The Wheel of Retailing is one of the tools that is utilized to describe the different retail distribution strategies of organizations. In working to understand each of the different stages of the Wheel of Retailing, it is possible to gain a better understanding of where Wal-Mart falls in the different stages of the process, something that is not apparent at first glance.
There are four different stages of the Wheel of Retailing; in the first stage, the retailer is considered to be a store of low status with low margins (Boone & Kurtz, 2012). The second stage of the Wheel of Retailing occurs when the retailer starts to add in additional fixtures and embellishments to the store, passing on the cost to its customers through the use of higher prices (Boone & Kurtz, 2012). Stage three consists of the retailer adding even greater embellishments to the store and boosting the prices even further, while stage four occurs when new retailers enter the market, replacing the previous store by offering even lower prices than the original store does now (Boone & Kurtz, 2012).
In the case of Wal-Mart, perhaps the most accurate place to position them on the wheel is in stage 2; Wal-Mart has worked to consistently upgrade their stores, increasing the size and the amount of product offered, though it must be stated that they do strive to keep their prices low. This is primarily due to the fact that the costs of the items sold are kept low, but the costs of the upgrades come out of funds that other companies would typically use on their workers (O’Connor, 2014); in passing the costs backward instead of forward to the customers, Wal-Mart is, and will most likely continue to, stay firmly in stage 2 of the Wheel of retailing, at least until something or someone comes along to change the manner in which the store is able to treat and interact with its workers.
- Boone, L., & Kurtz, D. (2012). Contemporary Marketing (15th ed.). Boston: Cengage Learning.
- O’Connor, C. (2014). Report: Walmart Workers Cost Taxpayers $6.2 Billion In Public Assistance. Forbes. Retrieved 4 June 2014, from http://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/