Economic Importance Of Retail

789 Words4 Pages
The work of retail Economics has been nothing if not diverse, in both subject matter and geography. The economics of regional retail and service provision have taken to calling the Economics of Retail. Retail development and redevelopment bring significant impacts. 1. Retail Economics provides with the methods to handle those impacts, magnifying the benefits and justifying the challenges. 2. Retail Economics is the acclaimed organizer in understanding the economics of regional retail and service activities. The organizations have focused on the critical and often misunderstood role of retail in economic development and urban planning policy. 3. Retail Economics describes the economics of retail and service provision using time-tested, industry…show more content…
The economic sectors and industries, mining, manufacturing, agriculture, and tourism which give capital by producing goods or providing services to outside visitors make up what economists call the “economic base” of the local economy. These industries are the central part or foundation for the local economy because they make it possible for the community to import those goods and services which cannot be produced within their own market or at least which cannot be produced or provided at a “comparative advantage” to those produced…show more content…
Retailers earn their profits by providing services to buyers of the population, when they consume goods. Retailers are dependent for their livelihoods on the buying power of the consumers in the community which includes all members of that community. The buying power of the consumers is a function of their connection to the economic base of the importing community. The factory workers in the community earn money for their company by producing goods which are sold to another community. The “value added” by the factory workers, minus profits retained by the factory owners, is transformed to cash and distributed through the payroll to the workers. These workers in turn use this cash to purchase goods from the retailers. Their purchasing power is restricted not only by the prices charged by the retailers, but by the wages paid by the manufacturers. Any retailer larger than a “mom and pop shop” has salesmen and salesladies who provide the bulk of the retailer’s services to the consumers. They get paid also, and in turn spend some portion of their wages at the establishments of other retailers, and so on. The retailers are all directly or indirectly giving the wealth to the economic base industries. In such way they are able to make money and grow only as fast as the economic base can grow. The retailers are thus competing among one another to obtain larger
Open Document