Question

Retailers with several units are a stronger competitive threat because?

1) they can focus all their efforts on one trade area
2) they are generally owner and family operated
3) they can spread many fixed costs over a number of stores and can achieve economies in purchasing
4) they can tailor their merchandising to one trade area in each unit
5) they can spot customer desires sooner and respond faster.

Answer 1

Retailers with multiple units are competitively stronger because they can spread fixed costs across their stores, achieve economies of scale, tailor their offerings to specific markets, and respond quickly to consumer needs. Therefore, the most appropriate option is 3.

Step-by-step explanation:

Retailers with several units pose a stronger competitive threat in the market primarily because of their ability to spread many fixed costs over multiple stores. This distribution of costs can lead to significant economies of scale and more competitive pricing. Additionally, these retailers often have more purchasing power, enabling them to achieve economies in purchasing, which can be translated into cost savings for the business and, potentially, lower prices for consumers. Moreover, larger chains can tailor their merchandising strategies to specific trade areas, which allows them to become more competitive in each local market. They are better positioned to spot customer desires and respond faster due to their broader market coverage, infrastructure, and data collection capabilities. This agility is crucial for adapting to market changes and providing what consumers want more efficiently than smaller competitors, such as a gas station adding a coffee shop or a carwash to attract more customers, or a unique restaurant concept being replicated.