Question: DEVELOPING CRITICAL-THINKING SKILLS
According to the wheel of retailing hypothesis, retail businesses begin as low-margin, low-priced, low-status operations. As they successfully challenge established retailers for market share, they upgrade their facilities and offer more services. This raises their costs and forces them to increase their prices so that eventually they become like the conventional retailers they replaced. As they move up from the low end of the wheel, new firms with lower costs and prices move in to take their place. For example, Kmart started as a low-priced operation that competed with department stores. Over time, it upgraded its facilities and products; big Kmart stores now offer such exclusive merchandise as Martha Stewart's bed-and bath collection, full-service pharmacies, café areas, and "pantry" areas stocked with frequently bought grocery items, including milk, eggs, and bread. In consequence, Kmart has become a higher-cost, higher-priced operation and, as such, is vulnerable to lower-priced firms entering at the low end of the wheel.
Assignment: 1. Investigate the operations of a local retailer.
2. Explain how this retailer is evolving on the wheel of retailing.
3. Prepare a report on your findings.