Microeconomics- The U.S Retail Industry

Microeconomics- The U.S Retail Industry

The Retail Industry: Goods and Services

The selected industry for this paper is the retail industry. The industry entails the retailing process, which ensures final commodities are supplied to consumers. The firms that operate in this industry include physical retailers like fixed store retailers, hypermarkets, and supermarkets. Further, the sector consists of online retailers such as eBay and Amazon.com. Some of the major companies that operate in this industry include Walmart Inc., the largest store in the world. The company runs convenience shops, superstores, hypermarkets, and supermarkets. Another major company is Tesco Plc., which has its origin in the U.K. Other major companies that operate in this industry are Amazon.com and eBay, whose retailing activities are conducted through online platforms.

All companies operating industries do not have a specific type of goods or services to offer to their customers. Notably, they offer a variety of household items such as food, accessories, furniture, electronics, and clothing. One interesting thing regarding the retail industry is its contribution to the overall economic development. For instance, the retail industry is the largest employer in the U.S., accounting for more than 10 percent of the overall employment across the country (Amadeo & Estevez, 2022). Additionally, the industry contributes significantly to the overall gross domestic product by six percent of the gross GDP.

Microeconomic Variables in the Retail Industry

One microeconomic variable that is notable within the retail industry is price. Companies that operate within the retail industry pay significant attention to their pricing strategies. It bears consequences on the nature of competition witnessed in this industry. For instance, the pricing strategies that a single industry player adopts are likely to influence the demand for a product in another one’s store (Ferm & Thaichon, 2021). Perhaps this indicates that price is one of the variables driving the immense competition witnessed in the retail industry. Further, it explains why companies that operate through online stores, such as Amazon.com, have managed to offer lower prices, which has gained them significant market share. The following provides a further illustration.

Source: Statista (2022)

How the Government Might Impact the Retail Industry

The government impacts the retail industry through fiscal and monetary policies. In the case of the U.S., the federal government uses these policies through government spending and taxation to influence the direction of activities in the industry. For instance, the policies can help control the availability of goods and services and increase or decrease the demand for goods and services. Once adopted by the government, fiscal policy can affect the ability to compete, investment decisions, the cost of doing business, and consumer demand for retailers. Notably, this paper concentrates on the influence of the taxation policy and government spending on consumer demand.

Essentially, when the government adopts tax-related fiscal policies, the amount of disposable income available for people to spend is affected, influencing purchases within the retail stores. When higher taxes are adopted under the policy, consumers’ net income reduces, prompting them to become conscious of the budget and minimize their spending on necessities. On the other hand, when lower taxes are adopted under the policy, consumers tend to have more money in their pockets, and as a result, they spend more, increasing sales for retail businesses. When the policy includes increased government expenditure, there is an addition to the federal deficit, which results in increased interest rates. Notably, when interest rates increase, the cost of mortgages and credits rise, prompting consumers to reflect extensively on their expenditure on retail commodities. Some consumers will opt to save to avoid adverse outcomes while speculating about hard economic times in the future. Therefore, the amount left to them for spending on retail products becomes less, affecting the general retail industry.

 References

Amadeo K., & Estevez. (2022). The retail industry and its impact on the economy. The Balance. https://www.thebalance.com/what-is-retailing-why-it-s-important-to-the-economy-3305718

Ferm, L. E. C., & Thaichon, P. (2021). Customer pre-participatory social media drivers and their influence on attitudinal loyalty within the retail banking industry: A multi-group analysis utilizing social exchange theory. Journal of Retailing and Consumer Services, 61, 102584. https://doi.org/10.1016/j.jretconser.2021.102584

Statista. (2022). Market share of leading mass merchant e-retailers in the United States in 2017. https://www.statista.com/statistics/293268/mass-merchant-us-e-retailers-market-share/

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Overview
In this assignment, you will develop a paper in which you select an industry that interests you, describe that industry, and explain how the government might impact the industry.
A paper template is provided below for this assignment.

Microeconomics- The U.S Retail Industry

Use the Week 5 Microeconomic Paper Template [DOCX] to help you get started (optional).
Instructions
Review your chapter readings and use the resources provided to develop a 2–3 page paper on Economic Principles – Microeconomics in which you:
1. Choose an industry that interests you. (Remember, an industry is not a company. An industry is a group of companies doing the same thing. Ford is a company. Automobile manufacturing is an industry.)
2.Do research on your industry. In a few short paragraphs, describe your selected industry:
-Be sure to write in your own words.
-Identify some of the major companies in this industry.
-Identify the goods, and/or services this industry produces.
-Add anything else about the industry that you think is interesting.
-Keep track of your sources by copying their Internet addresses (URLs). You can paste these URLs at the end of your paper as your references.
3.Describe a microeconomic variable for your industry. Microeconomic variables include prices, sales, production, advertising, investment, and so on.
4.Include a graph, chart, or table showing this microeconomic variable over time.
-You do not need to create this graph, chart, or table. Find one that has already been created and paste it into your paper. For example, if your industry is U.S. automobile manufacturing, Google, “U.S. automobile manufacturing over time.” Select the “images” option. Choose one of the graphs, charts, or tables. Then copy and paste it into your paper.
-Include a reference to the source of the graph, chart, or table. Microeconomic relationships and market outcomes are covered in Weeks 2–4.
5.Describe one way the government might impact this industry. Examples might include price controls, regulations, taxes, or any other way you can think of.
Government intervention through price controls, regulations, taxes, and antitrust enforcement were covered in Weeks 2 and 4.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.
Resources to Complete the Assignment
*Statista*.
The specific course learning outcome associated with this assignment is:
Explain economic principles and their applications in the real world.