CRA Fundamentals & Core Concepts 3

Question 1

Gross Margin Return on Inventory Investment (GMROII) is calculated as:

Accepted Answer

Gross margin dollars divided by average inventory cost

Answer

GMROII measures how many dollars of gross margin are earned for each dollar invested in inventory, indicating inventory productivity.

Question 2

Which type of retail pricing strategy involves setting a high initial price and gradually lowering it over time?

Accepted Answer

Price skimming

Answer

Price skimming targets early adopters at a premium price, then lowers the price to attract more price-sensitive segments over time.

Question 3

In the context of retail demand forecasting, 'cannibalization' occurs when:

Accepted Answer

A new product reduces sales of an existing product in the retailer's own assortment

Answer

Cannibalization happens when a new or promoted item takes sales away from another item the same retailer already sells.

Question 4

What is the primary purpose of a retail 'markdown cadence'?

Accepted Answer

To systematically reduce prices on aging inventory to clear stock before season end

Answer

A markdown cadence is a planned schedule of progressive price reductions designed to liquidate slow-moving inventory before it becomes obsolete.

Question 5

Which KPI directly measures how efficiently a retailer uses its selling floor space?

Accepted Answer

Sales per square foot

Answer

Sales per square foot (or square meter) is the standard metric for evaluating how productively a retailer monetizes its physical floor area.

(CRA) Certified Retail Analyst Practice Test