as well as the mechanisms for the emergence of new formats based on the examples of pop-up stores and m-commerce. In order to explain these phenomena an integrated theoretical approach has been adopted. The chapter also indicates some probable new fields of research and new formats which are likely to appear in the retail trade.

Key Terms in this Chapter

Conflict Theories: According to them, conflict between existing and new formats is the driving force behind changes in the retail sector.

M-commerce: An Internet retailing format based on the possibility of making transactions via mobile devices such as smartphones and personal data assistants.

Pop-Up Store: A temporary retail outlet which sells short lines of goods and/or unique products.

Retail Accordion Theory: In the subsequent stages of the development of retail sector the formats which emerge and gain an advantage are those which alternate between specialisation and universalisation of their product and service structure.

Retailer’s Product: A service which to consumers offers access to products which originate outside the trade sector, and to suppliers – access to the consumer market. A retailer's product, when considered structurally, has a very complex nature: it is defined by a number of components such as the form of the product assortment (in terms of dimensions such as depth, width and the criteria for its creation); and the conditions in which it is offered (location, time, presentation, range of services, price level, forms of payment, how customers receive goods).

Retail Format Life Cycle Theory: Refers to the succession of identifiable stages a retail format goes through over time: innovation, growth, maturity and decline.

Wheel of Retailing Theory: Concept explaining the mechanisms for the emergence and changes to retail formats. It suggests that new retail formats often start as discount store and then improve their service to get better position on the market.

Adaptation Theory: Assumes that changes in the business environment are reflected in internal changes. The main assertion of this theory states that all the changes which occur in the market environment (macro- and micro-) of a company are reflected in the existing structure of the retail trade.

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