Pottery Barn is a retail chain of home products. Before entering a new geographic area, the company develops an index consisting of a ratio of local market potential in dollars (demand) to local market retailing space in square feet. If this ratio is below a predetermined level, the site is not considered further. However, if this ratio is greater than that level, further site-selection analyses are performed. This index is called _____.

Question

Quizplus · Accepted Answer

The index described in the scenario is measuring the ratio of local market potential (demand) to local market retailing space (supply) and if this ratio is below a predetermined level, the site is not considered. This indicates that the market may already be saturated with retail options. Therefore, the best choice is D, index of retail saturation. Option A, index of retailers, is too general and could refer to any type of index that measures retailers in a geographic area. Option B, index of retail utilization, does not convey the specific concept of supply and demand in a geographic area. Option C, index of retail sales, only considers demand and doesn't take into account the retail space available.

Pottery Barn Is a Retail Chain of Home Products