CRA Retail Industry Foundations 3 — Questions and Answers
Question 1: Which metric measures the productivity of retail floor space by comparing net sales to total selling area?
- Return on assets (ROA)
- Sales per square foot (Correct answer)
- Gross margin return on investment (GMROI)
- Inventory turnover ratio
Correct answer: Sales per square foot
Sales per square foot is a key space-productivity KPI calculated as net sales divided by total retail square footage.
Question 2: In retail supply chain management, 'cross-docking' refers to:
- Storing excess seasonal inventory at a third-party warehouse
- Transferring inbound shipments directly to outbound vehicles with minimal warehousing (Correct answer)
- Shipping products across international borders without duties
- Consolidating multiple vendor orders into a single purchase order
Correct answer: Transferring inbound shipments directly to outbound vehicles with minimal warehousing
Cross-docking moves merchandise from receiving docks to outbound trucks quickly, reducing storage costs and improving replenishment speed.
Question 3: Which of the following is a characteristic of 'everyday low pricing' (EDLP)?
- Frequent promotional markdowns and high-low price swings
- Consistently low prices with minimal reliance on temporary promotions (Correct answer)
- Premium pricing to reinforce a luxury brand image
- Dynamic pricing adjusted hourly based on demand algorithms
Correct answer: Consistently low prices with minimal reliance on temporary promotions
EDLP strategies maintain stable, competitive prices year-round rather than cycling between regular and sale prices.
Question 4: A 'planogram' in retail operations is best described as:
- A financial plan for promotional spending
- A visual diagram specifying how and where products should be displayed on shelves (Correct answer)
- A layout of store exit routes for safety compliance
- A schedule for employee shift rotations
Correct answer: A visual diagram specifying how and where products should be displayed on shelves
Planograms guide store associates on exact shelf placement of each SKU to maximize sales, comply with vendor agreements, and maintain visual consistency.
Question 5: Which of the following best defines 'anchor tenant' in the context of a shopping mall?
- The first retailer to sign a lease in a new development
- A large, well-known retailer that generates significant traffic for the entire center (Correct answer)
- A food-court operator that anchors the dining section
- A retailer with the longest remaining lease term
Correct answer: A large, well-known retailer that generates significant traffic for the entire center
Anchor tenants like department stores or big-box retailers draw consumers to the mall, benefiting smaller co-tenants through spillover traffic.
Question 6: The 'retail life cycle' concept suggests that retail formats experience stages analogous to:
- The business cycle of economic boom and recession
- The product life cycle of introduction, growth, maturity, and decline (Correct answer)
- The employee career progression from entry-level to executive
- The supply chain from raw materials to end consumer
Correct answer: The product life cycle of introduction, growth, maturity, and decline
Like products, retail formats move through introduction, accelerated development, maturity, and decline phases over time.
Question 7: In retail, 'markdown money' (also called 'vendor allowances') is best described as:
- Funds set aside internally for end-of-season clearance
- Payments from vendors to retailers to compensate for markdowns on their products (Correct answer)
- Discounts given to customers at point of sale
- Federal tax credits for reducing retail prices on essential goods
Correct answer: Payments from vendors to retailers to compensate for markdowns on their products
Markdown money is a negotiated payment from suppliers to retailers to offset the cost of reducing prices on slow-moving or excess inventory.
CRA Retail Industry Foundations 3
Which metric measures the productivity of retail floor space by comparing net sales to total selling area?