Department stores are now facing increased competition from off-price chains,factory outlets,membership clubs,and flea markets.This illustrates ________.

Question

Quizplus · Accepted Answer

The situation described in the statement is an example of the "wheel of retailing." The wheel of retailing theory suggests that as retail firms evolve, they tend to go through predictable stages. Specifically, new retail companies enter the market with low prices and low margins to undercut established retailers. Over time, these new companies improve their operations, increase their prices, and improve their profit margins. As a result, they face new competition from other low-price retailers entering the market, causing the cycle to repeat. This phenomenon is illustrated by the increased competition department stores are facing from off-price chains, factory outlets, membership clubs, and flea markets.

Department Stores Are Now Facing Increased Competition from Off-Price Chains,factory