Introduction Growth Maturity DeclineS
ales/market shareTimeMealsolution centresInternet groceryClothing superstoresDIY warehousesFurniture hypermarketsDIYsuperstoresVarietystoresCitycentre department storesGrocerysuperstores Warehouse clubs778 The Marketing Book
Theories of retail change
Given the dynamic nature of retailing, several
theories have developed to explain aspects of
evolution and change. Two of the most influen-
tial are the ‘wheel of retailing’ and the ‘retail life
cycle’. These and other theories of retail change
are discussed in detail by Brown (1987).
The wheel of retailing suggests that new
types of retailers tend to enter as low-price,
low-margin, low-status operators. Over time,
they acquire more elaborate facilities, incur
higher operating costs and cease to be as price
competitive. Eventually, they mature as higher-
cost, higher-price retailers, vulnerable to newer
types who enter at the first phase of ‘the wheel’.
Many examples can be found of retail types and
individual companies that have evolved in this
way, including department stores and super-
markets. The process has been ascribed to
various influences, including a shift away from
the aggressive management style of the foun-
ders, the attraction of the up-market segments,
a preference amongst leading retailers for non-
price forms of competition, and possible ‘mis-
guidance’ by suppliers of elaborate equipment
and fitments. It is also possible that the boom–
recession cycles within most advanced econo-
mies contribute to the process, encouraging
trading-up during the boom years and encour-
aging new forms of price competition during
recessions.
The retail life cycle concept derives from
the better known product life cycle. Retail
institutions and formats appear to be moving
from innovation to maturity with increasing
speed. Davidson et al. (1976) estimated that the
city centre department store took some 80 years
to mature, whereas the home improvement
centre in the USA took only 15 years. More
recently, Burns et al. (1997) observed retail
concepts that had peaked after just eight years.
Figure 30.2 illustrates the four phases of the life
cycle, with examples of formats generally
regarded as being at each stage. Clearly, there
are many exceptions to these generalizations, as
well as international differences (Eurostat,
1997).