Retail development can also be looked at from the theoretical perspective. No single theory can be universally applicable or acceptable. The application of each theory varies from market to market, depending on the level of maturity and the socio-economic conditions in that market.
The theories developed to explain the process of retail development revolve around the importance of competitive pressures, the investments in organisational capabilities and the creation of a sustainable competitive advantage, which requires the implementation of strategic planning by retail organisations Growth in retail is a result of understand in market signals and responding, to the opportunities that arise in a dynamic manner. Theories of retail development can broadly be classified as:
1. Environmental- where a change in retail is attributed to the change in the environment
in which the retailers operate.
2. Cyclical- where change follows a pattern and phases can have definite identifiable
attributes associated with them.
3 Conflictual- where the competition or conflict between two opposite types of retailers,
leads to a new format being developed.