Over the past few years, there has been a steady increase in the number of individuals who have been involved in athletics. Due to this growth, it was expected that the number of sales in sporting goods would also increase. To the dismay of the traditional sporting goods industry, sales have actually dropped, according to Sara Germano’s article, “Sporting Goods Stores Hit Slump,” published on March 9th of this year. With this decrease in sales, some companies are trying to adopt new sales marketing schemes or adjust share earnings, whereas others face the unavoidable pressure of closing stores.
According to Performing Sports Group Ltd., the plummet in sales is a result of the “sudden shifts in demand” (Germano). There have been two different shifts in demand in varying sections of the sporting goods market: traditional in-store and online shopping (specialized …show more content…
If, for example, traditional stores were to decrease the prices of their products, the revenue received by the company would increase, but the profit would decrease. This was the case for Dick’s, where the profit decreased by 17% and the revenue increased by 3.7% (Germano). This shows that decreasing the price is not beneficial in bringing these companies “out of the slumps.” This would explain why the paths these companies take/took do not consist of decreasing the prices of their products, but instead they change share earnings and marketing schemes, or forfeit altogether. Price elasticity of demand can also be related back to consumer surplus. If demand were to stay the same, even a slight decrease or increase in the price at which a good is sold would significantly impact consumer surplus. Decreasing the price would increase consumer surplus, but it would also decrease producer surplus (proving price decreases to be inefficient for producers, especially at a time where profits are already at a
According to Performing Sports Group Ltd., the plummet in sales is a result of the “sudden shifts in demand” (Germano). There have been two different shifts in demand in varying sections of the sporting goods market: traditional in-store and online shopping (specialized …show more content…
If, for example, traditional stores were to decrease the prices of their products, the revenue received by the company would increase, but the profit would decrease. This was the case for Dick’s, where the profit decreased by 17% and the revenue increased by 3.7% (Germano). This shows that decreasing the price is not beneficial in bringing these companies “out of the slumps.” This would explain why the paths these companies take/took do not consist of decreasing the prices of their products, but instead they change share earnings and marketing schemes, or forfeit altogether. Price elasticity of demand can also be related back to consumer surplus. If demand were to stay the same, even a slight decrease or increase in the price at which a good is sold would significantly impact consumer surplus. Decreasing the price would increase consumer surplus, but it would also decrease producer surplus (proving price decreases to be inefficient for producers, especially at a time where profits are already at a