In the world of fashion, one can buy a dress for just $6.95 from H&M retail, while I spend more than that at Starbucks! Starbucks may be just one big rip off, but it makes me question, the quality of the clothing, and the underlying incentives the retailers may have; like pricing items questionably low to encourage customers to actually buy more than they would if the prices were high, making more profit. The cost for Chinese labour is increasing, however retailers must think strategically that if they up their prices, their profits will likely decrease. Retailers have to cut their prices in order to meet the equilibrium price and quantity, which has shifted due to a change in expectations by the customers. For a retail store to be successful they must constantly be on their toes ready to increase or decrease their prices according to customer’s willingness to buy, and economy scale. While the margins are fairly high now, with the continually rising manufacturing cost, it will be difficult for retailers to maintain those low prices, meaning they will have to lower their prices or bring in less profit. Until this happens, right now is the prime time to shop, shop, shop! 

WORK CITED: “H&M OFFERS A DRESS FOR LESS” – Canadian Business Magazine