Emergence of Entrepreneurial Retail Forms

Article excerpt

FORMS OF RETAIL INSTITUTIONS

One objective of marketing is delivering value to customers by providing goods and services when, where and how they want them to be delivered. Retailing may be the most important facilitator of the exchange as it provides buying and selling parties a medium for coming together physically or virtually to complete the exchange. Throughout retailing history, entrepreneurs have introduced ideas to enhance this function. Thanks to visionary entrepreneurs, multiple forms of retailing institutions emerged throughout the last millennium to deliver value to their customers in parallel to customers' changing life styles. Some retail forms diminished when they no longer delivered value; others were redefined to adjust to the changing environment. Researchers saw that forms of retail institutions had changed from back/wagon peddlers in pre-industrial revolution to large-scale retailers of the "modern period" (Savitt 1989) and interactive electronic catalogs (May, 1989), and finally to technology-based self-service (TBSS) options (e.g., self check-out and self check-in systems). Diverse forms of store and nonstore retailing now exist. Moreover, new forms or combinations are continually emerging (Kotler 2000). Table 1 classifies retail institutions and provides examples.

Entrepreneurship is an important element of retailing because it is essential for economic growth, improves competitiveness, creates jobs, stimulates economy, creates and redistributes new wealth (Spencer, Kirchhoff and White 2008). Although the literature does not provide a clear definition of entrepreneurship, Schumpeter mentioned (1950) the role of entrepreneur in creative destruction. Common entrepreneurial activities identified among researchers include innovating, recognizing and creating opportunities, developing new organizations, utilizing resources in new ways, and creating wealth. Entrepreneurs are also recognized for their ability to work under risk and uncertainty (Spencer, Kirchhoff and White 2008). Table 1 reveals that stores for each retail form have involved successful and unusual entrepreneurs, such as Sam Walton of Wal-Mart, Jeff Bezos of Amazon.com, or Mary Kay.

Although small business and entrepreneurial operations are the core of retailing, entrepreneurship is rarely mentioned in retailing literature. The purpose of this paper is to alert entrepreneurs and academic researchers to the causes of new forms of emerging retail institutions within the existing retail change theories. Ireland and Van Auken (1987) complained that most studies in the entrepreneurship research were descriptive in nature and focused on generic concerns and groups and operational issues. They encouraged research on how new businesses can be more successful. Understanding retail institutions may provide the much needed help.

RETAIL INSTITUTION CHANGE

Every retail institution's major supply chain challenge is to have the right product in the right place at the right time for the right price (Fisher, Raman, McClelland 2000). Accomplishing this objective helps in achieving ultimate goals, such as profit maximization, stock price maximization, principal's welfare maximization, and internal or external stakeholders' satisfaction (Anderson 1982). Therefore, it is very important to attempt to explain, understand, predict, and control the emergence of new forms of retail institutions in attaining any ultimate goal.

A number of theories as summarized in Table 2 have been developed to explain retail institution change. Some focus on cyclical patterns, while others emphasize evolutionary relationships. Still some others identify inter-organizational conflicts and a variety of environmental factors causing such changes as technological innovation and consumer trends. Finally, some efforts have been made to combine different approaches into more comprehensive models.

CYCLICAL THEORIES

Wheel of Retailing

McNair (1931) suggests three distinct phases of changes in retail institution forms. …