What triggers the “wheel of retailing”?
What triggers the “wheel of retailing”?
Wheel of retailing is an observation on retail development, where retailers initially enter markets and begin operations as low margin, low price players who gradually scale up their operations and set up bigger facilities and move upmarket. The four elements are:
1) Entry phase. In this phase, retailers focus on low margins, low prices, and generally have a low reputation. They are more focused on establishing their business.
2) Growth phase. In the growth phase, retailers command a higher price and margin.
3) Maturity phase. Price, margins, and status are the highest in the maturity phase.
4) Decline phase. The high price and margins attracts new players and thereby increases competition in the decline phase. The increase in competition leads to low prices and other features of the entry phase.
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