/* ---- Google Analytics Code Below */

Wednesday, June 14, 2017

Wheel of Retailing?

Admit I had not heard the term 'Wheel of Retailing'.   HBS talks this.  I will include the explanation, more at the link below.  Comments also interesting at link.  Implications for Amazon v Wal-Mart?

In HBS Working Knowledge.

Can Amazon Do What Walmart Couldn’t, Stop the 'Wheel of Retailing'?
Walmart couldn't do it. Now it's Amazon's turn to break the theory of the "wheel of retailing." Can Amazon succeed? Is the wheel model even a helpful concept anymore? asks James Heskett. .... 

" ... The wheel of retailing was first described by Malcolm McNair, a distinguished faculty member at HBS beginning in 1920 who, after completing work in Shakespeare and English, became fascinated with the retailing field. In 1958, he described what was happening in the world of retail after the Second World War.

He observed that new retailing concepts typically begin with low-price strategies with the goal of attracting customers. As the number of customers and the volume of sales increase, the retailer gains a dominant position in the market. The goal gradually shifts from attracting more customers to increasing prices and margins in order to achieve higher profits. That subjects retailers to new competition from low-priced, low-service startups, thus spinning the wheel of retailing again.

The concept fell out of favor with the ascendancy of big box retailers, especially Walmart. Walmart gained such a dominant share, driving so many higher-priced, higher-margin competitors out of business, that it was believed that the only limit on the company’s growth and profit was the size of the global retail market itself. No competitors could successfully undercut such a retail phenomenon. The wheel of retailing had been stopped!   .... " 

No comments: