Professional Documents
Culture Documents
The Wheel of Retailing is a theory that explains the institutional changes that occur when
innovators enter the retail field, especially huge corporations. the Wheel of Retailing is
merely a concept that may or may not apply to all retailing circumstances. It does, however,
appear to explain a variety of retailing trends in a variety of countries. To entice potential
customers, the majority of new merchants begin with a low-cost, low-margin business
strategy. The wheel of retailing theory discusses a retail organization's life cycle and the
various levels it passes through.
ENTRY PHASE
GROWTH PHASE
MATURITY PHASE
DECLINE PHASE
The first phase of the retailing wheel is when a company enters the market with a small
number of products at a cheap price and a small profit margin. Furthermore, the organisation
only delivers limited services, and the infrastructure is typically low-cost and impermanent.
As a result, the corporation strives to break into the market using a low-cost strategy at this
level.
The firm can improve its market reputation by pursuing a low-cost approach. At this point,
the retailer can pursue expansion methods such as raising product prices somewhat,
expanding the product category, modernising the store, and offering more services. This is
the stage where the company can maintain a higher profit margin since more and more
customers opt to acquire the products.
The organisation has developed a strong reputation and has established itself as a well-known
corporate entity at this point. The company is now unable to attract new customers, and client
churn is increasing. As a result, at the maturity level, the retailer's primary priority is
increasing client loyalty and retention by increasing customer pleasure.
This is the point at which the company's performance begins to deteriorate. Other companies
enter the market with low-cost competing products in order to attract customers' attention.
Within a short period of time, the competitor's products have taken over the market, and the
company is losing clients.
STRATEGIES:
Limited products
Low price
Minimal services
Low facilities
Better quality
Medium price product
Better facilities
Good services