GMAT Essays (AWA)

fit4life wrote:
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 the 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 consumers with products intended to attract the middle-aged consumers."


ANSWER:
Middle-aged consumers devote 39% of their retail expenditures to department stores while the percentage is less for younger consumers. The population of middle-aged people will increase dramatically within the next decade so department stores should see an increase in profits and should replace items to attract more middle-aged consumers. This argument has a few unstated assumptions including, middle-aged consumer spending habits will be the same within the next decade and the economy will stay the same over the coming years.

The first assumption is the spending habits of these middle-aged consumers will stay the same. For example, there could be a big bomb in internet shopping in the next 10 years. As history sometimes show us, economy's go through waves of spending habits and these habits shift from year to year. If there is a shift to shopping online instead of at department stores, these department stores would actually experience a decrease in sales as they assumed spending habits would remain the same among middle-aged consumers. If these stores replace the products that attract the younger crowd with products that attract the middle-aged crowd, without proper anaylsis of the hypothetical future, they could actually lose out on sales as younger people, for example, like to go out shopping with their friends versus shopping online.

The next flawed assumption is assuming the economy is going to stay the same over the next upcoming years. As seen before, when an economy goes into a recession, spending slows down and individuals are more cautious about where their monies ago every month. If for example, a recession where to hit, middle-aged consumers may not want to devote 39 percent of their retail expenditures to department store products and services especially if they lose their jobs. Instead they may shift their monies to lower priced goods and services that they can live with as they may not want to spend money on higher goods and services. Younger consumers may not feel the need to cut back on spending money even through a recession, so these department stores would be doing an injustice to young people if they assume the middle-aged consumers will continue to shop regardless of their economic standing. This argument could also work if the economy experiences an increase in spending money. Thus, middle-aged consumers may shift their monies to more higher priced products and services, for example, luxury cars or expensive boutiques. With an increase in monies, middle-aged consumers may not want to shop at their local department stores anymore.

In conclusion, this argument would be considerably stronger if the writer took into consideration the possible future of shopping trends and the possibility that their could be a negative and also positive shift in the economy.