Question 1

A disadvantage with the concept of balanced tenancy for a specialty store in a planned shopping center is that the

Accepted Answer

Balanced tenancy refers to a mix of stores in a shopping center that complements each other, aiming to attract a wide range of customers. A specialty store in such an environment might face limitations in expanding its product range (scrambled merchandising) due to the need to maintain this balance and not overlap too much with the offerings of other stores.

Question 2

The store composition in a regional shopping center is most similar to that of a

Accepted Answer

A regional shopping center typically has a wide variety of stores and services similar to those found in a central business district, including department stores, specialty shops, restaurants, and sometimes entertainment venues.

Question 3

The evolution of the conventional supermarket into the superstore illustrates

Accepted Answer

Scrambled merchandising refers to the practice of retailers adding products that are not traditionally associated with their store type, which is a characteristic of the evolution from conventional supermarkets to superstores.

Question 4

A manufacturer sells its low-priced watches at airport kiosks, stationery stores, full-line discount stores, and jewelry stores. This strategy illustrates

Accepted Answer

Scrambled merchandising refers to a strategy where retailers carry a wide variety of merchandise that crosses traditional product boundaries, often in unexpected or non-traditional outlets, which is what the manufacturer is doing by selling watches in a variety of stores not typically specialized in watches.

Question 5

One-stop shopping for final consumers is possible due to a retailer's use of

Accepted Answer

Scrambled merchandising refers to a retailer's strategy of offering a wide variety of unrelated product lines and items within a single store, allowing consumers to find everything they need in one place, thus facilitating one-stop shopping.

Question 6

According to the wheel of retailing theory,

Accepted Answer

The wheel of retailing theory suggests that new entrants often gain a competitive advantage through lower costs and prices, which can disrupt existing high-cost retailers.

Question 7

Some retail analysts argue that as full-line discount stores have matured, they have increased their services (such as offering credit, more convenient locations, and return and refund privileges). This change in strategy best illustrates

Accepted Answer

The wheel of retailing theory suggests that retail businesses start with low prices and minimal services to attract customers and then, as they grow, add services and amenities, which can lead to higher prices. This theory best explains the scenario where full-line discount stores mature and increase their services.

Question 8

An important lesson in the wheel of retailing is for a retailer to

Accepted Answer

The wheel of retailing theory suggests that over time, retailers start with low prices and low margins to attract customers and then gradually add services and amenities, which increase costs and prices. Keeping an eye on costs is crucial to avoid becoming vulnerable to new competitors who can enter the market with a lower cost structure, thereby repeating the cycle. Continuous focus on cost control helps a retailer maintain its competitive edge and adapt to changes in the competitive landscape.

Question 9

A traditional department store can generate a list of both slow-selling and fast-selling merchandise through

Accepted Answer

Computerized-checkout systems can track sales data in real-time, allowing a store to identify which items are selling quickly and which are not. This data can be used to generate lists of slow-selling and fast-selling merchandise.

Question 10

The major difference between a traditional credit card-based purchase and a debit transaction is that in the debit transaction, the

Accepted Answer

In a debit transaction, the amount is immediately deducted from the customer's bank account, unlike a credit card transaction where the customer is billed later and pays at a future date.

Question 11

A wholesaler can act as a retailer when it sells products directly to the final consumer.

Accepted Answer

Wholesalers primarily sell goods in large quantities to retailers or other businesses, but they can also act as retailers when they sell products directly to the final consumer, bypassing the retail intermediary.

Question 12

The large amount of credit purchases contributes to the high average value of a retail transaction.

Accepted Answer

Credit purchases allow consumers to buy goods without immediate payment, but they do not directly increase the average value of a retail transaction; factors like product pricing, consumer purchasing power, and demand influence transaction values more significantly.

Question 13

Impulse sales are particularly important to retailers.

Accepted Answer

Impulse sales generate additional revenue for retailers by encouraging customers to make unplanned purchases, often driven by emotional triggers or strategic product placement.

Question 14

Annual U.S. retail store sales exceed $10 trillion.

Accepted Answer

As of my last update in 2023, annual U.S. retail store sales are in the trillions but have not exceeded $10 trillion. The total retail sales in the United States, including food services, were estimated to be around $6.2 trillion in 2021, according to the U.S. Census Bureau.

Question 15

The sorting process makes one-stop shopping possible for final consumers.

Accepted Answer

The sorting process allows consumers to purchase a variety of products from a single location, making one-stop shopping possible.

Question 16

The retail categories of "chain," "franchise," and "convenience store" are not mutually exclusive.

Accepted Answer

A single retail entity can operate as a chain, franchise, or convenience store simultaneously, depending on its business model, ownership structure, and the nature of the products or services it offers.

Question 17

While chains account for just 25 percent of all U.S. retail units, they account for over half of all retail sales.

Accepted Answer

Chains often have more resources, wider brand recognition, and larger marketing budgets, allowing them to generate a disproportionate amount of retail sales compared to their number of units.

Question 18

Retail franchising provides independent retailers with services (such as site location, management training, and promotional support) that are common to large chain organizations.

Accepted Answer

The answer of Retail franchising provides independent retailers with services...

Question 19

In a leased department, the leased department operator benefits from the store traffic and the prestige of the lessor.

Accepted Answer

Leased departments allow the operator to benefit from the foot traffic and brand prestige of the host store, potentially increasing their sales and customer base without the need for extensive marketing.

Question 20

Many leased departments specialize in goods and services in which the lessor has little expertise (such as fine jewelry or photographic studios).

Accepted Answer

Leased departments are sections of a retail store that are rented out to an outside party, often because the store owner wants to offer goods or services in which they do not specialize, allowing for a broader range of offerings without the need for in-house expertise.

Quiz 16: Retailing