Question

In: Finance

which of the following is an impact of the Great Recession on retailing trends? a. economic...

which of the following is an impact of the Great Recession on retailing trends?

a. economic shift toward higher prices

b. longer retail life cycles

c. tighter consumer spending patterns

d. prohibition new retail forms

e. lower costs for retailers

Solutions

Expert Solution

The correct answer is c.tighter consumer spending patterns

During a recession a consumer will be more focused on essential goods rather than durable goods, travelling or making investments in the real estate market. What happens during a recession is that people are forced to take pay cuts, many lose jobs and their earnings fall. As a result of this a consumer would focus on surviving first by buying food. They would refrain from visiting the restaurants and prefer making food at home. Now as a result of this consumer spending falls. Due to low earnings people will try to avoid non-essential travel, vacations etc. as they are left with inadequate earnings as a result of the recession. The significant impact is seen on the spending for durable goods. People would not prefer to buy durable goods during times of a recession.

Keeping all the above points in mind it can fairly be concluded that consumers do become cautious on their spending during a recession and this leads to a tighter consumer spending.


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