Question

A "retailer's cost management" strategy refers to?

1) getting shoppers into the store.
2) having the right merchandise, using the right layout and display, and having the right sales force.
3) the small size of the retailers' stores which gives these advantages in negotiating leases in an industry with a surplus of stores, thus reducing their operating costs.
4) having a low marginal cost, where the cost of selling one more unit does not significantly impact total costs, thus making them want to maximize revenue.
5) getting shoppers and converting them into customers at the lowest operating cost possible that is consistent with the level of service that customers expect.

Answer 1

A retailer's cost management strategy involves minimizing operating costs while providing the expected level of service. This includes leveraging economies of scale, optimizing production technology, and analyzing various cost measures to determine the profit-maximizing output and pricing.

Step-by-step explanation:

A "retailer's cost management" strategy refers to getting shoppers and converting them into customers at the lowest operating cost possible that is consistent with the level of service that customers expect.

This encompasses a variety of practices such as optimizing the scale of production to benefit from economies of scale, where the cost per unit goes down as the quantity of output goes up, which is utilized by warehouse stores like Costco or Walmart.

It also includes adopting the least costly production technology and making decisions about the profit-maximizing quantity to produce based on an analysis of fixed and variable costs, average total cost, average variable cost, and marginal cost.

Firms like Amazon have succeeded due to their production model and cost structure, which allows them to offer lower prices even with added shipping costs. Whether it's a massive online retailer or a small corner deli, all businesses must consider what to sell, the output, and the price, taking into account their cost management strategies.