The Retail Lifecycle: Definition & Examples

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  • 0:04 Retail Lifecycle
  • 2:01 Emerging
  • 2:54 Growing
  • 3:45 Maturing
  • 4:43 Declining
  • 5:38 Lesson Summary
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Lesson Transcript
Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

The retail lifecycle is like the human life cycle: it consists of different stages that correspond to different experiences. In this lesson, you'll learn more about the retail lifecycle and its stages and explore some examples of businesses at each stage.

Retail Lifecycle

In 1985, Blockbuster opened its doors, bringing movie rentals to millions of households. The very first store in Dallas boasted 8,000 rentals of more than 6,500 movie titles, and consumers were thrilled. It was a new way to watch the latest movie releases right from your couch.

Over the next few years, the company expanded, opening locations across the country. By 1993, Blockbuster had more than 3,400 locations. Ten years later and a few years after the founding of Netflix, Blockbuster was still enjoying successes. It had grown to 9,000 stores, and more than 15 percent of its business came from customer fees.

But by 2010, the company hit a steep decline and filed for bankruptcy. The internet, technology, and Netflix combined to be Blockbuster's death knell. In 2013, it closed all of its remaining store locations. What you see in this example, of an emergent retailer that became a leader in the market before ultimately failing, is the complete evolution of something known as the retail lifecycle.

What is the retail lifecycle? It is the concept that all retailers go through periods of ups and downs that bring about discernible stages of growth and decline. Just like new products emerge in the market (think about the must-have toy each Christmas that falls out of favor soon afterwards), retailers go through different stages in the life of their businesses.

The retail lifecycle is comprised of four distinct stages, with each based on the sales and profit growth experienced during that stage. For example, a highly successful emergent company will experience rapid growth because sales are going so well. This will create quicker growth opportunities. By contrast, a growing company whose sales level off may find itself in a period of stable maturity before experiencing a potential decline if sales continue to drop.

Let's take a look at the four stages of the retail lifecycle:

Emerging

The emerging stage of the retail lifecycle resembles the infancy stage in human development. This is when a company is brand new. This stage is synonymous with innovation; new products, services and business opportunities are materializing. Businesses in the emerging stage are just beginning their journey in the retail lifecycle, and while profits may initially be low due to expenses and a lack of consumer familiarity with the brand, there is tremendous opportunity for growth.

An example of the emerging stage is Amazon's new grocery store, Amazon Go. The store is the first of its kind for the Amazon brand, as well as a new concept in the structure of a grocery store. Instead of filling a cart and paying at the checkout line, consumers can browse and buy all in one step, speeding up the shopping process and eliminating the traditional cash register pay station.

Growing

Someone once said, ''If you're not growing, you're dying,'' so the growing stage of the retail lifecycle is an important one. Growing means that a business has passed the sniff test with consumers; it fills a needed or wanted place in the market, where it's appreciated and trusted. In this stage, retailers establish themselves as a force in their industries and identify competitors. Growing means that profits are increasing and a business is investing in new opportunities, products, or services to keep consumers engaged and loyal.

Ulta Beauty is a good example of a company experiencing growth, thanks to the popularity of the cosmetics industry. Over the next five years, Ulta officials have said they plan to open 100 new stores each year, and the company reported a second-quarter net income that grew more than 30 percent.

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