December 1 2015
The Ugly Christmas Sweater Trend
With Christmas just around the corner, it seems like everyone is trying to find their ‘ugly Christmas sweater’ for the holidays. Each sweater you see is uglier than the next, adorned with all the bells and whistles-literally. Themed parties have become more and more common creating an increase in demand for them.The trend has gotten so popular that higher end stores like H and M and Nordstrom have started reaping the benefits of this craze (Source 1). In fact, there is even a website that purposefully makes ugly sweaters called uglychristmassweater.com. Now, instead of rummaging at Goodwill or looking through your mom’s closet, you can purchase them new online or in stores. No more hurt feelings when your mom sees you wearing her sweater on ugly Christmas sweater day! There is a tradeoff though; with more selection and accessibility, they’ve become quite expensive. Prices range anywhere from 30 to 70 dollars, and since they are an inelastic good, people are willing to pay that price because you can’t substitute anything for it.
The demand for these tacky sweaters are enormously high during the winter season, and in places like Goodwill and the Salvation Army, the amount in stock is scarce because everything has gotten picked over. To prevent shortages, more and more retailers have started carrying sweaters creating an increase in supply. Since the demand is so high for only a small period of time, suppliers can increase the prices during the christmas season. Stores cannot price them too outrageously though because it is not a monopoly. There are many firms with similar products, and if a retailer's prices are too high, consumers will just go somewhere else. In other words, the market of ugly Christmas sweaters is a perfect competition, which means no single seller controls the prices. If the cost of buying a sweater is too great, another option that has been created which are DIY Kits. At 30 dollars, they include a sweater, stencils, and embellishments and you make them yourself. According to Meri Barnes, product and business developer for the company who makes these kits “[She’s] never seen a product or category blow up like this.” Last year they sold 35,000 kits, and they’re expected to sell 400,000 this year (Source 2). The amount of revenue brought in by these sweaters is enough for small businesses like this to survive throughout the year, despite having a seasonal product. Some individual entrepreneurs have even started selling these corny sweaters on Ebay. One woman paid for her two son’s college tuition with the millions of revenue she made after selling 25,000 sweaters (Source 2).
What started as a funny themed party idea has now expanded to a phenomenon. Ugly Christmas sweaters have impacted the market in a positive way not only for the consumer but the supplier as well. Each year, the sweaters get uglier and more accessible, and the suppliers get richer. The only opportunity cost is money, and if the trend continues in this way, customers will continue to pay the price.
- "A Brief History of the Ugly Christmas Sweater." NewsFeed A Brief History of the Ugly Christmas Sweater Comments. Web. 1 Dec. 2015.
- "The Big Business of Ugly Christmas Sweaters." Bloomberg.com. Bloomberg. Web. 1 Dec. 2015.