While the wheel of retail concept can be illustrated by the growth of a number of types of retail businesses, such as department stores, supermarket and factory outlets it is increasingly difficult to apply. According to Rosemary Varley and Mohammed Rafiq in the book Principles of retail management this is because of the assumption that innovative retailer operate on a low-price, low status minimalist basis.
Cox and Brittain believe that growth and maturation occurs during the market shares which are increased, which then results in trading-up occurring and finally the firms become high cost and high price retailers once again are vulnerable to the next innovator.
According to Dunne, Lusch, Gable and Gebhardt the wheel of retailing hypothesis is one of the oldest attempts to describe competitive development in retailing. As I read on and learn more and more about the wheel of retail the fact that it is a concept becomes more inevitable. How can something that is so undecided and be a theory, there is just no evidence to prove that it is a theory and yet most text books I have read refer to it as a theory. Peter McGoldrick does refer to the wheel of retail as being a notion.
Since McNair’s pioneering contribution, the wheel of retail has given rise to prolonged, occasionally acrimonious and ultimately inconclusive academic debate. At one extreme, it has been described as 'powerful and fascinating’ by Stern and El-Ansary. Greyser referred to it as ‘the dominant concept in retailing,’ and Brown talked about it being a great achievement in the study of marketing.’ Then at the other extreme it has been castigated for having ‘limited clarity’ (Gripsud) and for ‘failing to meet the criteria for formal theory,’ stated by Hirschman and Stampfl.
Another concept which I have been asked to discuss is the retail life cycle. Below is a diagram of the retail life cycle so you can see clearly what I am talking about when I discuss what it is.
The retail life cycle is not a theory either; it is a concept and is based on the product life cycle. It has been defined as a concept, “of retail competition that states that retailing institutions, like the products they distribute, pass through an identifiable cycle. This cycle can be partitioned into four distinct stages: (1) innovation (introduction), (2) accelerated development (growth), (3) maturity, and (4) decline as you can see in the diagram above.
During the Introductory phase the company seeks to build company awareness and develop a market for the company. There is an impact on the marketing mix; this will include for example the product, pricing, distribution and promotion. The impact on the product is establishing the brand and the quality level of the product. During this stage intellectual property protection such as patents and trademarks are obtained. During the pricing stage in the marketing mix there may be a low price penetration so that the company can build market share quickly. Distribution is selective show acceptance to the product, so for example the company is going to jump into developing an e-commerce website to distribute products all round the world, until the conquer their local market. Promotion is aimed at newly opened companies. This form of marketing helps to increase awareness of a company. After the introductory phase comes the accelerate development stage, or the growth stage. During this stage the company seeks to build brand preference and also increase the market share. In this stage the product quality is maintained and additional features and support features may be added. The pricing stage is also maintained as the company increasing the demand with a little competition. Distribution channels should be added as at this stage their should be a growth in awareness as customers have accepted the product, which then leads onto promotion, which should be aimed at a broader audience to increase sales and in turn increase profits. Next is the maturity phase. At maturity the strong growth in sales weakens. Competition appears with similar products. The intention at this time is to defend market share maximizing profit. At this stage the product features may be enhanced to compete with competitors, pricing may be lower also to compete with competitors. Distribution becomes intense as the company has to offer incentives, for example 2 for the price of 1. A good example of this is chemists like Gordons, Boots and Bairds. Gordons and Bairds have to compete against a big company like Boots by having to have their products at a lower price, where as Boots have offers like 2 for the price of 1 and their advantage card idea to encourage customers to shop in their stores instead of the local stores. Promotion during the maturity stage emphasizes on product differentiation. The forth and final phase is decline. During this phase profit becomes more a challenge of distribution efficiency than increased sales. As sales decline the company has a few options. These will include maintain the product. This could be done by refreshing the product or store, by adding new features. Reducing prices may help as people will go to buy a product where ever it is cheaper.
I feel a good example to use while explaining the retail life cycle is the Bodyshop. The Body Shop International plc is a global manufacturer and retailer of naturally inspired, ethically produced beauty and cosmetics products. Founded in the UK in 1976 by the late Dame Anita Roddick, they now have over 2,100 stores in 55 countries, with a range of over 1,200 products, all animal cruelty free, and many with fairly traded natural ingredients.
Another example I can mention in here is Next, who I also mentioned previously in the essay. Next is a more expensive retailer compared to some retailers, for instance Zara. Zara have twenty-six seasons throughout the year, the change their product every two weeks. This encourages people to come back more often and also it keeps the store fresh. Whereas Next has four seasons and struggles to get rid of their stock. This would nearly say there is something wrong with Next as a retailer. From a personal view I could say that Next’s products aren’t as good quality as Zara. I don’t feel as comfortable in Next clothes as I do in Zara’s. It could maybe have something to do with the age group, but anyone I know I have mentioned this too has said they prefer Zara as a retailer. Zara is a Spanish company is known throughout the world. It is so important for companies to keep a fresh face on their store and products as a store can go from being the most popular store to the least popular store because at the end of the day who wants to shop in a grubby old store with the same products.
To conclude I would stress how the wheel of retail and the retail life cycle are not theories, they are concepts. A concept is defined as “A general statement of the idea behind a book,” and a theory is defined as “a well-substantiated explanation of some aspect of the natural world.” The wheel of retail and the retail life cycle couldn’t possibly be labelled as a theory if there is no definite way for it to be explained. It can only be described.
Bibliography
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Retail Management by Cox and Brittain 3rd Edition, published 1996
- Principles of retail management by Rosemary Varley and Mohammed Rafiq, published 2004.
- Retailing by Dunne Lusch Gable Gebhardt, published 1992
- Cases in Retail Management by Peter McGoldrick, published 1994
- International journal of retail