Why Is the Selection of a Retail Location So Critical

question 151

Multiple Choice

Why is the selection of a retail location so critical to a store's success?

• A) Location affects pricing decisions but does not affect store image.
• B) Customers will not drive out of their way to find a store.
• C) A location decision ties up funds that will not appreciate or gain in value.
• D) A location decision typically requires long-term commitment of resources.
• E) Employee density is affected by the area in which the store is located.

---

Definitions:

Variable Expenses

Costs that vary directly with the level of output or activity, such as materials and labor.

Operating Income

The profit realized from a business's operations after subtracting operating expenses from the gross profit.

Contribution Format

An income statement format that separates fixed and variable costs to highlight the contribution margin.

Variable Expense Ratio

A metric that compares variable expenses (costs that change with production levels) to total sales, indicating how much revenue is consumed by variable costs.