Wheel of Retailing Concept

Posted in Marketing and Strategy Terms, Total Reads: 20082

Definition: Wheel of Retailing Concept

Most of the retail businesses start on low cost, low price and low margins but as their sales start increasing they quickly shift to a high cost, high revenue model.


A restaurant started in a temporary location would be offering a limited number of items at low price. It looks to develop its client base but as soon as the construction is completed or final, it starts providing a lot more variety and introduces a number of new services (free home deliver y, boarding , and lodging )  it also starts increasing its prices on its earlier items. This is done to recover its fixed cost quickly and have an early breakeven so that it can start generating some profit since it is operating in a virgin market it will look to increase its market share.

However  with passage of time when a new restaurant comes up in its vicinity and starts offering the same items at a lower price in order to retain its customers it will  bring down its prices back to where its earlier ones.

Wheel of Retailing




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