Question

Wheel of retailing theory is the theory that explains the institutional changes when any innovators or large business enters into retail market. Explanation - Wheel of retailing theory is the concept that describes how retailer captures the market share and creates a brand value. There are 4 quadrants of wheel in which the retailer begin to increase the market share.

Quadrant 1 - Low Price, Low Margin and Low Reputation - The retailer enters into the market and offers their customer at low price, earning less profit and start building the image.

Quadrant 2 - High Price, High Margin and High Reputation - Over the time, the retailer start getting recognized by the customer. They mark their product at high price, earning higher profit and creating a good image among the existing competitor.

Quadrant 3 - Even High Price, Even High Margin and Even High Reputation - The main objective of the retailer is to provide good service to the customer. In this way it will increase its reputation in the market. In this quadrant, the retailer is established in the market and is the market leader in a particular location.

Quadrant 4 - Back to Quadrant 1 - Retailer goes back to quadrant 1 when the competitor enters into the same market. This is probably because the retailers do not want their competitors to enter into their market and hamper their reputation and profit margins.

Shops, Restaurants, and Cinemas: A Growing Glut?

(Glut means oversupply)

Required: Do you think there are too many retail stores, movie theaters, restaurants, etc. in New Jersey and the United States as a whole? Why or why not?

If there is a glut of such establishments, what do you think will happen to this space? How can you use the concept-wheel of retailing that will impact the need for retail space in the future? Write 250 words.

Please write in your own words and write appropriate answers. Thank You!

Answer 1

No I do not think that there are too many retail stores because when one retailer shift from quadrant 4 to quadrant 1, it will go fro low margin, the competitor will also go for quadrant 1. Retailer won't survive for long with less margin and has to move to quadrant 2 and further to quadrant 3. Only a few of them can survive, others who are continuously making losses will shift to some other location or will close down. So there won't be a glut. Market dynamics (like rent, operating cost, continuous losses) won't let many retailers to survive and only a few of them will survive in the long run.