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Consumer spending has hit record highs in recent years yet many retailers are struggling for profitability:...

Consumer spending has hit record highs in recent years yet many retailers are struggling for profitability: Provide an economic explanation of the future of the retail industry. Please provide website if you pull info from it.

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Answer #1

The consumer is spending a very high amount but the profitability is low means that the price of the goods is low and close to the cost incurred by the industry to produce that good i.e. there is very less difference between the selling price and cost. This will cause many industries with zero profit to close, these will be the industries who are inefficient and cannot get a profit at a low cost. The industries will go more and more efficient in the process to increase the profit.

In the future, the industries who are more efficient will be making more profit and they can force the prices further down. This will reduce the profit even more for the inefficient industries and force them to exit the industry. This may lead to fee efficient and very large retail firms serving the whole retail industry.

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