1.How would you classify Wal-Mart in terms of position on the wheel of retailing versus that of an off-price retailer?
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To classify Wal-Mart in terms of its position on the wheel of retailing compared to an off-price retailer, you will need to understand the characteristics of each.
The wheel of retailing is a concept used to understand different stages through which retail formats evolve. According to this concept, retailers start as low-cost, low-price operators and eventually upgrade their facilities and services, resulting in higher prices. This creates space for new low-cost retailers to enter the market.
An off-price retailer is one that offers branded merchandise at prices lower than traditional retailers, typically by buying excess inventory from manufacturers or other retailers. Off-price retailers focus on providing value-seeking customers with discounted prices on quality products.
Now, let's look at how Wal-Mart and an off-price retailer can be classified based on their positions on the wheel of retailing:
1. Wal-Mart: Wal-Mart is typically classified as a discount store or a hypermarket. It began as a low-cost, high-volume operator with a focus on offering everyday low prices. Over time, Wal-Mart has expanded its offerings to include a wide range of products, including groceries, electronics, clothing, and more. It has also developed its e-commerce capabilities. With its vast reach and economies of scale, Wal-Mart has grown into one of the world's largest retailers, offering competitive prices while also providing a wide range of goods and services.
2. Off-price retailer: Off-price retailers, such as TJ Maxx, Ross Dress for Less, or Marshalls, primarily focus on offering branded merchandise at lower prices than traditional retailers. They often acquire excess inventory, discontinued items, or closeout products from other retailers or manufacturers. Off-price retailers rely on treasure-hunt shopping experiences and frequently changing assortments to attract customers seeking value for money.
Based on these characteristics, Wal-Mart can be classified as a large-scale, low-cost, general merchandise retailer with an extensive offering, while an off-price retailer is typically smaller in scale, specializing in offering discounted branded apparel and household items.
To classify specific retailers accurately, it is essential to consider their unique strategies, product offerings, target markets, and competitive advantages.