Unit 2: Retail types and development theories
Retail Management notes · PTU syllabus (MBA 924-18)
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Unit summary
Retailers differ in what they sell, how they sell and who owns them, and formats keep evolving. This unit covers food and general merchandise retailers, non-store formats, services retailing, types of ownership, the evolution of retail formats, theories of retail development, the retail life cycle and business models in retail.
After this unit you can
- Classify food, general merchandise and non-store retailers
- Explain services retailing and types of ownership
- Explain theories of retail development and the retail life cycle
- Explain business models in retail
PTU syllabus topics
- Food retailers
- general merchandise retailers
- non-store formats
- services retailing
- types of ownership
- evolution of retail formats
- theories of retail development
- retail life cycle
- business models in retail
- 1. Innovation: New format, fast growth
- 2. Accelerated development: Rapid expansion
- 3. Maturity: Saturation, competition
- 4. Decline: Loss of share
Topic 1
Food, general merchandise and non-store retailers
Food retailers
| Format | Features | Example |
|---|---|---|
| Convenience store | Small, near homes, long hours, limited assortment | 24Seven, In & Out |
| Supermarket | Self-service food and household items, 5,000–25,000 sq ft | Nature's Basket, More |
| Hypermarket | Very large, food + general merchandise, low prices | DMart, Reliance Smart, Spar |
| Warehouse club | Bulk packs, membership, very low prices | Metro Cash & Carry, Walmart Best Price |
General merchandise retailers
| Format | Features | Example |
|---|---|---|
| Department store | Many departments under one roof, mid–high service | Shoppers Stop, Lifestyle, Pantaloons |
| Speciality store | Narrow but deep assortment in one category | Bata, Titan, Croma |
| Category killer | Very deep assortment, low prices, dominates a category | Decathlon, IKEA |
| Discount store | Broad assortment, low price, low service | V-Mart, Vishal Mega Mart |
| Off-price retailer | Branded goods at deep discounts | Factory outlets |
| Drugstore | Pharmacy plus health and beauty | Apollo Pharmacy |
Non-store retail formats
E-tailing
Online stores and marketplaces (Amazon, Flipkart, Myntra)
Direct selling
Person-to-person sales at home (Amway, Tupperware)
Catalogue and TV home shopping
Orders from catalogues or TV channels
Automated vending
Machines for snacks, drinks, tickets
Exam tip
Mention omnichannel retailing — integrating stores, website, app and social media so that the customer can buy anywhere and return anywhere.
Topic 2
Services retailing and types of ownership
Services retailers sell services rather than goods — banks, hotels, salons, cinemas, gyms, hospitals, airlines. Features: intangibility, simultaneous production and consumption, perishability and inconsistency — so the store environment and staff matter more.
Independent single-store
Owner-managed, flexible, limited resources
Corporate chain
Multiple outlets under common ownership, economies of scale
Franchise
Franchisee uses franchisor's brand and systems for a fee
Leased department
Space leased inside a larger store (cosmetic counters)
Consumer co-operative
Owned by members (Kendriya Bhandar, Amul outlets)
Topic 3
Evolution of retail formats
- 1
Traditional markets and haats
- 2
Kirana and general stores
- 3
Department and speciality stores
- 4
Supermarkets and hypermarkets
- 5
Malls and category killers
- 6
E-commerce and marketplaces
- 7
Omnichannel, quick commerce and social commerce
Topic 4
Theories of retail development
Wheel of retailing (McNair)
New retailers enter as low-cost, low-price formats, then trade up in service and price, opening room for new low-cost entrants
Retail accordion
Retail alternates between wide-assortment generalists and narrow specialists
Dialectic process
A new format (antithesis) challenges the existing one (thesis); they merge into a synthesis
Natural selection
Retailers that adapt to the environment survive
Melting pot
Formats borrow features from each other
Example
Big Bazaar began as a low-price hypermarket; as formats traded up, value players like DMart and online discounters took the low-price position — the wheel of retailing in action.
Topic 5
The retail life cycle
- 1Innovation
New format, rapid sales growth, low profits
- 2Accelerated development
Fast growth in sales and profits; imitators enter
- 3Maturity
Slowing growth, intense competition, falling margins
- 4Decline
Loss of share to new formats
- Strategies: at maturity — reposition, renovate, add services or new formats; at decline — consolidate or exit.
Topic 6
Business models in retail
Store-based retail
Own inventory, physical stores
Inventory-based e-commerce
Online retailer owns stock
Marketplace
Platform connecting sellers and buyers for commission
Omnichannel
Integrated stores, app and website
Direct-to-consumer (D2C)
Brands selling directly online and in own stores
Franchise and shop-in-shop
Brand partners operate outlets
Quick commerce and dark stores
10–30 minute delivery from micro-warehouses
Subscription and rental
Recurring deliveries, rental fashion
- FDI rules in India: 100% FDI in single-brand retail (automatic route); multi-brand retail limited to 51% with conditions; e-commerce marketplaces allowed 100% FDI but not inventory-based B2C.
Key terms
- Hypermarket
- Very large store combining grocery and general merchandise
- Category killer
- Specialist with very deep assortment and low prices
- Wheel of retailing
- Theory that low-cost entrants trade up over time
- Retail life cycle
- Stages of a retail format from innovation to decline
- Dark store
- Micro-warehouse used for quick delivery
Quick revision
- Food: convenience, supermarket, hypermarket, warehouse club.
- General merchandise: department, speciality, category killer, discount, off-price.
- Non-store: e-tailing, direct selling, TV shopping, vending; services retailing; ownership types.
- Theories: wheel, accordion, dialectic, natural selection, melting pot; retail life cycle.
- Business models; FDI in retail.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.Distinguish a supermarket and a hypermarket.
- Q2.What is a category killer?
- Q3.Explain the wheel of retailing.
- Q4.What is the retail accordion theory?
- Q5.Name the stages of the retail life cycle.
- Q6.What is a dark store?
Long-answer questions
- Q1.Classify retailers by format with Indian examples.
- Q2.Explain services retailing and the types of retail ownership.
- Q3.Explain the theories of retail development.
- Q4.Discuss the retail life cycle and business models in retail.
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