The Wheel of Retailing
- A process observed in retail marketing when what is originally a discount store improves its services and products in order to boost prices once it has become established. As it cycles through the wheel of retailing, a discount retail business might develop into a higher end department store, leaving its former niche to be filled by newer discount businesses.
The Wheel of Retailing describes how outlets change over time.
The graph shows the retail life cycle.
The description of the retail life cycle.
How
Retail Institutions Are Evolving
- Forward-looking firms know their individual strategies must be modified as retail institutions evolve over time. Complacency is not desirable. Many retailers have witnessed shrinking profit margins due to intense competition and consumer interest in lower prices. This puts pressure on them to tighten internal cost controls and to promote higher-margin goods and services while eliminating unprofitable items. Firms are reacting to this formidable environment through mergers, diversification, and value-driven retailing. Downsizing, as well as cost containment Mergers, Diversification, and Downsizing Some firms use mergers and diversification to sustain sales growth in a highly competitive environment (or when the institutional category in which they operate matures). For stronger firms, this trend is expected to carry over into the future
•Mergers
combinations of separately owned firms
•Diversification
retailers become active in businesses outside their normal operations
•Downsizing
unprofitable stores are closed or divisions are sold off
Reference
http://www.citeman.com/7774-concept-of-life-cycle-in-retail.html
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