Retail Strategic Analysis Flashcards
7 cards from real CRA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Retail Strategic Analysis flashcards as text
A retailer's customer lifetime value (CLV) analysis shows high-value customers account for 20% of its base but 70% of profits. This exemplifies:
Answer: The Pareto principle applied to retail
The Pareto principle (80/20 rule) in retail describes how a small share of customers disproportionately drives the majority of revenue or profit.
Which retail format strategy uses smaller-format stores to penetrate urban markets where large-format stores are impractical?
Answer: Small-box urban strategy
Small-box urban strategy deploys compact store formats to capture demand in dense city markets where real estate costs and space constraints prevent large-format entry.
A retailer notices its basket size increases significantly when a product category is relocated near checkout. This demonstrates:
Answer: Cross-merchandising and impulse purchase behavior
Placing products near high-traffic areas like checkout leverages impulse buying behavior and cross-merchandising to increase average basket size.
A retail chain operates 200 stores. If it closes 20 underperforming stores and total revenue drops by only 3%, what does this suggest?
Answer: The closed stores were contributing minimal revenue relative to their costs
A small revenue decline from closing 10% of stores suggests those stores generated disproportionately low sales, making closure financially beneficial.
In retail real estate strategy, 'co-tenancy clauses' primarily protect a retailer by:
Answer: Allowing lease termination or rent reduction if anchor tenants leave
Co-tenancy clauses give tenants the right to exit or renegotiate leases if specified anchor tenants close, protecting against foot traffic loss.
What strategic risk does excessive reliance on a single product category create for a specialty retailer?
Answer: Concentration risk and vulnerability to category-specific demand shifts
Single-category dependence exposes the retailer to concentrated risk; any fashion shift, economic downturn, or disruption in that category can severely impact performance.
A retailer's 'channel conflict' most commonly arises when:
Answer: A brand sells directly to consumers, undercutting the retailer's pricing
Channel conflict occurs when a vendor's direct-to-consumer channel competes with retail partners, creating pricing and relationship tensions.