Fundamentals & Core Concepts Flashcards
7 cards from real CRA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Fundamentals & Core Concepts flashcards as text
Gross Margin Return on Inventory Investment (GMROII) is calculated as:
Answer: Gross margin dollars divided by average inventory cost
GMROII measures how many dollars of gross margin are earned for each dollar invested in inventory, indicating inventory productivity.
Which type of retail pricing strategy involves setting a high initial price and gradually lowering it over time?
Answer: Price skimming
Price skimming targets early adopters at a premium price, then lowers the price to attract more price-sensitive segments over time.
In the context of retail demand forecasting, 'cannibalization' occurs when:
Answer: A new product reduces sales of an existing product in the retailer's own assortment
Cannibalization happens when a new or promoted item takes sales away from another item the same retailer already sells.
What is the primary purpose of a retail 'markdown cadence'?
Answer: To systematically reduce prices on aging inventory to clear stock before season end
A markdown cadence is a planned schedule of progressive price reductions designed to liquidate slow-moving inventory before it becomes obsolete.
Which KPI directly measures how efficiently a retailer uses its selling floor space?
Answer: Sales per square foot
Sales per square foot (or square meter) is the standard metric for evaluating how productively a retailer monetizes its physical floor area.
A retailer notices its 'stock-to-sales ratio' is rising week over week. This most likely indicates:
Answer: Inventory is building up relative to sales, signaling potential overstock
A rising stock-to-sales ratio means inventory is accumulating faster than it is being sold, which could lead to markdowns or obsolescence.
In retail, 'private label' (store brand) products primarily benefit retailers by:
Answer: Providing higher gross margins and differentiation versus national brands
Private label products are sourced directly by the retailer, typically yielding higher gross margins and creating assortment exclusivity that differentiates the retailer.