Retailers Report Weak Results As Cold Weather Chills Sales
As the author mentioned, “Retailers reported weak, weather-beaten results for February, although some chains said they expect warmer temperatures will soon lift demand for spring clothing.” There is a downturn for American spring business market owing to the weather problem. However, I think it is just the beginning.
Of course, at this stage, every retailer is worried about the situation of surplus. The weather problem resulted in a decrease in quantity demanded at each price; namely, the demand curve shifted left. As a result, both the market price and equilibrium quantity of spring goods went down as the movement of the equilibrium point. Retailers lost benefits by this move.
However, what if the weather is getting warmer soon? All retailers will fetch out all their cumulate goods to retrieve their benefits, and then the quantity supplied will rise more than the quantity demanded. Besides, owing to a similar level of willingness to purchase (after the increase in quantity demanded when the weather gets better), the demand curve will maintain close to the situation last year. At last, retailers will also get a market price lower than the price in the same term last year, and they will gain less per unit in this situation too. Hence, although the market will gain more in total, retailers have to prepare a new round of competitions to sell more goods to keep their expected profits.
All in all, I think there will be another potential problem behind this wintry weather. A big challenge faced by retailers is how to attract more customers to gain from less benefit transactions in the future.
Of course, at this stage, every retailer is worried about the situation of surplus. The weather problem resulted in a decrease in quantity demanded at each price; namely, the demand curve shifted left. As a result, both the market price and equilibrium quantity of spring goods went down as the movement of the equilibrium point. Retailers lost benefits by this move.
However, what if the weather is getting warmer soon? All retailers will fetch out all their cumulate goods to retrieve their benefits, and then the quantity supplied will rise more than the quantity demanded. Besides, owing to a similar level of willingness to purchase (after the increase in quantity demanded when the weather gets better), the demand curve will maintain close to the situation last year. At last, retailers will also get a market price lower than the price in the same term last year, and they will gain less per unit in this situation too. Hence, although the market will gain more in total, retailers have to prepare a new round of competitions to sell more goods to keep their expected profits.
All in all, I think there will be another potential problem behind this wintry weather. A big challenge faced by retailers is how to attract more customers to gain from less benefit transactions in the future.
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