Final answer:
The Fair Share Index (FSI) aids retailers in understanding their performance relative to market potential within specific categories, distinguishing it from broader market competition metrics like the four-firm concentration ratio and the Herfindahl-Hirschman Index (HHI). The correct answer is D) FSI helps assess how a retailer is performing compared to market potential.
Step-by-step explanation:
From a retailer's perspective, the Fair Share Index (FSI) is utilized to determine how well a retailer is performing relative to the market potential. The FSI is a measure that compares a retailer's percentage of category sales to their percentage of total store sales. If the index is greater than 100, the retailer is getting more than their fair share of category sales in comparison to their overall store performance.
It is important to contrast FSI with other measures like the four-firm concentration ratio and the Herfindahl-Hirschman Index (HHI), which assess market competition differently. The four-firm concentration ratio adds the market shares of the four largest firms in the market, while the HHI squares the market shares of all firms to give extra weight to firms with larger shares. These market competition metrics are used differently from the FSI, which focuses on the performance of specific categories within a single retailer's operation.
The correct answer to the question is: D) FSI helps assess how a retailer is performing compared to market potential.