Current Status and Future Evolution of Retail Formats

Abstract

Present-day consumers are faced with an ever-growing variety of retail formats to satisfy their needs and want. The emergence of new retail formats can be explained in at least three ways: First, it can be argued that the changing demand patterns of consumers may lead to different formats. For example, there are valueoriented shoppers, price-oriented shoppers and convenience shoppers. Each type of consumer may cause the retail industry to consider new retail formats. Secondly, retailers themselves may decide to develop a certain format that best fits their internal strength. By so doing, they hope to obtain a competitive advantage. A third explanation for the emergence of new retail formats may be the changing role of the manufacturing industry. Excess product supply can force prices down, which in turn may lead retailers to purchase opportunistically.

Whatever the reason for the emergence of new retail formats, it is certain that new formats offer opportunities for both traditional and new retailers to increase their market share and their profitability. On the other hand, it may also cause erosion in the retail landscape. Those players who are unable to take the chances that come with a change in the market may lose market share or even disappear (see chapter by Fox, Sethuraman in this book for more insights into betweenformat versus within-format retail competition).

One way for retailers to evaluate the chances for certain retail formats is to take an international perspective. While most developed countries share the same basic retail formats, their importance and dissemination vary substantially across different countries.