Retail prices
If economics tells us that a healthy market should have more than one supplier of a product to allow for competitive prices, what happens when the competing suppliers go bust trying to weather a recession?
If consumers are not spending money, suppliers will presumably attempt to entice them to spend by lowering their prices.
Thinking about the lowering of prices as an act of determining the price the market is now willing to bear for their products, should this result in a short-term deflation of retail prices? Or does this act as a longer-term expectation from consumers considering how to spend their discretionary income?
Supply hasn’t particularly changed yet, but demand for luxury non-essential goods has dropped, so we should see their retail price drop. Necessities such as food probably won’t change too much because there’s still more or less the same demand. So we’re seeing a shift in how consumers will spend their money. Does that help?
Not quite. What I was thinking was that it feels like the supply of luxury items is changing on the High Street because the number of options is decreasing as retailers are placed into administration.
During the process of retailers trying to stay in business, they will compete with other retailers to encourage consumers to spend their discretionary income at their stores.
I was wondering if these acts from the retailers could change the consumer’s perception of the value of luxury items over the long-term.