Page 12 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 1: Introduction to Retail Environment

Retailers Diversifying their Activities Notes

Large retail multiple chains are increasingly looking for new opportunities – new area in which
to grow their business. This is especially the case in markets with highly developed retail
structures where competition is fierce and regulation after restricts the development of further
stores. The strategy of expansion has been for retailers to move away from their core business
and into broader retail activities. Moving from the food sector to clothing or diversifying
financial services. It is in part of a reflection of the high esteem in which retailer are held that
many of the personal banking services are providing to be a success. Customers seem to be
displaying increasing loyalty to the retailer fascia or brand rather than manufacturer brands.

Organizations Growing on an International Scale

Increasingly retailers are also expanding their business by moving internationally. Although
there have long been examples of international retailers, they have focused mainly on the
luxury goods markets; it was not until the late 1980s that the process of retail internationalization
occurred on any significant scale.

Grow on Cost Perspective

From a cost perspective, retailing is a significant field of study. In the U.S.A, on an average, 31
cents of every dollar spent in department stores, 44 cents spent in furniture and home furnishings
stores, 27 cents spent in grocery stores go to the retailer to cover the operating costs, activities
performed, and profits. Cost includes rent, display, wages, ads and maintenance. Only a small
part of each dollar is profit.

Notes Name the top ten retailers of the world and try to find out how much they contribute
to the GDP of their home nation.

Self Assessment

State whether the following statements are true or false:

10. Retail sector makes an important contribution to the GDP of a nation.
11. Retailers also act as gatekeepers.

1.5 Evolution of Retailing Industry

Like the products that are sold within retailers, the formats used for retailing evolve over time.
A retailing concept that appeared revolutionary when first introduced may Notes become dated
within a couple of decades, and so retail businesses must constantly evolve their own portfolio
of retail formats to reflect the changing requirements and aspirations of the shopping public,
whilst responding to constraints imposed by the political and legal framework in which they
operate.
The ways in which retailers evolve have been the subject of academic debate for over half of a
century. Many of the academic references use the term ‘retail institutions’ to describe a type of
retail outlet. However, it is easy to confuse the term retail institution with a large retail business
(stores like Marks and Spencer are often referred to as institutions) and so the term format will
continue to be used in this discussion. The evolutionary theories attempt to provide some

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