The theory of retail competition that states that new retail institutions enter the marketplace as low-price,low-margin operations and eventually begin to offer more services and charge higher prices is the:
A) retail accordion theory.
B) high/low theory.
C) natural selection theory.
D) retail life cycle theory.
E) wheel of retailing theory.

Question

Quizplus · Accepted Answer

The theory described in the question is known as the "wheel of retailing theory." This theory suggests that new retail institutions enter the market as low-price, low-margin operations and gradually add more services, upgrades, and conveniences while charging higher prices. Eventually, these established retailers become vulnerable to new low-cost entrants, and the cycle begins again. The wheel of retailing theory is widely accepted and often used to describe the evolution of retail markets.

The Theory of Retail Competition That States That New Retail