Retail Operations Flashcards

A retailer's inventory turnover rate drops from 8 to 5 turns per year. What does this indicate?

Answer: Inventory is sitting longer and capital is less efficiently deployed

A lower inventory turnover rate means products are taking longer to sell, indicating slower sales or overstocking that ties up capital.

Which type of retail layout is most commonly used in grocery stores to expose shoppers to the maximum number of products?

Answer: Grid layout

The grid layout uses long parallel aisles to guide shoppers past the entire store, maximizing product exposure — standard in grocery retail.

A customer buys a $50 item and pays with a $100 bill. The cashier gives $60 in change. What type of loss does this represent?

Answer: Cashier error shrinkage

Giving incorrect change due to a cashier mistake is classified as an administrative or cashier error, a common form of shrinkage.

What is the primary advantage of a retail store using an automated replenishment system?

Answer: It reduces stockouts by automatically triggering reorders at set inventory levels

Automated replenishment systems monitor inventory levels in real time and trigger purchase orders when stock falls to a reorder point, minimizing stockouts.

Which display technique places high-margin or promotional items at eye level on a retail shelf?

Answer: Eye-level placement

Eye-level placement is the premium shelf position because shoppers naturally look there first, increasing purchase likelihood for high-margin items.

A specialty retailer decides to carry fewer SKUs but in greater depth of inventory for each. This is called a __________ assortment strategy.

Answer: Narrow and deep

A narrow and deep assortment strategy offers fewer product categories but maintains high stock levels within each, reducing stockout risk on key items.

What is the purpose of a markdown cadence policy in retail?

Answer: To establish consistent timing and depth of price reductions for aging inventory

A markdown cadence policy sets rules for when and by how much prices are reduced on slow-moving or seasonal merchandise to clear inventory systematically.