What is Price Elasticity in Retail? Explained

Price elasticity in the retail industry assesses how responsive the quantity demanded of a product is to changes in its price. It quantifies the impact of price fluctuations on consumer purchasing behavior. If a product is deemed elastic, price changes have a significant impact on quantity demanded, while an inelastic product experiences less pronounced effects. Retailers leverage insights from price elasticity to fine-tune pricing strategies, aiming to optimize revenue and profitability based on consumer reactions to price adjustments.