DECA Retail Merchandising Practice Exam

What does forward integration involve?

1. Manufacturers engaging in wholesaling

2. Retailers performing wholesaling activities

3. Retailers taking on manufacturing roles

4. Wholesalers distributing directly to consumers

The correct answer is: Retailers taking on manufacturing roles

Forward integration involves a business taking control of its distribution process by moving closer to the end consumer. In this context, when retailers take on manufacturing roles, they are effectively integrating forward in the supply chain. This means that instead of just selling products made by others, these retailers also produce their own goods. This strategy allows retailers to have more control over product quality, reduce dependence on suppliers, and potentially increase profit margins by eliminating intermediaries. By producing their own products, retailers can also better align their offerings with customer preferences and market demands. This approach is increasingly relevant in today’s retail environment, where brands seek to create unique identities and manage consumer relationships more directly.