The Service Cost – Unit Value Retail Continuum and the Demise of the American ‘Five and Dime’ Variety Store, 1914–1941

We examine a classic ‘wheel of retailing’ episode – the abandonment of the five and dime pricing formula by American variety chains. Variety stores moved from a conventional product lifecycle, focusing on cost reduction through standardisation, to an inverse movement up the ‘service cost - unit value’ continuum. We show that, rather than reflecting deteriorating managerial acumen, this was a response to market saturation in their low price niche. However, rapid changes in retailing methods entailed significant risks, while - even where these were successfully negotiated - higher sales came at the cost of lower margins and an erosion of competitive advantage.