CRA Retail Strategic Analysis 2

Question 1

A retailer's gross margin is 42% and its operating expense ratio is 38%. What is its operating margin?

Accepted Answer

4%

Answer

Operating margin equals gross margin minus operating expense ratio: 42% - 38% = 4%.

Question 2

Which competitive strategy focuses on a retailer dominating a narrow customer segment rather than the broad market?

Accepted Answer

Focus strategy

Answer

Porter's focus strategy concentrates resources on a specific niche segment to achieve competitive advantage within that segment.

Question 3

A retailer's sales per square foot declined 15% year-over-year while total sales increased 5%. What most likely explains this?

Accepted Answer

Significant store expansion increasing total floor space

Answer

If total sales rise but sales per square foot fall, the denominator (total square footage) must have grown faster than sales, indicating store expansion.

Question 4

What does a retailer's 'private label penetration rate' measure?

Accepted Answer

Percentage of total sales generated by store-brand products

Answer

Private label penetration rate is the share of total net sales attributable to the retailer's own store brands.

Question 5

In SWOT analysis, a major competitor closing stores in your trade area would be classified as:

Accepted Answer

Opportunity

Answer

An external positive development—such as a competitor's exit—represents an opportunity that the retailer can capitalize on.

(CRA) Certified Retail Analyst Practice Test

(CRA) Certified Retail Analyst Practice Test

CRA Retail Strategic Analysis 2