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AA 18题 9. The following appeared in the opinion column of a financial magazine.
“On average, middle-aged consumers devote 39 percent of their retail expenditure to department store products and services, while for younger consumers the average is only 25 percent. Since the number of middle-aged people will increase dramatically within the next decade, department stores can expect retail sales to increase significantly during that period. Furthermore, to take advantage of the trend, these stores should begin to replace some of those products intended to attract the younger consumer with products intended to attract the middle-aged consumer.”
The statement claims that middle-aged consumers devote 39% of their retail expenditure to department store products and services while younger consumers devote only 25% of their retail expenditure on an average. Hence the statement is trying to conclude that it would be more beneficial to the department store to shift its focus to middle aged people. Let us review the conclusion of the statement from various perspectives.
Firstly, at any given moment of time, there is always a percentage of the population that falls in the middle-aged segment. However, there is also a significant percentage of the population that falls into the younger segment of the population. If department stores were to lay more stress on products aimed toward middle-aged people, they would probably end up losing their younger generation customers. If a majority of the department stores were to adopt this stand then the younger generation would be left with very little choice with where to shop from. This may result in a price difference between the same products being sold at the department store versus the product being sold at any other venue. Over a period in time department stores may become solely dependant on the middle-aged segment to keep their businesses viable.
Secondly, if department stores were to primarily service middle-aged people, where would the younger and the elderly go in order to purchase their necessities? We would then begin to have separate department stores catering to the needs of the various age segments. If this concept becomes a viable business model then the consumer stands to gain, as now each segment could walk into their respective department stores and expect to get everything they wanted under one roof. Companies would begin orienting themselves towards servicing these segments. From their perspective, it would lead to an increase in costs by means of acquiring real estate, hiring and advertisement costs. However, if we were to compare the products that are commonly used across all the age segments, we would find a huge intersection in the various products that are used for example toothpaste, soaps, detergents etc. Hence we are lead to question the viability of such a business model as one that caters to various age segments exclusively. The garment industry has adopted this concept successfully. However, whether this concept would do the department stores good in the long run, is as yet unknown. It is clear however, that the industry that would stand to gain the most from such an arrangement would be the advertising industry. Advertisements would now have to be tailor made for each segment.
In conclusion, the statement could have done better by modifying its line of reasoning. The statement could have suggested that to cater across age segments that department stores set up special areas that cater to the respective age segments under one roof. That way, the department could still capitalize on the 39% expenditure of the middle-aged segment by providing them with variety while safeguarding the interests of the other age groups as well. At the end of the day, the department store still makes it profits and customers are satisfied. The statement currently does not provide us with sufficient information to conclude in its favor decisively. |
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