The factors that influence demand are generally categorized
into:
- Price - the main factor that influences quantity demanded
- Other factors - that influence demand as a whole
Keeping the price of a product constant, there are several other
factors that influence the demand in a particular market or an
industry.
Specifically referring to the fashion retail industry, this
industry comprises of a diverse chain of small and big sellers, and
retail buyers are generally individuals.
The main factors influencing demand in this industry
are:
- Tastes and Preferences of Consumers: Fashion, as an industry,
is completely driven by tastes and preferences. These variables
change continuously. For example, there may be a new movie or a new
fad that influences teenagers. It is possible that it will impact
demand for a few months, till a newer fad comes along. Thus,
sellers have to be very alert about such changes.
- Income of Consumers: In the fashion industry, products have to
be designed for all income groups. In general, when the income
level of consumers change, their ability to purchase products also
changes. Fashion products are not the basic necessities of life,
thus people will spend on them when they have disposable
income.
- Prices of related products: Fashion itself has no substitutes.
However, within the retail industry, there are a lot of items that
can be replaced with each other. When branded products become very
costly, usually people switch to generic substitutes. As sellers,
knowledge of best-selling products is very important.
- Expenditures on promotion and advertisements: In the fashion
industry, consumers have to be constantly made aware of all the
developments. Thus, brands which don't promote themselves properly,
usually fail to generate demand. Proper advertising leads to an
increase in demand.
- Number of buyers: It is not necessary that every product will
have a large buyer base. For example, an extremely rare and vintage
fashion material may attract only a few buyers, but it will be sold
at a very high price. Similarly, the masses will opt for more
affordable products. In general, the demand will be higher where
the number of buyers are higher.
- Expectations of consumers: If consumers expect prices to rise
tomorrow, they stock up on products today. However in fashion,
there is a limit to how much a person can stock up. For general
fashion items, demand will rise if prices are expected to rise in
the future.