3 ms·
Prices don't go down unless there is competition. If a company figures our a way to make massive cost savings while their competition does not, they pocket that
by lovich 8y ago
Prices don't go down unless there is competition. If a company figures our a way to make massive cost savings while their competition does not, they pocket that margin and use it to either invest in more productive capacity or give back to shareholders. They don't feel some ethical need to lower prices just because they can
Automation is correlated with cost savings for consumers because usually the competition can figure out the same thing after seeing another player do it. It's a mistake to think they are causally related
- ALittleLight 8y ago>Prices don't go down unless there is competition Prices also go down if it will lead to more profit. If you can sell 2.1 times as many widgets selling at half the profit then of course you will.
- PeterisP 8y agoWell, sure, "if a company figures our a way to make massive cost savings while their competition does not" - but Uniqlo isn't that unique; nothing that they have done here is something that's fundamentally impossible for their competition to implement as well, it's just a question of appropriate investment. Yes, there's no reason for them to lower the prices right now, but that will result in mid-term (3-5 years) price decreases in the industry.
- EpicEng 8y ago>If a company figures our a way to make massive cost savings while their competition does not, they pocket that margin and use it to either invest in more productive capacity or give back to shareholders. Well sure, but in what world is that going to happen in here? They didn't invent time travel; they automated a factory. This can be replicated. They may also lower prices simply to undercut competitors if they think the increase in volume will work out to more profits overall.