DECA Retail Merchandising Practice Exam

When does intense competition typically occur among retailers?

1. When they have low prices

2. When they offer unique merchandise

3. When retailers are located near one another offering similar merchandise

4. When there is low customer demand

The correct answer is: When retailers are located near one another offering similar merchandise

Intense competition among retailers typically occurs when they are located near one another and offer similar merchandise. This is because proximity allows customers to easily compare products, prices, and services. As a result, retailers may feel pressured to enhance their offerings, lower their prices, or improve their customer service in order to attract and retain customers. The competition becomes fierce as each retailer tries to differentiate itself to capture market share in a saturated area, leading to intense rivalry and strategic maneuvering. While low prices and unique merchandise can certainly influence competition levels, these factors do not inherently create a competitive environment in the same way that proximity and similarity do. Low customer demand does not promote competition either, as retailers are less likely to compete aggressively when there aren’t enough customers to go around. Therefore, the presence of multiple retailers in close proximity offering similar products creates a conducive environment for intense competition.