Cyclical Theory

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The most well known theory of retail evolution is The Wheel of Retailing theory. This theory, described by McNair II, helps us understand retail changes. This theory suggests that retail innovators often first appear as low-price operators with a low-cost structure and low profit-margin requirements, offering some real advantages, such as specific merchandise, which enables them to take customers away from more established competitors.
As they prosper, they develop their businesses, offering a greater range or acquiring more
expensive facilities, but this can mean that they lose the focus that was so important when they entered the market. Such ‘trading up’ occurs as the retailer becomes established in his own right.

 

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