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Example of Wal-Mart about wheel of retailing theory


For example, when traditional department store prices became too high for many consumers, the growth of the full-line discount store (led by Wal-Mart) was the result. The full-line discount store stressed low prices because of such cost- cutting techniques as having a small sales force, situating in lower-rent store locations, using inexpensive fixtures, emphasizing high stock turnover, and accepting only cash through pos equipment or check payments for goods. Wal mart

Then, as full-line discount stores prospered, they typically sought to move up a little along the wheel. This meant enlarging the sales force, improving locations, upgrading fixtures, carrying a greater selection of merchandise, and accepting credit. These improvements led to higher costs, which led to somewhat higher prices. The wheel of retailing again came into play as newer discounters, such as off-price chains, factory outlets, and permanent flea markets, expanded to satisfy the needs of the most price-conscious consumer. More recently, we have witnessed the birth of discount Web retailers, some of which have very low costs because they do not have "bricks-and-mortar" facilities.

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