Retailing Management 10th Edition By Michael Levy -Test Bank

Retailing Management 10th Edition By Michael Levy -Test Bank

Retailing Management, 10e (Levy)

Chapter 8 Retail Site Location

1) A metropolitan statistical area (MSA) is a core urban area containing a population of more than 50,000 inhabitants.

2) Accessibility is lesser for sites located near major highways, on uncongested highways, and at streets with traffic lights and lanes that enable turns into the site.

3) A food court is an example of utilizing the principle of cumulative attraction.

4) The secondary trading area is the geographic area from which the shopping center or store site derives 50 to 70 percent of its customers.

5) The best way to define the three trade zones is based on distance rather than driving time.

6) Most franchise agreements grant franchisees an exclusive territory to protect them from another franchisee cannibalizing their sales.

7) When using the analog approach, the retailer finds a site and then describes the desired trade area characteristics.

8) Conducting a competitive analysis is typically the first step in the selection of a site.

9) In a graduated lease, the rent increases by a fixed amount over a specified period of time.

10) A cotenancy clause prohibits the shopping center management from leasing to retailers that sell competing products.

11) In the United States, retailers often focus their analysis on a ________ because consumers tend to shop within this area.

1. A) micropolitan statistical area
2. B) competitive statistical area
3. C) statistical demographic area
4. D) metropolitan statistical area
5. E) trade area

12) A city of 50,000 or more inhabitants, or an urbanized area of at least 50,000 inhabitants, with adjacent communities having a high degree of economic and social integration with the core community is called a

1. A) metropolitan urban development.
2. B) competitive statistical area.
3. C) statistical demographic area.
4. D) metropolitan statistical area.
5. E) trade area.

13) Which of the following refers to a town removed from larger U.S. cities, often by up to 100 miles?

1. A) Micropolitan statistical area
2. B) Competitive statistical area
3. C) Statistical demographic area
4. D) Metropolitan statistical area
5. E) Trade area

14) Which of the following does not affect the long-term profit generated by stores when evaluating store locations?

1. A) The economic conditions
2. B) Competition
3. C) The strategic fit of the areas’ population with the retailer’s target market
4. D) The cost of operating stores
5. E) The corporate centralization

15) Which of the following statements is not true when considering and evaluating store locations?

1. A) The best areas for locating stores are those that generate the highest return on investment in the short term.
2. B) It is important to examine an area’s level and growth of population and employment and how long such growth will continue and how it will affect demand for merchandise sold in its stores.
3. C) It is important to have the strategic fit of the areas’ population with the retailer’s target market.
4. D) It is important to consider local and state legal and regulatory environments affecting operating costs.

16) Which of the following would not affect the operating costs of a store?

1. A) Having a large MSA
2. B) Having a small MSA
3. C) Proximity of the store to the distribution center
4. D) State regulatory environment
5. E) Congestion of people and cars

17) Retailers must consider the trade-offs between lower operating costs and potential ________ from having multiple stores in an area.

1. A) economies of scale
2. B) economies of scope
3. C) sales cannibalization
4. D) channel integration
5. E) vertical integration

18) Although retailers gain economies of scale from opening multiple locations in an area, they also suffer diminishing returns associated with locating too many additional stores in an area. This is called

1. A) channel competition.
2. B) economies of scope.
3. C) sales cannibalization.
4. D) channel integration.
5. E) operating turnover.

19) The ________ is the number of vehicles and pedestrians that pass by the site.

1. A) traffic wave
2. B) traffic flow
3. C) traffic count
4. D) traffic stimulator
5. E) traffic accessibility

20) Connections to major highways, pedestrian traffic flow, and availability of mass transit are examples of

1. A) accessibility.
2. B) visibility.
3. C) availability.
4. D) cost.
5. E) exclusivity.

21) A retailer that is hard to get to, even if the customer can see it, has low

1. A) compatibility.
2. B) accessibility.
3. C) visibility.
4. D) cumulative attraction.
5. E) availability.

22) Retailers study traffic flow, street congestion, and parking space availability when considering a new store site to determine the potential site’s

1. A) parallel tenants.
2. B) accessibility.
3. C) adjacent tenants.
4. D) availability.
5. E) visibility.

23) Which of the following site characteristics refers to the customer’s ability to exit the highway and enter the parking lot safely?

1. A) Restrictions and cost
2. B) Natural barriers
3. C) Parking
4. D) Adjacent tenants
5. E) Traffic flow and accessibility

24) Which of the following retailers would be the most dependent on traffic counts?

1. A) 7-Eleven
2. B) Macy’s
3. C) Bed, Bath and Beyond
4. D) Old Navy
5. E) Bill’s Wash-n-Fold

25) Which of the following retailers is the least dependent on traffic counts?

1. A) 7-Eleven
2. B) Macy’s
3. C) Home Depot
4. D) Old Navy
5. E) Hot Wings

26) Why is traffic count particularly important for convenience stores?

1. A) Convenience stores offer impulse merchandise.
2. B) Convenience stores are located only in MSAs that have a target market.
3. C) Traffic count means more pedestrian traffic.
4. D) Traffic count determines flow and accessibility.
5. E) Traffic count determines visibility.

27) Traffic count is less important for

1. A) convenience stores.
2. B) destination retailers.
3. C) grocery stores.
4. D) car washes.
5. E) specialty retailers.

28) The ________ of a site is the ease with which customers can get into and out of the site.

1. A) traffic flow
2. B) traffic restriction
3. C) accessibility
4. D) vehicular traffic bypass
5. E) macro analysis

29) Lee Ann was overwhelmed by the heavy traffic outside of her local discount retailer. Her experience in the store was no better. The aisles were packed, and the lines were long. To Lee Ann, this discounter didn’t consider the problem of ________ when choosing the site for the store.

1. A) congestion
2. B) non-shopper access
3. C) flow of traffic
4. D) visibility
5. E) vulnerability

30) A store that is easy for potential customers to see has high

1. A) compatibility.
2. B) accessibility.
3. C) store congestion.
4. D) cumulative attraction.
5. E) visibility.

31) What is the advantage of having your adjacent tenant as a complementary retailer?

1. A) Shared parking expense
2. B) Better lease negotiations
3. C) Visibility
4. D) Less tenant restrictions
5. E) Builds customer traffic

32) Store locations in a mall that are located next to one another are ________ stores.

1. A) adjacent
2. B) congestion
3. C) parasite
4. D) region
5. E) tertiary

33) Which of the following statements is not true when describing adjacent tenants?

1. A) Complementary, adjacent retailers have the potential to build traffic.
2. B) Competing adjacent retailers have the potential to build traffic.
3. C) Complementary retailers target different market segments and have a similar merchandise offering.
4. D) The principle of cumulative attraction states a cluster of similar and complementary retailing activities have greater drawing power than isolated stores.
5. E) Adjacent tenants cause congestion, which drives customers away.

34) At the Mall of America, all of the children’s specialty stores are on the ground floor and are near the Rainforest Café, which also targets adults with children. This would be an example of the principle of

1. A) multiple risk.
2. B) analog approach.
3. C) cumulative attraction.
4. D) consumer spotting.
5. E) diminishing adjacent.

35) A food court in a mall is an example of a(n)

1. A) multiple risk.
2. B) analog approach.
3. C) cumulative attraction.
4. D) consumer spotting.
5. E) diminishing adjacent.

36) The grouped location approach is based on the principle of ________, which states that a cluster of similar and complementary retailing activities will generally have greater drawing power than isolated stores that engage in the same retailing activities.

1. A) multiple risk
2. B) analog approach
3. C) cumulative attraction
4. D) consumer spotting
5. E) diminishing adjacent

37) Which of the following principles explains the success of a shopping center whose tenants include Kohl’s, Walmart, and Dick’s Sporting Goods?

1. A) Multiple risk
2. B) Analog approach
3. C) Cumulative attraction
4. D) Consumer spotting
5. E) Diminishing adjacent

38) When stores such as Bath & Body Works, Victoria’s Secret, Express, and Abercrombie & Fitch all have store sites near each other in a shopping center, what is this an example of?

1. A) Multiple risks
2. B) Analog approach
3. C) Cumulative attraction
4. D) Consumer spotting
5. E) Diminishing adjacent

39) Locations in a shopping center affect both sales and occupancy costs. Which of the following statements is not true in describing the relationships?

1. A) The more expensive locations are closest to the supermarket in a strip shopping center.
2. B) Shops, like a flower shop, that attract impulse buyers should be close to the supermarket in a strip shopping center.
3. C) A destination store, like a shoe repair store, should be located close to the supermarket in a strip shopping center.
4. D) Stores that cater to consumers engaging in comparison shopping are benefited from being located in more expensive locations near the department store anchors.
5. E) A retailer such as Foot Locker need not be in the most expensive location because customers are in the market for this type of product before they even go shopping.

40) Retailers try to locate their stores close to other retailers that appeal to similar target markets. Which of the following statements is not true in explaining how and why retailers do this?

1. A) Customers want to shop where they will find a good assortment of merchandise.
2. B) Retailers consider complementary retailers in location selections.
3. C) Retailers must avoid locating close to other retailers that compete directly.
4. D) Retailers such as the Build-a-Bear Workshop selling stuffed animal toys and the Disney Store try to have locations close to each other.
5. E) The principle of cumulative attraction states that a cluster of similar and complementary retailing activities have greater drawing power than isolated stores that engage in the same retailing activities.

41) A contiguous geographic area that accounts for the majority of a store’s sales and customers is called a

1. A) demographic.
2. B) metropolitan complex.
3. C) site location.
4. D) trade area.
5. E) target market.

42) Fishing enthusiasts come for miles to shop at Shabby Bill’s, a shack that sells limited tackle and bait on the North Carolina Outer Banks. Bill attracts this crowd because of his expertise in the Outer Banks and local folklore. The Outer Banks would be considered Shabby Bill’s’

1. A) site location.
2. B) demographically similar area.
3. C) target market.
4. D) metropolitan complex.
5. E) trade area.

43) Which of the following statements is false in describing different categories of trade areas?

1. A) The primary trading area is the geographic area from which the shopping center or store site attracts 80 percent of its customers.
2. B) The secondary trading area is the geographic area of secondary importance in terms of customer sales, generating about 20–30 percent of the site’s customers.
3. C) The tertiary trading area includes the remaining customers who shop at the site but come from widely dispersed areas.
4. D) The best way to define the three trade zones is based on driving time rather than distance.
5. E) The location of competitive stores can also affect the actual trade area configuration.

44) In terms of trade areas, the owner of Bubba’s Bar and Grille defines his ________ as the geographic area in which 70 percent of his customers live.

1. A) primary trading area
2. B) fundamental market
3. C) geographic market
4. D) secondary trading area
5. E) tertiary trading area

45) Schnuck’s Grocery Store is located in St. Louis, Missouri. The owner has taken a map and has drawn three different sized shapes around the store’s location. Those people that are located in only the largest shape, which is beyond a 15-minute drive radius of the store. are in what’s referred to as the store’s

1. A) geographic market.
2. B) market trading area.
3. C) delineated market.
4. D) tertiary trading area.
5. E) inclusive trading area.

46) Which of the following is not a factor affecting the size of the trade area?

1. A) Natural and physical barriers
2. B) Competition
3. C) Assortment offered
4. D) Accessibility
5. E) Type of lease

47) Which of the following statements is not true when describing the size of trade area?

1. A) Convenience stores’ trade areas are relatively small.
2. B) Category specialists have relatively large trade areas.
3. C) A retailer like Starbucks has a large trade area.
4. D) A retailer like IKEA has large trade areas.
5. E) A retailer like Best Buy has large trade areas.

48) Alyssa needed a new stirrup for her saddle. She had to drive 30 miles to the Western Tack store in order to make the purchase. To Alyssa, the Western Tack store is an example of a

1. A) destination store.
2. B) drawing store.
3. C) magnet store.
4. D) country goods store.
5. E) tertiary-zoned store.

49) Which of the following examples would customers least likely consider a destination store?

1. A) A shoe store that will dye shoes to match dresses
2. B) The drug store with the lowest priced pharmaceuticals
3. C) The home improvement store
4. D) A health and organic product store
5. E) A gas station also selling milk and eggs

50) Which of the following is not a destination store?

1. A) Bath & Body Works
2. B) IKEA
3. C) AMC Movie Theaters
4. D) The Home Depot
5. E) Kroger grocery store

51) The Mediterranean Cafe features light cuisine and folk entertainment. It is located in the middle of an upper-class neighborhood. The owners want to know where the customer base lives so that they can send direct mail to those areas. For the last several weeks, employees scoped the parking lot noting license plate numbers so they could have a private research company trace them to the owners. Which of the following is the Mediterranean Café engaging in?

1. A) Customer clustering
2. B) Residential research
3. C) Financial demographics
4. D) Geographic research
5. E) Customer spotting

52) When Benjamin purchased a camera at Best Buy, the cashier asked him for his home zip code. Which of the following approaches was Best Buy using to identify the trade area for the store?

1. A) Customer clustering
2. B) Residential research
3. C) Financial demographics
4. D) Geographic research
5. E) Customer spotting

53) ________ is the process of locating the residences of customers for a store on a map and displaying their positions relative to the store location.

1. A) Customer spotting
2. B) Buying power tracking
3. C) The analog approach
4. D) Customer clustering
5. E) Pirating

54) Which of the following can be used to determine how many people are in a trade area and where they live?

1. A) Customer spotting
2. B) Demographic USA’s Buying Power Index
3. C) Analog approach
4. D) Customer clustering
5. E) Centralization

55) The Village Green, a women’s clothing store, took a map of the city and the checks written by its customers during the last quarter. The store’s owner then marked the address of each customer on the map with a map pin. By looking at where the pins clustered on the map, she could determine her trade area. She was engaged in

1. A) geographic research.
2. B) customer spotting.
3. C) financial demographics.
4. D) customer clustering.
5. E) residential research.

56) What is the drawback of using data from the U.S. Census Bureau?

1. A) The information in the Census is only for metropolitan areas.
2. B) The information included is gathered only once every 10 years.
3. C) It is expensive to purchase and retailers usually find other means for the information.
4. D) The Census provides only numbers of people in an area, not specifics like household income, level of education, etc.
5. E) The information provided requires interpretation by analysts.

57) What is a census block?

1. A) An area bounded on all sides by visible and invisible features
2. B) A block of specific residents sharing similar demographics
3. C) A specific census used in comparison studies to demonstrate regional changes
4. D) A block including specific educational and economic status
5. E) A collection of adjacent blocks that contain between 600 and 3,000 people

58) Which of the following is not true about U.S. census data?

1. A) The census track is the smallest geographic entity for which census data is available.
2. B) There are 8 million census blocks in the United States, each containing the residences of about 40 people.
3. C) The block group is a collection of adjacent blocks that contain between 600 and 3,000 people.
4. D) Census data are collected every 10 years.
5. E) The data are not particularly user-friendly.

59) The key feature of ________ data is that they are identified with a coordinate system (latitude and longitude) that references a particular place on Earth.

1. A) geographical information system (GIS)
2. B) projection map (PM)
3. C) trade area topographical map (TATM)
4. D) retail information system (RIF)
5. E) PRIZM system

60) Which of the following statements is not true of geographic information systems?

1. A) They are used by retailers to find locations that maximize their sales and profits.
2. B) Their use develops a deeper understanding of the trade areas.
3. C) They combine demographic data, consumer spending patterns, and lifestyles in a geographic area.
4. D) They are based only on demographic census data.
5. E) Examples of GIS suppliers include ESRI, Nielsen, and Pitney Bowes.

61) ESRI and other GIS suppliers have developed schemes for classifying geographic areas. The ESRI Tapestry Segmentation scheme classifies neighborhoods into 67 distinctive segments. How would you classify the following person? Thomas is a recent college graduate who accepted a merchant training position with Macy’s in New York City. After six months, his strong performance at the company led to a promotion to assistant buyer and a raise. Each evening he either goes to a yoga class or relaxes at home streaming a movie. He enjoys traveling to Colorado on long weekends in the winter to go downhill skiing. Which of the following most accurately describes Thomas?

1. A) Chic
2. B) Metro Renter
3. C) Metropolitans
4. D) Main Street, USA
5. E) Laptops and Lattes

62) Which of the following statements is true about the Spending Potential Index?

1. A) It compares the local average expenditure by product to the national average amount spent.
2. B) It compares sales predictions based on various retail locations.
3. C) It is an index that provides retailers who are thinking of expanding into international markets with data on what consumers spend.
4. D) It compares what retailers spend on real estate in a given market and compares it to the national average.
5. E) It offers retailers information on property values as well as local tax information so they are better able to compare prior to purchasing.

63) When it became apparent that the drawing power to a particular Walmart store was very strong, because every day there would be long lines and empty shelves despite all cashier lanes open and plenty of stockers, Walmart opened another store within 10 miles of that store to try and reduce the amount of business at the over-demand store. This is an example of utilizing ________, but for the good of the retailer.

1. A) artificial barriers
2. B) cannibalization
3. C) congestion
4. D) fringe trading
5. E) drawing power

64) Which of the following statements does not describe the appropriate use of different approaches for site selection?

1. A) Large retailers often use the Huff Gravity Model to estimate potential sales for a store site before site selection.
2. B) Regression analysis can consider the effects of wide range of factors affecting sales in stores.
3. C) The regression analysis is appropriate for small chains to find the best location.
4. D) Using the analog approach, the retailer describes the site and trade area characteristics for its most successful stores and attempts to find a site with similar characteristics.
5. E) The analog approach is not recommended for large chain stores like Walmart.

65) Which best describes the analog method and regression analysis?

1. A) Approaches for using information about the trade area to estimate the potential sales for a store at the location
2. B) Analyses based on the premise that “birds of a feather flock together”
3. C) Two ways of analyzing the best lease options
4. D) Methods that compare the potential of cannibalization
5. E) Models that compare sustainable competitive advantages of one retailer to another

66) What is the difference between multiple regression analysis and the analog approach?

1. A) The analog approach gathers its information through nationwide customer surveys.
2. B) Multiple regression analysis uses geo-demographic segmentation systems to determine potential sales in a new market.
3. C) The analog approach uses statistics rather than judgment to predict sales.
4. D) Multiple regression analysis uses statistics rather than judgment to predict sales at existing store locations.
5. E) Multiple regression analysis cannot be used to determine potential sales like the analog approach.

67) With regression analysis used in location analysis, predictor variables are selected. Which of the following predictor variables would be more useful for a retailer who is contemplating opening a day care center than for a retailer of used books?

1. A) Number of households with children not attending school
2. B) Educational level of households
3. C) Average age of homes in trade area
4. D) Average age of head of household
5. E) Average number of cars in each household

68) When using the ________, the retailer simply describes the site and trade area characteristics for its most successful stores and attempts to find a site with similar characteristics.

1. A) Huff gravity model
2. B) regression model
3. C) analog model
4. D) location model
5. E) cumulative attraction model

69) Which of the following is typically the step after conducting a competitive analysis during site selection?

1. A) Define present trade area.
2. B) Analyze trade area characteristics.
3. C) Conduct a situational analysis.
4. D) Match characteristics of present trade area with potential sites.

70) Which of the following is typically the last step in site selection?

1. A) Define present trade area.
2. B) Analyze trade area characteristics.
3. C) Conduct a situational analysis.
4. D) Match characteristics of present trade area with potential sites.

71) Which of the following are the two basic types of leases?

1. A) The service lease and the strip lease
2. B) The percentage lease and the fixed-rate lease
3. C) The incentive lease and the parallel lease
4. D) The development lease and the associated lease
5. E) The multiplex lease and the single unit lease

72) Which of the following leases are most commonly used by community and neighborhood centers?

1. A) Percentage lease
2. B) Pro bono lease
3. C) Sliding scale lease
4. D) Fixed-rate lease
5. E) Variable-rate lease

73) Demarkus finally received financial backing from his wealthy aunt in order to open a pawn shop. He contacted the landlord of a nearby shopping center since he had his eye on a vacant storefront. To his surprise, his request for a lease was denied. What most likely prevented the landlord from leasing to Demarkus?

1. A) A fixed-rate clause
2. B) An escape clause
3. C) A licensing clause
4. D) A prohibited-use clause
5. E) An exit clause

74) A(n) ________ limits the shopping center management from leasing to certain kinds of tenants.

1. A) fixed-rate clause
2. B) cotenancy clause
3. C) exclusive-use clause
4. D) common area maintenance clause
5. E) prohibited-use clause

75) A shopping center landlord who has the agreement to increase the rent by a fixed amount over a specified period of time has negotiated a

1. A) fixed-rate lease.
2. B) graduated lease.
3. C) maintenance-increase-recoupment lease.
4. D) sliding scale lease.
5. E) percentage increase lease.

76) A(n) ________ prohibits the landlord from leasing to retailers that sell competing products.

1. A) prohibited-use clause
2. B) exclusive-use clause
3. C) escape clause
4. D) fixed-rate leases
5. E) inclusive-use clause

77) What factors should be considered in locating stores? Why should retailers consider those factors?

78) What are the characteristics of a site that affect store sales and thus are considered in selecting a site?

79) Compare and contrast when it is essential for a retailer to have good visibility and accessibility, and in which cases these attributes are less important.

80) Why would Save-A-Lot grocery store choose to be located in the same strip mall as Dollar General and Walmart?

81) Identify the three different trade area zones and indicate for each of the different geographic area what percentage of customers makes up from each zone.

82) Mention the factors affecting the size of the trade area.

83) Where can retailers obtain information about the nature of consumers in a trade area?

84) Describe what customer spotting is, its purpose, and the three approaches for obtaining information by means of customer spotting.

85) Identify and describe the two different approaches used to estimate the potential sales for a store site.

86) Mention the steps undertaken using the analog approach.

87) What are two main issues to consider when negotiating a store’s lease?

88) List out and define the different terms of leases.