Final answer:
Retailers can grow by taking away sales from competitors in a monopolistically competitive market environment where many firms offer differentiated products. Successful businesses need to innovate and improve their offerings to attract customers, whereas unsustainable strategies can lead to decline and failure.
Step-by-step explanation:
To be successful in retailing today, given the slower population growth rate, retailers can grow by taking away sales from competitors. This is a common practice in the world of monopolistic competition, where many firms compete in the same market with similar but differentiated products. For example, in a large shopping center like the Mall of America, there are numerous stores selling women's clothing, each trying to attract customers with unique styles, brands, or other selling points.
Competition can indeed reduce a business's profits, leading firms to find ways to offer better or cheaper products, attract and retain customers, and differentiate themselves from their competition. Businesses that fail to innovate or maintain competitiveness may lose income or even go out of business, while those that succeed can increase their profits and market share.
Options such as reducing the number of stores, having an industry legislated as a monopoly, accusing competitors of unfair competition, and reducing customer services are generally not sustainable strategies for growth in a competitive market environment.