Discuss Supply and Demand in the Retail Industry
As in any industry, supply and demand in the retail industry are a result of several factors that each contribute to the economy and affect how much people are willing to buy and also how much sellers are willing to sell. Some of the major factors in the retail industry that affect supply and demand include competitors and availability of substitutes, annual holidays, and the threat of new entrants.
Competition in the retail market and the availability of substitutes are arguably the biggest contributors that affect the supply and demand in the market. There is such a vast selection of retail stores and competition is constantly present. This is especially evident in places such as a shopping mall, where clothing stores are lined up next to each other and have to compete for customers. Also, substitutes are very readily available in retail. For example, Under Armour and Nike provide very similar items so it is easy to substitute one company for the other. If the price of Under Armour clothing is cheaper, more customers are likely to shop there over Nike because of the close similarities in products.
Along with competition, annual holidays and the threat of new entrants affect the supply and demand for products in the retail market. In December, both production and sales increase steadily because of the Christmas season. Suppliers are willing to supply more and buyers are willing to buy more during this gift giving time. Also, the threat of new entrants is always a factor to take in to consideration in retail. Many retail stores are chain stores and open at new locations all the time. If a Target is about to open right next to a Wal-Mart, that is going to affect the supply and demand of both stores.
Supply and demand does have a huge impact on the industry I must agree with Jenna. Competition is a huge factor as so we can comprehend that when there is a greater amount of competition with more suppliers in the market, demand is less. Quantity demanded shift downward, meaning the amount that consumers are willing and able to buy decreases because buyers have a choice between different suppliers.
ReplyDeletePrices play a huge role and when the price of substitutes goes down, suppliers with similar goods in the retail industry must push prices down and demand decreases because there is a greater variety to choose from. Demand is not as high anymore where prices are cheap and there are various substitutes because there is more supply and no race to find get the supplies quickly before other people get to them.
As i mentioned in my blog posting previously about the upcoming holidays, retailers are watching this year's supply and demand carefully. Demand rises as the holidays approach because people have a greater want and willingness to buy during this time of the year. Therefore, suppliers are willing to sell more and produce more and even raise prices for they know that consumers are still going to come to the stores to purchase because it is that time of year!!!
Sincerely,
FALEN SERENA RAUCHWERGER
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ReplyDeleteSupply and demand can be a tough thing to nail down when you are first getting into business.
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