DECA Retail Operations 3 — Questions and Answers
Question 1: A fashion retailer receives merchandise in March for a summer selling season. This is an example of what buying strategy?
- Opportunistic buying
- Forward buying (Correct answer)
- Just-in-time buying
- Consignment buying
Correct answer: Forward buying
Forward buying involves purchasing merchandise well in advance of when it will be sold, which is standard practice in fashion retail.
Question 2: Which of the following is a variable cost for a retail store?
- Monthly lease payment
- Store manager salary
- Cost of goods sold (Correct answer)
- Insurance premiums
Correct answer: Cost of goods sold
Cost of goods sold varies directly with sales volume, making it a variable cost, unlike fixed costs such as rent or salaries.
Question 3: A store achieves a 55% gross margin on a product priced at $40. What was the cost of the item?
- $18.00 (Correct answer)
- $22.00
- $24.00
- $28.00
Correct answer: $18.00
Gross margin of 55% means cost is 45% of retail: $40 × 0.45 = $18.00.
Question 4: What is the purpose of a loss leader pricing strategy in retail?
- To permanently reduce prices on slow-moving items
- To price one item below cost to attract customers who will buy other products (Correct answer)
- To match a competitor's price exactly on every SKU
- To increase margin on premium goods by lowering costs
Correct answer: To price one item below cost to attract customers who will buy other products
A loss leader is priced below cost intentionally to draw traffic, with the expectation that customers will purchase additional full-margin items.
Question 5: Which component of the retail marketing mix is most directly controlled by store-level operations staff?
- Product assortment decisions
- National advertising campaigns
- In-store customer service (Correct answer)
- Wholesale pricing from vendors
Correct answer: In-store customer service
In-store customer service is directly managed and delivered by store-level staff, making it the most operationally controllable marketing mix element.
Question 6: What does a retailer mean by 'open-to-buy' (OTB)?
- The number of new vendor accounts a store can open
- The dollar amount of inventory a buyer is authorized to purchase in a given period (Correct answer)
- The credit limit extended to retail customers
- The square footage available for new product displays
Correct answer: The dollar amount of inventory a buyer is authorized to purchase in a given period
Open-to-buy is the budgeted dollar amount remaining for purchasing inventory within a specific time frame, used to prevent overbought positions.
Question 7: A retail store wants to reduce customer wait times at checkout. Which operational change would most directly address this?
- Extending store operating hours
- Adding self-checkout lanes during peak hours (Correct answer)
- Rearranging product displays near the entrance
- Increasing the variety of payment accepted online
Correct answer: Adding self-checkout lanes during peak hours
Adding self-checkout lanes during peak hours increases checkout capacity, directly reducing wait times for customers.
DECA Retail Operations 3
A fashion retailer receives merchandise in March for a summer selling season.
This is an example of what buying strategy?