Last Updated 11 Jul 2021

Could the big box stores sell merchandise identical to Urban Outfitters?

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It would be very hard or even impossible for big box stores like Wal-Mart to sell products that are identical to what Urban Outfitters stock. To start with, their modus operandi when getting into a particular market situation would face significant challenge in counterculture market setting. They begin by bringing large volume of goods at a very low price and subsequently low profit margin so as to put their competitors at a very tight position-either to decreases their prices also or to move out of the market. Their main focus is not on a particular piece of product but on numbers.

On contrary, Urban Outfitters try as much as possible to reinforce the image of their brands through producing unique products in small quantities in order to ensure scarcity is maintained. Their market encompasses a certain group of counterculture persons who are not looking for conformity but rather obscurity. In this case, big box stores would be disadvantaged since production of volume of products would mean that there is no scarcity and also uniqueness.

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  • Identify at least three reasons why exclusivity is valuable.

By simple definition, the term exclusivity means a state of being stylish or unique. Exclusivity in itself presents a number of advantages not only in business but also in other spheres of operation. Firstly, this can help in getting hold of a particular market niche with a certain taste. It is important to state that exclusivity tries to utilize the diversity of the taste of people living in the society. Capturing the attention of those who embrace counterculture image in what they want to use demands that uniqueness should be highly put into consideration.

Consequently, when such markets are established by one particular seller it would be very hard for any other competitor to penetrate. Secondly, as Senk states, unique products are not easy to come by. This will definitely create scarcity as per the law of demand and supply and hence increment in value. Demand leads to appreciable increase in price which would be readily welcome by the otherwise unique consumers of the product without any complaints.

Moreover, such aggravation means that it would be difficulty for any competitor-however big-to survive in the competition. Last but not least, it has been noted that distribution through exclusive channels enhances efficiency and significantly lowers the cost of distribution. There is empirical evidence in various studies which shows that by maintaining exclusivity and at the same time applying intervention can yield increased welfare dividends. However caution must be taken not to misapply such interventions thereby interfering with the market laws.

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