LITERATURE REVIEW.

In the early world, the prevalent form of retail was the local marketplace where people sold their wares. In order to communicate the exclusivity of their goods to the potential buyers, these sellers would keep on announcing the superlative qualities of their wares throughout the day so as to attract the passing customers. Their voice and salesmanship were the only marketing techniques these sellers possessed. This form of selling then gave way to small shops, which was a very unorganised form of retail. Sellers had their own speciality stores, which were often named after their family name, and there were no chains of stores as we see today. As and when marketing techniques became sophisticated, and with the advent of technological breakthroughs in various dimensions, this unorganised form of retail finally metamorphosed into the modern retail environment that we see today. Though the retail sector is much developed in the powerful nations of the world, like United Kingdom and other European nations, it is still in an extremely Underdeveloped stage in many third world countries like India. The importance of the growth of the retail sector in the economy of a nation and the life of its citizens have been elucidated by Burt and Sparks, who say that with the emergence of modern techniques of retailing and the rise of large retail companies and new retail forms and formats, retailing has become much more visible and central to consumers and governments concerns (Burt and Sparks, 2003, p. 3). They have even gone to the extent of saying that reflecting as it does cultures and consumer, retailing is the primary conduit for production and consumption linkages in economies (Burt and Sparks, 2003, p. 3). In the immensely competitive world of modern retail where big retail groups are taking rapid strides to extend their presence globally, it is indispensable to understand the concept of retail strategy and why it is important for retail organisations to adopt a strategic perspective. According to Rosenfeld & Wilson (1990) change is in part, the act of crystal-ball gazing, looking into the future to predict what will be the context in which organisations and individuals will exist. Many management experts have emphasised the importance of change in the business environment.

Managers are now confronted with a bewildering array of approaches, techniques and strategies to assist them in changing some aspect of their business for the better. (Stickland 1998) There are many factors that induce change to take place in an organisational scenario. It is generally seen that the changing nature of the workforce, technological up gradation, economic shocks, competition, social trends and the world politics are the most common drivers of change in a company (Robbins, 2001). Hence changes take place on a daily basis not only in the external environment, but also in the internal environment of the organisation. The managers need to be aware of how to deal with this complexity, and more importantly, how to anticipate future changes that are likely to occur. This is the point where strategic management and strategic planning come into the picture. Ansoff (1965) defines strategic management by saying that it is concerned with positioning an organisation within its environment and to ensure its continued success (Burt and Sparks, 2003, p. 56). Burt and Sparks also state that decisions concerned with strategic management, that is, strategic decisions, are often not based on detailed analysis but on extensive personal knowledge and intuition. Managers use their own experience and acute sense of happenings to understand and interpret the environmental changes and deal with them accordingly, when it comes to such decisions. Thus, when a retailer sees the emergence of a new fashion conscious teenage consumer segment, he proposes to tap the new market by establishing a store which caters particularly to this segment, paying special attention to see that the prices coincide with their spending power. Such a change can only be anticipated by intuition. Strategic Management. (Freathy 2003) described a strategic management model in his book, explaining it to be consisting of five stages, as shown in the figure below.

Fig 2.1: THE STRATEGIC MANAGEMENT MODEL SOURCE: Paul Freathy, The Retailing Book, 2003, p.58

The first step to maintain a strong retail present in any country, the retailer must look at reshaping and controlling supply relations. Robin Murray(1989 : 43) threw light on the shift of emphasis from the manufacturers economies of scale to the retailers economies of scope, that is, the retailers developing innovatory information and supply systems which allow them to order supplies to coincide with demand, and of the revolution in retailing demanding and reflecting new principles of production, a new pluralism of products and a new importance for innovation (Wrigley and Lowe, 2002, p. 51). Simply speaking the onus of all product innovations, development of new products, marketing communications and dominance of distribution channels is on the retailer and not the manufacturer, as opposed to the situation which prevailed before the retailing revolution in the UK in the 1980s (Wrigley and Lowe, 2002, p. 52). Wrigley and Lowe also mentioned that the shift in power could be highlighted by the fact that the retailing companies are reaping more profits relative to the consumer-goods manufacturers. To understand this in a clearer manner, the use of Michael Porters Five forces model can be made. In his model, he explained that there are five forces that determine industry attractiveness and long-run industry profitability. These are the threat of entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers and the degree of rivalry between existing competitors. Thus each firm should seek to find a place in this framework in order to best defend itself against these competitive forces or can influence them in its favour. (Porter, 1980, p. 4).