Final answer:
Retailers must weigh the benefits of lower operating costs against the potential increase in competition that could result from opening multiple stores in the same area, possibly affecting profits.
Step-by-step explanation:
Retailers must consider the trade-off between lower operating costs and potential competition from having multiple stores in an area. When retailers expand by opening multiple locations, they can achieve economies of scale, which can reduce operating costs per store. However, this expansion could lead to increased competition if multiple stores end up competing with one another for the same customer base. This can result in a scenario where, although operating costs may be lower, the potential for profit could be compromised due to the intensified competition which can lead to price wars or the need for increased marketing spend. Additionally, increased competition might lead to better and less expensive products for consumers, leading successful businesses to eventually increase their profits, benefiting both the businesses and their employees. On the other hand, businesses that cannot cope with the competition may see reduced profits or even face closure, which can result in job losses for their workers.