Impact of Consumer Spending on UK Retail: An Economic Report

This report provides an executive summary and detailed analysis of consumer spending fluctuations in the UK retail market. It examines supply and demand dynamics, identifying factors influencing consumer behavior and the impact of the COVID-19 pandemic. The report delves into the effects of con...Read More

Economics for Business
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Executive Summary
In this report, it has been summarised about the fluctuations of consumer spending on retail
product and service in marketplace. Consideration of Supply-Chain demand factors in order to
determine the significant impact of economic condition of country. As per analysis, it has been
examined the impact on the retail business through consumer spending capacity while reducing
demand of retail business in global marketplace. However, it has been examined the significance
of consumers spending on retail goods and measurable change within UK economy condition or
situation.
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Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Discuss about the supply and demand analysis, identifying main factors in positive and
negative shift linked to change in consumer demand..................................................................3
TASK 2............................................................................................................................................8
Determine the Main UK governmental and economic policies that could be used to influence
consumer’s retail spending in UK with example.........................................................................8
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Economic of business is defined as field of applied economics that studies about the
financial organizational, market-related and environmental issues faced by corporations.
Business economics encompasses subject such a different way to represent the product factors,
distribution as well as consumption. This report is mainly focused on the fluctuations of
consumer spending on retail product and service so that they will significant way to impact of
economy in both positive as well as negative manner. Due to spread of COVID-19, it impacts on
the consumer spending capacity while reducing demand of retail business in global marketplace.
This documentation will describe about the importance of consumers spending on retail goods
and measurable change within UK economy condition or situation.
TASK 1
Discuss about the supply and demand analysis, identifying main factors in positive and negative
shift linked to change in consumer demand.
Supply Analysis
Supply is the willingness of seller to offer various kind of given quantity of good and services in
particular price or cost. In this way, it can be understand that supply and demand become useful
in explaining how price and quantity traded determined (Balleer, Link and Zorn, 2020).
Sometimes, external factors influencing the potential consumers and affect on the value of those
variables. Therefore, it will be captured the buyer’s behaviour in demand functions and
represented in the form of graphical supply or demand curve.
Due to COVID-19, producers are willing to sell their product for specified price as long as
the price or cost to produce an additional unit of goods. it follows that willingness to supply
goods in marketplace. it is also known as supply function, depends on the cost at which product
can be sold within particular price of cost.
By using Supply analysis, it is more difficult for retailer to understand the demand of
consumers. so as remembers to think of current economic condition and then try to supply good
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and services. Supply is not just quantity for products available in market for purpose of selling. It
is to be considered the most effective term that schedule with many prices and quantities.
Supply graph and Curve
A supply curve show how much quantity supplied that will change as the cost or price
rises or falls. Therefore, there is no economically relevant factors are changing. If other kind of
factors relevant to supply that needs to be change accordingly. Afterwards, the whole supply
curve will shift.
As per analysis, there are considered some common factors that affect supply and
consumers investing demand towards goods and service of retailers. It involves labour,
machinery, raw materials and input or output (Parrish, Heptonstall and Sovacool, 2020). These
are different factors useful in supply chain of business. Many retailers faced lower cost of
production while prices for good and service remain unchanged. A firm’s profit go up and
increasing profitability. It is always motivating the seller to produce better output. In this way, it
can identified that supply curve shifting to the right.
Figure 1 Shifts in Supply
According to Figure-1, it has been representing the supply shift curve in right side. this is based
on the car retailer which has decreased supply means that at every given price. So that supply
shift to left from S0 to s1. On the other hand, it has examined that increases supply means that at
give price, supply curve shift to the right from s0 to s2.
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Figure 2 Supply Curve
Demand curve analysis
Demand analysis can be defined as a process of understanding demand of customers for a
particular product or service in the target market. Most of the organizations uses demand analysis
for expansion of their business operations as it helps them to understand whether they can
successfully enter into a market or not (Sasatani and Eastin, 2018). For analysis of demand,
companies focus upon demand curve analysis which helps them in identifying relationship
between price of goods and services with quantity of products and services demanded by
companies within a specific given time period. Demand curve is typically represented in form of
graph in which vertical axis represents price and horizontal axis represents quantity demanded.
For retail sector organizations demand analysis is extremely important as it helps them to
understand ways in which demand of a product or service will get impacted if price of a product
or a service is increased or decreased. Shift in demand curve helps retail sector organizations to
understand ways in which they can bring changes within overall price of products and services in
order to increase overall demand of products and services.
Demand analysis is majorly used by organizations for demand forecasting of a product
and service (Newman and Ferrario, 2020). It is done by analysing past demand of products and
services due to change in price. Demand of a product or service in past helps in analysing
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demand of product or service in future. This helps retail sector organizations in decision making
so that their overall sales can be increased, production can also be increased and they can
maintain their overall competitive advantage. Demand forecasting is done with the help of
analysis of demand curve shift.
Figure: 3 Demand analysis graph
Above graph clearly explains demand curve on the basis of price of goods or services on
demand. This graph explains ways in which change in price can impact change in demand of
quantity. Shift in demand curve mostly occurs when whole demand curve either moves towards
right or left or its incline towards left or right (Newman and Ferrario, 2020). For example,
increase in overall price of product means its demand among customers would decrease. This
shift in demand curve is mostly because of: consumers preference, income, chance in price of
goods, changes in customers’ expectations and many more.
Positive shift: if the curve shift towards right then that indicates increase in demand that means
change in price will increase demand of goods and services. Below graph clearly explains
positive shift in demand.
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Price and Demand analysis
Negative shift: if the curve shift towards left then it causes reduction in demand curve that means
less goods will be purchased at every price. Below graph clearly explains shift in demand
towards left which indicates negative shift in demand curve.
It is important for retail sector organizations to focus upon this change in demand curve because
it can directly help them in taking appropriate decisions by understanding demand f a particular
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product in target market. Demand of retail goods and services in market directly impacts overall
revenue and production of organizations.
Factors that affect supply in both positive and negative, shifts linked to changes in consumer
demand.
As per supply analysis, it has been identified that changes occurs in price of input for
production process. It will affect the price of production and thus supply. There are various
things affect the production price or cost too much. Such kind of changes occurred due to new
technologies and other government policies (del Rio-Chanona and Et.al., 2020). As per current
scenario, UK retailers have already faced the certain issues regarding lower profitability due to
COVID-19 pandemic. These will reducing the current economic condition while consumers are
not investing time or money with retailer good and services. That’s why, retailers have been
supplied lower quantity of good and services. Conversely especially a lack of production would
shift supply curve to the left.
As per analysis, it has been summarized that changes in the cost or price of inputs, new
technologies and impacts of government decision. Therefore, it will directly affect the price or
cost of production. In turn, these factors affect how much enterprise are willing to supply at
given price.
TASK 2
Determine the Main UK governmental and economic policies that could be used to influence
consumer’s retail spending in UK with example.
The economic policy of government covers the system for setting level of taxation, budgets,
money supply and interest rate and labour market. This will help for different areas of
government intervention into economy. There are commonly used factors of economic policy
and divided into either fiscal policy which is mainly deals with different actions regarding
taxation and spending.
As per report, it has been identified that UK economy nears perilous turning point on
COVID-19. Rapidly growth of virus infectious have led to warn that UK faced second wave.
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Afterwards, government initiative to create a tough restriction to control the virus as
consequence, with measures that could happen last six months (Grubb and et.al., 2020). This
kind of situation is becoming dangerous for not only people health but it also affecting the
economic condition of retailers in UK. In this way, potential consumers are shifting towards
change in demand for retail good and service. Many people have shown limited interest towards
product as well as service.
The purpose of UK government and economy policy is supplying the good and service, if
retailer would fail to do such as public goods. Due to COVID-19, many people are suffering
from medical facilities so that provide the hospitals and welfare payments, benefits (Altig and
et.al., 2020). This can possible while implementing appropriate UK government and economic
policy that help to achieve the supply- demand side improvements.
Furthermore, it is useful for UK citizen to protect or secure themselves, in order to reduce
negative effects of externalities such as pollution control.
To subsidies industries which may need financial support and now it is very tough for
retailer to maintain their strong position in marketplace. UK government has provided the huge
subsidies to UK banking that help to deals with financial crisis. It help to re-distributed income
and achieve equity.
Poverty Programmes
Poverty alleviation is set of different steps taken in economic and humanitarian way for
eradicating the poverty from UK country. Due to COVID-19 and economic recession, various
kind of poverty programmes and schemes under government were introduced or launched to
improve current economic condition or situation. In order to provide the better quality of service
and facilities of poor peoples those are mostly affected by recession (Clark, Trimingham and
Wilson, 2020). Through this program, it help for potential consumers to reduce poverty which
means that giving many options to fulfil their specific need or requirement.
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Nowadays, it would be increasing the rate of unemployment in UK so that it become very
difficult for people to manage or control the overall business activities. Poverty programmes has
been conducted by UK government in order to improve current economic condition and
situation. By using this policy, consumer can utilise to the investing in different retail goods and
services. This can beneficial for both consumers and retailers in global marketplace.
Government Transfers
The Fiscal response towards the economic fallout from COVID-19 pandemic. There are
various lock-down measures in response of consumers towards retail good as well as services. It
have been halted economic activities in certain sector, increasing the disrupted other
(Government transfer. 2018). As a resulting, job losses and bankruptcies are likely to create a
major economic strain for millions of people in global world.
The Coronavirus crisis are affecting both human being and economic conditions which
become consider as unprecedented change. While immediately impact on the devastating change
For many, with situation comes up opportunities for review the progress. Afterwards, UK
government have defined their own spending rules and regulations that help to tackle the current
recession condition and downturn which is now shown as unfolding (Clark, Trimingham and
Wilson, 2020). So as creating a policy by UK government regarding the transfer of money. There
is no magic money tree but will try to spend a time and selecting alternatives options. Majorly,
UK banks have been controlled the monetary policy under circumstances that technical expert
are consider the best people to make better decision. This will help to maintain the financial
system. Through this policy, UK government will try to recover from loss of consumers retail
spending. In order to improve current economic condition or situation.
Retail Subsidies
In UK, Government has planned to interact with retailer association so that they have
developed retail subsidies based policy to announce a wage support other enterprise those are
majorly affected by COVID-19. While launding all government efforts and dealing with the
pandemic. There are various impact on the retail sector that directly employs 40-50 million of
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people. They would like to retain this talent (Clark, Trimingham and Wilson, 2020). Afterwards,
UK government has made policy that help to improve the current retailer and economic
condition. While boosting measures and segments include loan rules, freezing dividend payment
by banks.
Without consideration of economic policy support, it become difficult for retailers to
stand their position in marketplace. Furthermore, Government have developed retailer
association policy that will support for enterprise to handle the current business condition. Also
changing the perception of consumers towards goods and services.
Stimulus packages
Stimulus package is based on the economic measures that put together by government to
stimulate a floundering nations. That’s why, UK government have focused on the developed a
policy regarding stimulus packaging that can help to utilise or prevent from economic recession,
boosting the spending as well as employment (Clark, Trimingham and Wilson, 2020). A
monetary stimulus include cutting the actual interest rate and provide the better incentive for
people. By using policy or procedure, UK government opts for the other fiscal stimulus. This
will help for increases the spending in economic improvement. Afterwards, it will support for
recovery of UK economic situation while changing the demand of consumers, they also spending
a lot of time within retail goods and services in marketplace.
Additionally, expansion monetary policy in which central bank of UK purchase a large amount
of financial assets such as commercial banks. It help to increase the excess reserve and facilities
the better supply chain process.
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Industry-specific measures
Nowadays, it has found that Covid -19 impact on the overall economic condition of UK
and developed a situation of recession. Therefore, many retailers have faced the issue or problem
regarding lack of profitable rate in marketplace. In this way, the demand of consumer spending
towards retail goods and services which may be reduced (Clark, Trimingham and Wilson, 2020).
Afterwards, UK government initiative to focus on the current situation while developing
industries policy in term of improving the business performance. Industrial policy is becoming
consider as core approach in economic growth, encouraging the retailer to change their business
operational activities, establishing an online network. In this way, it become easier for targeting
the potential consumers in global marketplace. through this, it could influence consumers to
attract towards goods and services.
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CONCLUSION
From above discussion, it has concluded that Economic of business consider as important
aspects in the organization that mainly useful for identifying the different kinds of issue or
problem related to the environmental, weak economic condition or situation. In this report, it has
summarised about the concept of both demand and supply analysis, identifying the important
factors that can determine its positive as well as negative. In order to establish or shift linked to
change in potential consumer demand towards good and services. It has been representing the
graphical curve of supply and demand on the basis of analysis. Furthermore, it can be determined
the different type of supply and demand factors which is directly impacts on the economic
condition of UK and profitability of retailers. However, it has been discussed about the UK
governmental and economic policies that can use to influence potential consumers retail
spending in UK, explaining the suitable role of policies within organization in proper manner.
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REFERENCES
Book and Journals
Altig, D. and et.al., 2020. Economic uncertainty before and during the COVID-19
pandemic. Journal of Public Economics, 191, p.104274.
Balleer, A., Link, S. and Zorn, P., 2020. Demand or supply? Price adjustment during the Covid-
19 pandemic.
Clark, N., Trimingham, R. and Wilson, G.T., 2020. Incorporating consumer insights into the UK
food packaging supply chain in the transition to a circular
economy. Sustainability. 12(15). p.6106.
del Rio-Chanona and et.al., 2020. Supply and demand shocks in the COVID-19 pandemic: An
industry and occupation perspective. arXiv preprint arXiv:2004.06759.
Grubb, M. and et.al., 2020. Consumption-oriented policy instruments for fostering greenhouse
gas mitigation. Climate Policy. 20(sup1). pp.S58-S73.
Newman, M. and Ferrario, C.R., 2020. An improved demand curve for analysis of food or drug
consumption in behavioral experiments. Psychopharmacology, pp.1-13.
Parrish, B., Heptonstall, P. and Sovacool, B.K., 2020. A systematic review of motivations,
enablers and barriers for consumer engagement with residential demand response. Energy
Policy. 138. p.111221.
Sasatani, D. and Eastin, I.L., 2018. Demand curve estimation of locally produced woody biomass
products. Applied Engineering in Agriculture. 34(1). pp.145-155.
Online-
Government transfer. 2018. [online] Available through:<
https://www.investopedia.com/terms/t/transferpayment.asp>
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