Wheel of Retailing

Wheel of Retailing

A long-term strategy in which a discount retailer gradually begins to sell higher quality goods. The wheel of retailing allows the retailer to increase its prices over time, leading to higher revenues and perhaps higher profits. The ultimate goal of a wheel of retailing is to develop a discount company into a department store or the equivalent.
References in periodicals archive ?
The wheel of retailing concept has a "cost focus." It proposes that new forms of retailing start as low-cost operators, eventually trade up, and mature into high-cost operators (Davidson, Bates and Bass 1976).
Some historical developments (Table 2) support the cost basis of the wheel of retailing (Brown 1988; Levy and Weitz 1998a).
One of the first and still most-cited theories of retail change was offered by Hollander in 1960 in his seminal paper presenting the notion of a "Wheel of Retailing" and, "perhaps the most influential single article in the young history of thought in institutional change [in retailing]"[32].
Nevertheless, it is striking that, in an environment where three companies have a very strong command of the total market, the actual evolution and current positions of each of these three retailers exhibits much of the character that the wheel of retailing theory suggests we should expect, but with one important and encouraging addition.
As Curry describes events that provide evidence of Penney's merchandising genius, she identifies environmental factors that turned the wheel of retailing, driving the Golden Rule Stores from low-price, low-overhead innovative retailers in 1902 to a full-service department store chain in the 1960s.
The wheel of retailing ranks high in the pantheon of marketing theory.
Even as early as 1931, McNair[6] put forward a model of retailing later named the "Wheel of Retailing" after Lewis[7] concluded that the model of retail institutional change was more akin to a cycle than a series of stages.
Furthermore he argues that the evolution of warehouse clubs and off-price retailing adheres well to the wheel of retailing theory and this is illustrated by the growth of private label usage by the discounters in order to facilitate continuity of merchandise supply.
Retailing thought, moreover, is characterized by repetition with a 30-year (generational) cycle being apparent in many conceptual contributions, such as central place theory, the gravity model and the wheel of retailing itself[10,11,12].
That said, however, I have a number of misgivings about "Spokes in the Wheel of Retailing." My concerns stem not so much from the content, which was fine, given the stated objectives and caveats of the authors, but from the missed opportunity that the article represents.
Since then, the wheel of retailing theory has generated an enormous amount of academic debate, and not a little deprecation.
The wheel of Retailing concept, introduced in 1958 by Professor Malcolm P.