Theories of Retail Change

Numerous explanations surrounding the manner in which retail companies expand and succeed have been discussed throughout the decades. Such theories of retail change have attempted to use past experiences of retail chains to improve current business. There are essentially three categories of retail change theory: cyclical theory, environmental theory and conflict theory.

Cyclical theory basically explains the different phases in a company. According to this theory, change follows a pattern and all phases have identifiable attributes associated with them. There are three primary components associated with the theory: wheel of retailing, retail life cycle and retail accordion. While wheel of retailing refers to a company entering the market with low prices and affordable service in order to challenge competitors, retail life cycle addresses the four stages that a company goes through when entering the buyer's market. The retail accordion aspect of cyclical theory suggests that some businesses go from outlets that offer an array of products to establishments providing a narrow selection of goods and services. These establishments later return to a generalised outlet store. Retail accordion is also known as general-specific-general theory.

Environmental theorists present the idea of retail institutions being economic entities. Within such entities are retailers confronted with an environment filled with customers, technology innovation and market competitors. Retailers who meet the needs and demands of their environment find success, while retailers who fail to do this plummet. For this reason, it is important for retailers to be aware of and adjust to changing environments.

Conflict theory is viewed as a series of phases that a retail company endures when challenged by a competitor. During the first stage, the retailer is shocked that such challenge has been presented. As a result, many retailers retreat and attempt to sabotage the success of their competitor. After being unsuccessful, the retailer will admit defeat and create ways to improve their product or service. While the challenged retailer is undergoing these stages, the challenger is also implementing methods that will assist in company growth.

The use of retail theories vary over time for a number or reasons. Since implementation of theories is largely dependent on social and economic situations, high and low consumer demand may influence retailers to implement one theory over another. While a retailer may find conflict theory helpful at times of low demand, he or she may find this same retail approach useless when consumer requests are relatively high. Similarly, retailers use the theories to solve marginal and supply complexities. The environment theory is particularly helpful when factoring necessary marginal increases. Components of the cyclical theory can provide companies with alternatives when business is not doing well.