The amount of people demanding shoes can radically increase or decrease each week in relation to both internal and external factors of the market. The demand curve can be defined as the “graphical representation of the relationship between the demand for a good and its price, drawn on the assumption that everything else affecting demand remains unchanged.
One major factor that affects the demand for shoes in the UK is price. UK consumers are extremely price conscious and value driven. If prices in shoes rise then the demand for them will decrease. Although if shoes are brought onto the market at good value for money then the demand for those shoes will radically increase. An example of this has recently been the production of snow boots. When they were brought onto the market last winter ranging from prices of £15 to £30 demand grew and sales rocketed.
Another factor affecting the demand for shoes would be demographics. The characteristics and size of the population also impacts the demand for shoes. Heavily populated areas like cities have greater demands for shoes relative to smaller towns. The demographics of the area surrounding a specific store also impact the choice of your product. If you are located in the middle of the busy downtown area or business section of your town, you may find that corporate and formal shoes are in greater demand relative to other shoe types.
Demand can also be affected by changes in income. Income affects the choice and regularity of the purchase of shoes. A family with increasing incomes may find itself having more money available for the purchase of shoes. A family with decrease income, however, may find shoe purchase at the bottom of their priority. For a high-income area, you can expect a strong demand for brand names, particularly high-end types of shoes. Low-income areas are more likely to be price-conscious.
Fashion Trends and consumer tastes are another major factor that determines the demand for shoes as consumer tastes often change and fashion dictates what sells for shoes. Fashion creates demand for the current “must have” items and therefore if a specific shoe is in style the demand for that shoe will increase. The drawback, of course, is when you overstock on a particular style the fashion trends have already moved to the next “must have” shoes.
The economy can affect demand also. The shoe industry typically follows the instability of economic swings and downturns. A boost in the economy would boost the sale of shoes as customers have extra money to spend on luxuries. Although if there was a recession in the economy customers would be very cautious of how they spend their money.
The supply of shoes and the factors affecting supply can determine how much are sold each year. The supply curve can be defined as,
“An illustrative representation of the relationship between the supply of a good and its price, usually with price on the vertical axis and quantity supplied on the horizontal axis.”
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One factor affecting supply is Technology. If goods are produced and supplied using the most advanced and up-to-date technology then their will be an increase in supply. If there is deterioration in technology then this will result in a decrease in supply. An increase in supply is shown on the graph as a rightward shift of the supply curve. A decrease in supply is shown on the graph as a leftward shift of the supply curve.
If there was to be an increase of demand and supply for a related good also known as a substitute such as trainers or a certain type of clothing then this would affect the supply of shoes. Again there may not be enough technology to supply all goods demanded in the UK.
If the government were to increase the tax of shoes then there would be a reduction in quantity supplied at every price and therefore shifts the supply curve to the left.
Changes in unit labor costs or capital costs can affect supply. Materials such as leather are needed to produce shoes. If the cost of leather was to decrease then the quantity of shoes would increase, shifting the supply curve to the right as shown below.
In conclusion you should normally assume that higher prices are associated with a smaller quantity demanded. Quantity demanded at each price will change when any number of outside factors changes. Changes in income, other prices, and basic preferences will cause the original demand numbers to either increase or decrease. The interaction of supply and demand determines the market price and the quantity sold in the market. The market price is called the equilibrium price.