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This is the solution of business microeconomics assignment help in which we discuss the retail industry safety and growing with a market
The retail industry of Australia is fast becoming the main driver of the country’s gross domestic product. After the recession of 2009 the consumer sentiments have been rekindled and due to this the country is witnessing a surge in consumer spending chiefly in the areas of food products, clothes, footwear, grocery and personal care and health care products. Consumer spending in Australia peaked in the year 2015 reaching $200 million on a year on year basis and much of this spending was in the area of retail goods like food, recreation and traditional household items found in supermarkets (Zhu & Kraemer, 2005). Even though the GDP growth slowed to 0.6% in the first quarter of 2015 there was a growth of consumer spending to the tune of 0.8% during the same period. Thus it could be safely said that retail growth was the main driving force of the economy which helped in recovery after the recession of 2009. Online retail emerged as a significant share in the retail industry with a market share of 37% owing to the benefits it offered to shoppers mainly ease of shopping and choice of a wide array of products (Williams & Connell, 2010).
There are some top trends to be looked out for in this industry. The subscription model of shopping is on the rise with more and more youngsters wanting to rent clothes of high street fashion brands and using them for a period of time rather than buying it by paying the full money. Similarly the book retailers reported that people wanted to subscribe to annual issues of popular lifestyle magazines and also wanted to rent books from online book retailers. For example Amazon started the Kindle unlimited subscription service for book readers which was an instant hit among customers. Another trend is the delivery model (Zhu et al.2010). Consumers are looking for goods that are easily delivered to their residence, for example, if they buy furniture or a washing machine they want it delivered to their homes with the least hassle.
The retail industry of Australia is facing a lot of competition from global players like Wal mart and Tesco which is in a way good for the consumers as they can get a better deal on a better quality products but it is a real challenge for local players who see it as a threat to their business proposal. Due to the advent of the online retail behemoth Amazon the brick and mortar retailers of Australia are facing a tough time. Due to the inventory sales model of the online retailers their sales are increasing by leaps and bounds whereas the sales of the normal retail stores had saturated. Thus these erstwhile retailers need reforms in the overall retail sector so that everyone is on a level playing field both the online and offline retailers. Also it has been seen that some of the retailers had been violating import laws by sourcing goods from overseas at a cheap price without paying the duty or the taxes (Booth & Hamer,2007). The retailers both online and offline are under regulatory restrictions like selling products within a particular zone or region in the country owing to the differential tax regimes of different territories. This restricts the competitiveness and the ability to implement the new innovations which the retail companies have invented in an effort to increase the visibility of their products and hence their sales. Apart from this the restrictions on the trading hours makes the traditional retailers disadvantaged from their online counterparts. It also affects the convenience of shopping which the customer generally wants from the retailing company. Workplace regulations also affect the flexibility with which workers can work in the retail industry. Strict implementation of labour laws makes it difficult for the retailers to manage the work schedules of the employees thereby affecting the overall competitiveness of the business.
The customers often have a direct microeconomic elasticity impact on the retail market. For example in the case of online retail the details of customer behaviour and buying pattern can be easily noticed by sophisticated computer algorithms that can check their product browsing pattern and accordingly suggest products to them for sale. This kind of advanced knowledge of customer behaviour places the online retailers far ahead of the brick and mortar retailers as they can easily decipher what kind of products the customer wants (Zhu & Kraemer, 2005). The traditional retailers on the other hand distributes flyers and questionnaires to shoppers which are rarely filled up properly and submitted at the reception counter so that the nuances in their purchasing pattern can be noticed and studied and used for better targeting of the customers. Thus it could be seen in this aspect that traditional retailers are disadvantaged from this point of view. Also a careful study of the substitute products by the competitors could easily be done in case of online retail than in traditional brick and mortar retail. Thus more reforms are needed to be brought in by the government so that a level playing field is established for both modes of shopping- online as well as offline. According to the demand curve of microeconomics as the demand for a product rises the price falls. Hence it can be seen as the online retailers give steep discounts, the demand rises and the brick and mortar retailers are also forced to cut prices by entailing a loss (Booth & Hamer, 2007). Thus it can be seen that at present the laws are not uniform and protection should be given to offline retailers as well.
Thus it can be seen that the retail industry has come under a major turmoil with the advent of online shopping and hence reforms are needed since both these modes of shopping offer their own fair share of benefits (Zhu et al.2010). The brick and mortar retail industry is known to create millions of jobs and hence its significance in the market cannot be undermined. Thus reforms have to be introduced to ensure that the Australian retailers interest are protected and are not damaged by free market economic forces and unfair trade practices by overseas players.
- Zhu, K., & Kraemer, K. L. (2005). Post-adoption variations in usage and value of e-business by organizations: cross-country evidence from the retail industry. Information systems research, 16(1), 61-84.
- Zhu, Y., Li, Y., Wang, W., & Chen, J. (2010). What leads to post-implementation success of ERP? An empirical study of the Chinese retail industry. International Journal of Information Management, 30(3), 265-276.
- Williams, C. L., & Connell, C. (2010). “Looking good and sounding right” aesthetic labor and social inequality in the retail industry. Work and Occupations, 37(3), 349-377.
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- Booth, S., & Hamer, K. (2007). Labour turnover in the retail industry: Predicting the role of individual, organisational and environmental factors.International Journal of Retail & Distribution Management, 35(4), 289-307.