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Chapter 1 Introduction to the World of Retailing
1) Retailers are a key component in a supply chain that links manufacturers to consumers.
Answer: TRUE
Explanation: Retailers are a key component in a supply chain that links manufacturers to
consumers.
Difficulty: 1 Easy
Topic: What is Retailing?
Learning Objective: 01-01 Identify retailing activities.
Bloom's: Remember
AACSB: Analytic
Accessibility: Keyboard Navigation
2) Hotels, hair salons, and auto repair businesses are considered retailers.
Answer: TRUE
Explanation: Often, people think of retailing only as the sale of products in stores, but retailing
also involves the sale of services such as overnight lodging in a hotel, a doctor's exam, a haircut, or
a home-delivered pizza.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Analytic
3) The retail sector plays a key role in developed economies.
Answer: TRUE
Explanation: The retail sector plays a key role in developed economies, not only because
consumer demand is an indication of a vibrant financial system, but also because retailers are large
employers.
Difficulty: 1 Easy
Learning Objective: 01-02 Realize the importance of retailing in the U.S. and world economies.
Bloom's: Understand
AACSB: Reflective Thinking
1
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No reproduction or distribution without the prior written consent of McGraw-Hill Education.
2
4) Companies are totally convinced about the importance of corporate social responsibility (CSR)
during the initial stages of CSR integration.
Answer: FALSE
Explanation: Companies in the first stage engage only in CSR activities required by law. In this
stage, companies are not actually convinced of the importance of CSR actions.
Difficulty: 1 Easy
Topic: Ethical Considerations in Advertising, Promotion, and IMC Campaigns
Bloom's: Understand
AACSB: Ethics
5) The development of information systems is one of the forces facilitating the growth of large
retail firms.
Answer: TRUE
Explanation: The development of information systems is one of the forces facilitating the growth
of large retail firms—the shift from an industry dominated by small, local retailers to large
multinational chains.
Difficulty: 2 Medium
Topic: The Changing Retail Industry
Learning Objective: 01-03 Analyze the changing retail industry.
Bloom's: Understand
AACSB: Technology
6) More retail transactions take place online now than in stores.
Answer: FALSE
Explanation: More than 90 percent of all retail sales are made in stores. Online transactions are
growing at a fast pace; however, they still only occupy a small percentage of overall retail
transactions.
Bloom's: Understand
3
7) Retailers do not perform traditional business activities.
Answer: FALSE
Explanation: Retailers are businesses and, like manufacturers, undertake all the traditional
business activities.
Topic: Characteristics of Retailers
Learning Objective: 01-04 Recognize the opportunities for you in retailing.
Bloom's: Understand
AACSB: Analytic
8) Retailing offers entrepreneurial opportunities.
Answer: TRUE
Explanation: Retailing also provides opportunities for people who wish to start their own
business. Some of the world's most successful people are retailing entrepreneurs.
Difficulty: 1 Easy
Topic: Retailing as a Career
Bloom's: Remember
9) The largest retail company in the world is headquartered in the United States of America.
Answer: TRUE
Explanation: Walmart is the largest retailer in the world and is headquartered in Bentonville,
Arkansas.
Difficulty: 1 Easy
Bloom's: Knowledge
AACSB: Ethics
4
10) Ethical principles can change over time.
Answer: TRUE
Explanation: Ethical principles also can change over time. For example, some years ago, doctors
and lawyers who advertised their services were considered unethical. Today, such advertising is
accepted as common practice.
Difficulty: 1 Easy
Learning Objective: 01-05 Understand the strategic retail management decision process.
Bloom's: Understand
AACSB: Analytic; Ethics
11) All of the following businesses would be considered retailers except

A) a hot dog cart at the Highland Games.
B) Delta Airlines.
C) a university bookstore.
D) Priceline.com.
E) Procter & Gamble.
Answer: E
Explanation: Retailers are businesses that sell goods and/or services directly to a consumer for
their personal or family use. Proctor & Gamble manufactures and then sells its products to retailers
to be sold to the end user. Hence, it is not a retailer by itself.
Bloom's: Apply
5
12) Why is it imperative that manufacturers like Hewlett-Packard and Procter & Gamble
understand the operations of retailers?
A) To sell directly online
B) To encourage retailers to offer and promote their products
C) To develop strategies for selling without retailers
D) Retailers can expect fewer buyouts to occur
E) To have a wide assortment of products for customers to choose from
Answer: B
Explanation: Retailers are the customers for most business-to-consumer (B-to-C) companies
such as Procter & Gamble and Hewlett-Packard. Thus, brand managers in B-to-C companies need
to have a thorough understanding of how retailers operate and make money so that they can
encourage retailers to offer and promote their products.
Bloom's: Understand
13) A ________ is a business that sells products and/or services to consumers for their personal or
family use.
A) manufacturer
B) wholesaler
C) retailer
D) distributor
E) none of these
Answer: C
Explanation: Retailers typically buy products from wholesalers and/or manufacturers and resell
them to consumers.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Analytic
6
14) A(n) ________ is a set of firms that make and deliver a given set of goods and services to the
ultimate consumer.
A) supply chain
B) buying network
C) economic network
D) integrated wholesale network
E) extended enterprise
Answer: A
Explanation: A supply chain is a set of firms that make and deliver goods and services to
consumers.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Analytic
15) A retailer's role in a supply chain is to

A) act as the liaison between manufacturers and suppliers.
B) buy merchandise exclusively from the manufacturers.
C) negotiate with manufacturers to draw contracts for wholesalers.
D) add value to products and services sold to customers.
E) sell goods and services to wholesalers.
Answer: D
Explanation: Retailers add value and are more efficient at adding this value than manufacturers
or wholesalers.
Difficulty: 1 Easy
Topic: The Retailer's Role in the Supply Chain
Bloom's: Understand
7
16) Retailers provide important functions that increase the value of the products and services they
sell to consumers. Which of the following is not a value-creating activity performed by a retailer?
A) Providing an assortment of products
B) Reducing production costs with innovative designs
C) Breaking bulk
D) Holding inventory
E) Providing an assortment of services
Answer: B
Explanation: The value-creating activities undertaken by retailers include (1) providing an
assortment of products and services, (2) breaking bulk, (3) holding inventory, and (4) providing
services.
Difficulty: 1 Easy
Bloom's: Understand
17) Samson's is a large clothing retailer. The store offers over 1,000 brands and 50,000 different
products. Which of the following value-creating activities can best be seen in the given example?
A) Breaking bulk
B) Scrambled merchandising
C) Vertical integration
D) Offering assortments
E) Add-on selling
Answer: D
Explanation: Conventional supermarkets typically carry about 30,000 different items made by
more than 500 companies. Offering an assortment enables their customers to choose from a wide
selection of products, brands, sizes, and prices at one location.
Difficulty: 1 Easy
Bloom's: Apply
8
18) Which of the following value-creating activities has retailers offering products in quantities
tailored to customers' consumption patterns?
A) Providing assortments
B) Breaking bulk
C) Add-on selling
E) Scrambled merchandising
Answer: B
Explanation: Retailers offer the products in smaller quantities tailored to individual consumers'
and households' consumption patterns—an activity called breaking bulk. Breaking bulk is
important to both manufacturers and consumers. It allows manufacturers to efficiently make and
ship merchandise in larger quantities at one time and enables consumers to purchase merchandise
in smaller, more useful quantities.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Analytic
19) Which of the following statements about retailers holding inventory is false?
A) This activity benefits customers with limited storage space, such as families living in small
apartments.
B) It allows customers to get the lowest price possible.
C) Holding inventory in a store helps serve customers' needs.
D) Retailers keep inventory so products are available when consumers want them.
E) Holding inventory reduces consumers' cost of storing products.
Answer: B
Explanation: A major value-providing activity performed by retailers is holding inventory so that
products will be available when consumers want them; however, because of the additional stage in
the overall supply chain, this adds to the price.
Bloom's: Understand
9
20) The value-creating retail activity that is particularly important to consumers with small living
quarters who cannot store a large quantity of products is
A) providing assortments.
B) breaking bulk.
C) holding inventory.
D) providing services.
E) consumerization.
Answer: C
Explanation: Retailers perform the activity of holding inventory so that products will be available
when consumers want them. Consumers know that retailers will have what they need when they
need it. This is important to consumers with limited storage space, such as families living in small
apartments.
Bloom's: Remember
AACSB: Analytic
21) Grocers, a large food retailer, purchases fruits from several different tropical countries. When
the fruits arrive in distribution centers across the United States, the quantities are reduced to
amounts that are appropriate for store delivery. The stores, in turn, offer the fruits in quantities that
depend on the consumption pattern of the customers. This act of offering products in smaller
quantities based on consumption patterns is known as
A) holding inventory.
B) breaking bulk.
C) forward integration.
D) intensive distribution.
E) consumerization.
Answer: B
Explanation: Breaking bulk allows manufacturers to efficiently make and ship merchandise in
larger quantities at one time and enables consumers to purchase merchandise in smaller, more
useful quantities.
Bloom's: Apply
10
22) ________ is the value-creating activity in which a retailer makes available a wide range of
products of different brands and prices at a single location.
A) Providing services
B) Breaking bulk
C) Providing assortments
E) Exclusive dealing
Answer: C
Explanation: Offering assortments enables customers to choose from a wide selection of
products, brands, sizes, and prices at one location.
Bloom's: Remember
AACSB: Analytic
23) Many retailers have and offer their own store credit card. This is an example of which of the
following value-creating activities?
A) Exclusive dealing
B) Breaking bulk
C) Holding inventory
D) Offering assortments
E) Providing services
Answer: E
Explanation: Retailers provide services that make it easier for customers to buy and use products.
For example, retailers offer credit cards so that consumers can have a product now and pay for it
later.
Bloom's: Apply
11
24) Retailers that have a website with store locations, store hours, product information, product
reviews, promotion information, instant chats, etc. offer which type of value added activity?
A) Breaking bulk
B) Holding inventory
C) Providing assortments
D) Exclusive distribution
E) Providing services
Answer: E
Explanation: Retailers provide services that make it easier for customers to buy and use products.
Some retailers employ salespeople in stores or maintain websites to answer questions and provide
additional information about the retailer and the products they sell.
Bloom's: Apply
25) Tech Games, a retailer, purchases of the video games and game consoles on a large scale. It
then offers the products to customers in single quantities. The value-creating function performed
by Tech Games in the given scenario is
A) providing assortments.
B) breaking bulk.
C) holding inventory.
D) providing services.
E) creating a retail mix.
Answer: B
Explanation: Breaking bulk enables manufacturers to efficiently make and ship merchandise in
large quantities and enables consumers to purchase merchandise in smaller, more useful
quantities.
Difficulty: 1 Easy
Bloom's: Apply
12
26) A major value-providing activity performed by retailers is ________, so that products will be
available when consumers want them.
A) breaking bulk
B) holding inventory
C) scrambled merchandising
D) backward integration
E) providing assortments
Answer: B
Explanation: A major value-providing activity performed by retailers is holding inventory so that
products will be available when consumers want them.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Analytic
27) ________ means that a firm performs more than one set of activities in the channel, as occurs
when a retailer engages in wholesaling activities by operating its own distribution centers to
supply its stores.
A) Channel diversification
B) Horizontal development
C) Horizontal integration
D) Vertical expansion
E) Vertical integration
Answer: E
Explanation: Vertical integration means that a firm performs more than one set of activities in the
channel, as occurs when a retailer engages in wholesaling activities by operating its own
distribution centers to supply its stores.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Analytic
13
28) Fresh n Fragrant is a chain of flower shops offering a variety of flowers and ornamental plants.
It recently opened a distribution center to supply ornamental plants and cut flowers to all its stores
within a 300-mile radius. From the given scenario, it can be seen that Fresh n Fragrant is practicing
A) vertical integration.
B) channel expansion.
C) horizontal expansion.
D) horizontal integration.
E) channel diversification.
Answer: A
Bloom's: Apply
29) Florals is a popular retail chain specializing in women's lingerie and perfume. It designs and
sources its own private-label merchandise that is sold in the store. Therefore, Florals is practicing
A) channel expansion.
B) scrambled merchandising.
C) backward integration.
E) product diversification.
Answer: C
Explanation: Backward integration arises when a retailer performs some wholesaling and
manufacturing activities, such as operating warehouses or designing private-label merchandise.
Bloom's: Apply
14
30) Dailies is a large retail chain in New Jersey. Apart from selling to customers, Dailies supplies
bread and vegetables to a large number of restaurants in and around New Jersey. Therefore, Dailies
is engaged in ________ when selling to restaurants.
A) wholesaling
B) retailing
C) merchandising
D) breaking bulk
E) channel expansion
Answer: A
Explanation: Some large retailers, like Costco and Home Depot, function as both retailers and
wholesalers: They perform retailing activities when they sell to consumers, but they engage in
wholesaling activities when they sell to other businesses, such as restaurants or building
contractors.
Bloom's: Apply
31) A retailer that is vertically integrated

A) concentrates on selling only to businesses.
B) outsources all supply chain activities to independent firms.
C) has limited control on the activities of the supply chain.
D) performs more than one activity in the distribution channel.
E) concentrates only on operating its own retail stores.
Answer: D
Bloom's: Remember
AACSB: Analytic
15
32) ________ arises when a retailer performs some distribution and manufacturing activities, such
as operating warehouses or designing private-label merchandise.
A) Exclusive dealing
B) Merchandising
C) Backward integration
D) Horizontal integration
E) Forward integration
Answer: C
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Analytic
33) ________ occurs when a manufacturer undertakes retailing and wholesaling activities.
A) Merchandising
B) Exclusive dealing
C) Backward integration
D) Horizontal integration
E) Forward integration
Answer: E
Explanation: Forward integration occurs when a manufacturer undertakes retailing and
wholesaling activities, such as Apple operating its own retail stores.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Analytic
16
34) Essentials, a retail store, manages its own warehouse. It also owns a manufacturing facility
where it produces private-label food products. Therefore, Essentials is practicing
A) scrambled merchandising.
B) backward integration.
C) cross-selling.
E) forward integration.
Answer: B
Difficulty: 1 Easy
Bloom's: Apply
35) Retailers function as wholesalers when

A) they hold inventory.
B) they perform manufacturing activities.
C) they practice scrambled merchandising.
D) they sell to other businesses.
E) there is an intratype competition.
Answer: D
Explanation: Some large retailers, like Costco and Home Depot, function as both retailers and
wholesalers: They perform retailing activities when they sell to consumers, but they engage in
wholesaling activities when they sell to other businesses, such as restaurants or building
contractors.
Bloom's: Understand
AACSB: Analytic
17
36) Shades n Hues is a company producing cosmetics. It supplies products to stores and beauty
salons and also manages its own retail outlets. Therefore, Shades n Hues is engaged in
A) forward integration.
B) scrambled merchandising.
C) backward integration.
E) cross-selling.
Answer: A
Explanation: Forward integration occurs when a manufacturer undertakes retailing and
wholesaling activities, such as Apple operating its own retail stores.
Difficulty: 1 Easy
Bloom's: Apply
37) The U.S. retail industry

A) has the lowest concentration of large firms.
B) has the greatest retail density in the world.
C) mostly has small stores operating independently.
D) depends on a single large wholesale industry.
E) consists of a fragmented distribution system.
Answer: B
Explanation: The U.S. retail industry has the greatest retail density (retail stores per person) and
concentration of large retail firms.
Bloom's: Remember
AACSB: Analytic
18
38) ________ is the world's fastest-growing retail market.
A) China
B) the United States
C) India
D) Russia
E) Brazil
Answer: A
Explanation: China is the world's fastest-growing retail market, poised to hit the $8 trillion mark
soon.
Bloom's: Understand
AACSB: Analytic
39) Which of the following statements about the U.S. distribution system is true?
A) The U.S. retail industry is mostly composed of many small and medium-sized firms.
B) Many U.S. retailers are large enough to have their own warehouses.
C) The retail density in the U.S. is lower than that found in Europe.
D) A large independent wholesale industry supplies goods to all retailers.
E) The U.S. retail industry has a fragmented distribution system.
Answer: B
Explanation: Many U.S. retailers have stores with more than 20,000 square feet. Due to their
size, they have the scale economies to operate their own warehouses, eliminating the need for
wholesalers.
Bloom's: Remember
19
40) The Chinese retail industry
A) has a combination of large stores and large firms resulting in an efficient distribution system.
B) is characterized by many small and medium-sized firms.
C) has the most number of large retailers operating their own warehouses.
D) is characterized by a high retail density.
E) has extensive restrictions on retail locations, store size, and ownership.
Answer: A
Explanation: The Chinese distribution system is highly fragmented like the retail industry in
India. It is composed of many small and medium-sized firms. The number of national and even
regional chains is limited.
Bloom's: Remember
41) Which of the following does not describe the distribution systems of the major international
markets?
A) The U.S. distribution system has the greatest retail density and the greatest concentration of
large retail firms.
B) The Indian distribution system is characterized by small stores operated by relatively small
firms and a large independent wholesale industry.
C) In China, there is great disparity between the distribution systems in different parts of the
country.
D) Northern European retailing is similar to efficient distribution systems in the U.S.
E) Restrictions on retail locations, store size, and ownership are minimal in northern Europe and
India.
Answer: E
Explanation: Restrictions on retail locations, store size, and ownership are extensive in northern
Europe and India. They are minimal in the U.S. and modest in China.
Bloom's: Understand
20
42) ________ describes the voluntary actions taken by a company to address the ethical, social,
and environmental impacts of its business operations and the concerns of its stakeholders.
A) Forward integration
B) Corporate social responsibility
C) Integrity management
D) Customer engagement
E) Ethical behavior
Answer: B
Explanation: Corporate social responsibility (CSR) involves an organization voluntarily
engaging in business practices that meet or exceed the ethical and legal expectations of its
stakeholders—its employees, customers, community, and society in general.
Bloom's: Remember
AACSB: Ethics
43) Happy Kids clothing store started a program where customers could bring in gently used
clothing for donation to a local shelter for women and children. This is an example of which
principle of conscious marketing?
A) Recognition of the retailing firm's greater purpose
B) The presence of conscious leadership
C) Consideration of stakeholders' independence
D) Distinguishing right from wrong
E) Incentivizing employees to provide good service
Answer: A
Explanation: When a retailer recognizes that its purpose should be more than just making profits
the actions it undertakes change in focus. By taking action to help local children in need, Happy
Kids is engaged in conscious marketing.
Bloom's: Apply
AACSB: Ethics
21
44) When a firm's leaders adopt a conscious marketing approach
A) the resulting corporate culture stays in accordance with the leaders' ideals.
B) the firm engages in activities that provide a short-term financial benefit.
C) the resulting corporate culture emphasizes making a profit.
D) a group of employees is selected to focus on corporate social responsibility.
E) the majority of stakeholders are not affected.
Answer: A
Explanation: A conscious marketing approach implies that the firm's leaders are dedicated to the
proposition of being conscious at all levels of the business, throughout its entire culture. The
resulting conscious corporate culture stays in line with its higher purpose and in accordance with
the leader's ideals.
Bloom's: Understand
AACSB: Analytic; Ethics
45) Which of the following is an example of a decision that involves business ethics?
A) A retailer decides to close a location where sales have decreased.
B) A retailer decides to start a customer loyalty program.
C) A retailer decides to use a celebrity in an advertising campaign.
D) A retailer decides to have its salespeople adopt a high-pressure sales approach when dealing
with all customers.
E) A retailer decides to manage its own distribution center.
Answer: D
Explanation: Business ethics is concerned with distinguishing between right and wrong actions
and decisions that arise in a business setting, according to broad and well-established moral
principles. Retail managers may have to ask themselves: Should retail salespeople use a
high-pressure sales approach when they know the product is not the best for the customer's needs?
Bloom's: Understand
AACSB: Reflective Thinking; Ethics
22
46) Prime Industries Inc. is a large company producing a wide range of chemicals. It decides to
focus on making its products more environmentally friendly. This is an example of
B) providing assortments.
C) wholesaling.
D) conscious marketing.
E) a supply chain.
Answer: D
Explanation: Conscious marketing entails a sense of purpose for the firm higher than simply
making a profit by selling products and services. One of the principles of conscious marketing is
recognition of the retailing firm's great purpose, such as making strides toward more
environmentally friendly products.
Bloom's: Apply
AACSB: Reflective Thinking; Ethics
47) Which of the following is true of retailing activities in the bottom of the pyramid (BoP)
market?
A) Retrofitting business models used in the more developed markets has proven successful.
B) Most people in BoP markets live in rural areas with limited access to mass media.
C) The ideas used in BoP retail marketing are similar to conventional retailing strategies.
D) High local demand results in low prices for consumer goods.
E) Firms are not motivated to enter the BoP market.
Answer: B
Explanation: It is difficult to communicate and complete transactions with people in the BoP
market because they are more likely to lack access to mass media, the Internet, mobile phones, or
credit cards than more affluent markets.
Difficulty: 1 Easy
Topic: Global Growth Opportunities
Bloom's: Understand
AACSB: Analytic
23
48) ________ are the most concentrated sector of the retail industry in the U.S.
A) Fitness centers
B) Drugstore chains
C) Apparel stores
D) Home improvement centers
E) Food and beverage services
Answer: D
Explanation: Home improvement centers in particular are highly concentrated; the two largest
firms (Home Depot and Lowe's) account for 45.6 percent of U.S. market share.
Difficulty: 1 Easy
Topic: Evolution of Retailing
Bloom's: Remember
AACSB: Analytic
49) Retailers use customer transaction data to do all of the following except
A) identify their best customers.
B) match the needs of a store's local market.
C) create customized promotions.
D) tailor product assortments.
E) identify political party preferences.
Answer: E
Explanation: Many retailers now use the data they have on their customers to identify their best
customers and target customized promotions to them, place products close to each other when they
find that many customers are buying the same products at the same time, and tailor the assortment
of products in each store to better match the needs of the store's local market.
Difficulty: 1 Easy
Topic: Evolution of Retailing
Bloom's: Understand
AACSB: Technology
24
50) Students often view retailing as part of marketing because
A) retailing does not involve traditional business activities.
B) retailing involves the management of distribution systems.
C) retailing requires only people with expertise in marketing.
D) activities in retailing are confined to advertising and promotion.
E) retailers are not part of the supply chain.
Answer: B
Explanation: Students often view retailing as part of marketing because managing distribution
(place) is one of the 4 Ps of marketing.
Bloom's: Understand
AACSB: Analytic; Reflective Thinking
51) Which of the following is true of the career opportunities offered by the retailing industry?
A) Retailers employ people with exclusive expertise in supply chain management.
B) Retail managers are often given considerable responsibility early in their careers.
C) Retailing offers limited opportunities for entrepreneurs.
D) Retail management is not a very lucrative career path.
E) People with a marketing background have limited opportunities in the retail industry.
Answer: B
Explanation: Retail managers are often given considerable responsibility early in their careers.
Retail management is also financially rewarding.
Topic: Retailing as a Career
Bloom's: Understand
AACSB: Communication; Ethics
25
52) The competition between the same type of retailers is called
A) intertype competition.
B) indirect competition.
C) intratype competition.
D) scrambled merchandising.
E) intrinsic competition.
Answer: C
Explanation: The competition between the same type of retailers is called intratype competition.
Difficulty: 1 Easy
Topic: The Strategic Retail Management Decision Process
Bloom's: Remember
AACSB: Analytic
53) Daily Needs and Smart Saves are two large retailers in Canada. They compete with each other
using similar marketing strategies. Which form of competition is seen between these two retailers?
A) Intertype competition
B) Indirect competition
C) Intratype competition
D) Scrambled merchandising
E) Intrinsic competition
Answer: C
Explanation: A retailer's primary competitors are other retailers that use the same retail approach.
The competition between the same type of retailers is called intratype competition.
Bloom's: Apply
26
54) When Austin saw pastries and coffee being sold at his local bookstore, he knew it was an
example of
B) intertype competition.
C) product diversification.
D) channel conflict.
E) vertical differentiation.
Answer: A
Explanation: Scrambled merchandising occurs when retailers offer merchandise not typically
associated with their type of store.
Difficulty: 1 Easy
Bloom's: Apply
55) Karen's is a popular clothing store in Boston. The store recently started selling designer
watches. Thus, Karen's is practicing
A) channel expansion.
D) scrambled merchandising.
Answer: D
Explanation: Scrambled merchandising is when retailers offer merchandise not typically
Bloom's: Apply
27
56) The offering of merchandise not typically associated with the store type is called
B) intratype competition.
D) channel diversification.
Answer: A
Explanation: Scrambled merchandising is when retailers offer merchandise not typically
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Analytic
57) Which of the following is the first step in the retail management decision process?
A) Developing the retail communication mix
B) Buying merchandise
C) Developing a retail marketing strategy
D) Understanding the world of retailing
E) Customer relationship management
Answer: D
Explanation: The first step in the retail management decision process is understanding the world
of retailing. Retail managers need to know the environment in which they operate before they can
develop and implement effective strategies.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Analytic
28
58) ________ form a part of the microenvironment that influences retail management decisions.
A) Competitors
B) Technologies
C) Politics
D) Legal aspects
E) Ethics
Answer: A
Explanation: The retailer's microenvironment focuses specifically on its competitors and
customers.
Bloom's: Understand
AACSB: Analytic
59) A retailer's primary competitors are other retailers that

A) are more vertically integrated.
B) use the same type of store format.
C) have the same target market.
D) sell online.
E) scramble merchandise.
Answer: B
Explanation: The competition between the same type of retailers is called intratype competition.
A retailer's primary competitors are other retailers that use the same retail approach.
Difficulty: 1 Easy
Bloom's: Remember
AACSB: Analytic
29
60) Scrambled merchandising increases
C) concentric diversification.
E) intratype competition.
Answer: B
Explanation: Scrambled merchandise is offering merchandise not typically associated with the
store type, and it increases intertype competition or competition between retailers that sell similar
merchandise using different types of stores.
Bloom's: Understand
AACSB: Analytic
61) Which of the following is not an example of intertype competition?

A) A supermarket and a fresh flower stand
B) A coffee shop and a fast food restaurant
C) A supercenter and a pharmacy
D) An American Eagle store and a Macy's store
E) A Target store and a Walmart store
Answer: E
Explanation: Offering merchandise not typically associated with the store type increases
intertype competition or competition between retailers that sell similar merchandise using
different types of stores. Since Target and Walmart use the same format of store, they are intratype
competitors, and all others are intertype competitors.
Bloom's: Apply
30
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CHAPTER XIX
WIRE AND WIRE DRAWING
It may be rather disconcerting to some enthusiastic ones who

assume that we Moderns have made all the progress that is worth
while to learn that so many of our supposedly new products were far
antedated. In the case of wire, again, we were antedated as much as
30 centuries. The wires which were produced by the Ancients,
however, were usually of the noble metals, gold and silver. They were
not drawn through dies as are the wires that we know, but were
hammered into shape from long, thin strips of metal. The earliest use
of our “drawplate” method of which we find authentic mention was
in the 14th century in Germany. The wire was hand-drawn. Machine-
drawn wire was being produced in England as early as 1565.
In the United States the wire drawing industry had become pretty
well established by the middle of the 17th century. As Cort had not at
this time invented the rolling process for bars and rods, very uneven
strips of metal only were available from which to draw the wires. But,
even so, with our highly developed rod mills and our present very
satisfactory No. 5 wire rod to begin with, our wire drawing methods
are yet seemingly crude and show small advance compared with the
very great progress which has been made in other lines of the iron
and steel industry.
Unlike the processes of forging, rolling, etc., drawing of wire is
done cold. In this condition steel has its highest strength to stand the
strain. The rod or wire is pulled through very hard cast iron or steel
dies, the general process being well likened to pulling a rope through
a small knot hole.
As was seen in the rolling of plates, “cold working” raises the
strength, lowers the ductility and embrittles steel more than does the
regular “hot working” at the cherry-red or white heats which are
usual in the forging and rolling processes. If the so-called “cold
finishing” at very low red or black temperatures affects the physical
properties of plates, it can be readily understood that cold-drawing of
wire and of seamless tubes at ordinary temperatures of 70 to 100° F.,
must considerably accentuate the effects noted. So much is this so
that drawn wires and tubes have to be frequently annealed, i.e.,
heated to a good red heat for a time between successive trips through
the dies, annealing having the effect of off-setting the lowered
ductility and increased brittleness which would cause the wire to
break. In some cases the wire has to be annealed after each pass or
draft, but oftener several passes are possible before annealing is
necessary. This depends largely upon the quality of the steel used
and the amount of “reduction” attempted in each pass.
The raw material, No. 5 soft wire rod, which is about one-fifth of
an inch in thickness, comes to the wire-drawing plant from the rod
mill. This No. 5 rod is the thinnest which the mills have found it
economical to roll, so further pulling down in size can best be done
by “drawing.”
Before Drawing into Wire the Scale Must Be Removed from the Rods by
“Pickling” in Acid
As all iron and steel materials which have cooled in air from a red
heat are covered with a hard, brittle scale of iron oxide, the rod must
first be “pickled,” i.e., digested in hot, weak sulphuric acid, which, in
10 or 15 minutes so dissolves and loosens the hard surface that it can
be readily jarred loose and washed off. By immersion in a vat of
boiling milk of lime, the pickled rod is given a lime coating which
neutralizes any acid which remains, and, when dry materially aids in
the lubrication of the wire while it is going through the dies.
Thorough drying, called “baking,” is accomplished in the dry house
at 300 or 400° F., from which the rod with soft, scaleless, lime-
coated surface goes to the “drawing” benches. After rinsing free from
the pickling acid, the wire is often allowed to acquire a soft film of
rust by spraying it with water and keeping it wet in the air for a short
time before going to the lime vat. This rust or “sull” coat itself assists
in the lubrication. However, the color of the product is not as good as
when the “sull” coat is not used, and such wire usually goes into
articles for which darker color is no drawback.
The
dies with
more or
less
funnel-
shaped
holes of
A Wire-Drawing Die accurate
diameter
are set
vertically. They are of extremely hard Single Wire-Drawing
material in order to stand as long as Block
possible the severe service without
excessive wear, which sooner or later
so enlarges the holes that the dies become useless. Then they must be
removed and either discarded, or, in the case of steel dies, the holes
reduced by hammering and redrilled. Often the holes of worn cast
iron and steel dies are enlarged to the next larger size and so used.
The Drawing of Wire
The loose end of each coil of rod of wire is hammered or otherwise

made smaller for a length long enough to be threaded through the
hole in the die and firmly grasped by tongs or “pliers.” The die being
firmly fastened, the draw head, of which the pliers are a part, is
drawn away until a sufficient length has come through that it can be
attached to a revolving block or drum which thereafter continuously
pulls the rod through the die and winds it into a coil about the block
as it comes, at speeds as high as 400 feet a minute.
As the rod passes through the box in which the die is fastened,
besides its lime or sull coating it is sometimes provided and takes up
other lubricants, such as soap, grease, or tallow.
The coil of wire is lifted off the drum and tied, or is redrawn to
wire of a smaller size.
After from one to several drafts, depending upon conditions, the
wire must be annealed for several hours, and again pickled to remove
the scale formed, washed, lime-coated and dried. For wire which
must undergo many reductions or passes, as must all small wires,
several drawings, annealings and cleanings must be gone through
with before it is down to the desired size.
In order to work properly and not cut the die too fast, which would
rapidly enlarge the hole and cause the rear end of the wire to be of
different thickness than the forward end, the rod or wire must be of
maximum softness. Either under-cleaning or over-cleaning will make
the metal harsh, as, also, will under-baking in the dry ovens. These
they endeavor to avoid in preparing the rod.
Other lubricants may be used and certain finishes or colors given
to the wires. Such are the various white to red coatings which come
from using tin and copper sulphate solutions instead of lime
coatings. This is more often done with fine wire than with thicker.
Certain “patenting” processes make use of various methods of
tempering wires by cooling in air after a last annealing.
Not only are wires ordered to size but many times also of certain
temper or grades of hardness and stiffness. These various tempers
are determined largely by the chemical analysis of the steel and the
number of drafts after the last annealing.
Piano wire is well known to have a very high strength, sometimes
as high as 400,000 pounds per square inch. Spring wire is rolled and
drawn from higher carbon steel than is ordinary wire, and, through
heat treatment, the best properties are imparted to it.
Besides being in this form used for miscellaneous purposes,
thousands of tons of wire are annually made into wire nails, staples,
wire fence, barbed wire, etc., all of which products are of American
derivation, with the possible exception of wire nails. Even this,
however, if not originally ours we have made ours through our great
production. All are very speedily turned out by automatic machines
into which the wire or wires feed. The product drops out into boxes
below or is rolled into coils as is the case of the wire fence and barbed
wire. The speed of the machines is so great that the eye cannot begin
to follow the operation.
Wire being so well known it is not necessary to speak of its uses,
but it will be interesting to call attention to the very extensive
production of this steel product. Of the 32,000,000 tons of steel
produced in 1915, for instance, over 3,000,000 tons were rods and
wire, and when we think of the length of small or even average sized
wire that it takes to make a pound, a hundred weight, or a ton, some
slight conception of the amount of wire produced and used comes to
us. As the material for wire gauze and cloth, wire rope, cable, piano
strings, springs of all sorts, pins, needles, nails, fence, barbed wire,
and the myriad of other things, wire really is one of our great
products.
It was mentioned that piano wire had been made which had a
tensile strength as high as 400,000 pounds per square inch, which is
six or seven times the strength of an equivalent cross-section of steel
rail or plate. Wire is undoubtedly the strongest product which is
made from steel. This is why wire rope or cable is so strong. It is
made by twisting together many small wires.
Though extremely recent from the standpoint of our world’s
history, the building of the famous Brooklyn Bridge by the Roeblings
was far enough back that we likely have forgotten that each of the
four big 15¾–inch cables is made up of 5,296 separate wires tied
into a bundle.
Undoubtedly the best preservative against corrosion for iron and
steel is what is known as “hot galvanizing.” Much wire is hot
galvanized. In this process the wire is “pickled” in weak acid to
remove scale, given a soft red coating by dipping in weak muriatic
acid and drying. The strands of wire 20 or 30 abreast are run
through a kettle of molten zinc. The wires are wiped smooth and free
from excess zinc by pulling them through asbestos pads. A
continuous coating of zinc is thus permanently left upon the surfaces
of the wires which very effectively keeps them from rusting. Wires
which have to stand severe weather conditions may not have the
excess zinc wiped from them. Telegraph and telephone wires often
have the thicker or unwiped coating.
Very naturally the drawing of wire requires use of much greater
power than the rolling of rod and the speed of drawing is nowhere
near as great. Therefore the cost of wire is comparatively much
greater than the cost of rolled products. In the case of watch springs
it was once computed that the product had to bring 50,000 times the
cost of the steel from which the wire was drawn.
“Continuous” wire drawing has not been so successful nor
advantageous as was the continuous rolling of rods. It has been
possible in a small way and with certain grades of the product to
apply the continuous process, but, mainly on account of mechanical
difficulties, continuous drawing of wire seems to be comparatively
unimportant.
CHAPTER XX
THE MANUFACTURE OF PIPE AND TUBES
Tubes of some sort have been in use by man since very early times.
Nature provided the first ones in the way of hollow stems of shrubs,
such as alder and bamboo. Some of these we saw in use by the early
smiths conveying the blast of air from their goat-skin bellows into
the crude clay furnaces built in the hillside.
Tubes made of clay, stone, lead and bored logs were also used.
Much later pipes made of cast iron came into rather extended use for
the conveyance of water. The general use of gunpowder greatly
accelerated the manufacture of small tubes which the smiths
produced for gun barrels by hammering and welding together long,
red-hot strips of wrought iron about round rods or “mandrels.”
About 1815 illuminating gas came to be used in England for house
lighting. This brought a demand for tubes of considerably greater
length, which were first made by screwing or otherwise fastening
together old gun barrels which were very plentiful at that period.
The first patents for the making of welded pipe as we know it were
taken out in 1824 and 1825, the latter for the butt-welding method of
pulling a narrow iron plate, called “skelp,” through a bell-shaped
orifice which curled it and welded the edges together very much as is
done to-day by this process.
Our modern pipe of both butt-weld and lap-weld varieties is
manufactured either from wrought iron or from soft steel.
The Butt-Weld Process
alt='BAMBOO RODS WERE USED FOR CONVEYING WATER'
Early Water Pipes
From the double refined puddled

iron, in the case of wrought iron, or
from billets of soft Bessemer or open-
hearth steel, long narrow plates are
rolled. The width and thickness of
these plates, which are known as
“skelps,” are exactly such as will give
pipe of the desired diameter and How Butt-weld Pipes Are
gauge. In order that the weld may be Made
solid all along, the skelp as it leaves the
rolls has edges not exactly square but
very slightly beveled, so that the surface which is to form the interior
of the pipe is slightly narrower than the other.
After trimming the pieces of skelp so that each has one end with a
sort of point where the tongs are to take hold, they are laid side by
side in a heating furnace and left there until they have become white-
hot.
Just in front of the furnace is the “bell,” with a second and slightly
smaller one in front. With strong tongs the workman reaches into the
furnace and fastens onto the pointed end of a piece of the white-hot
skelp. Hooking the handle of his tongs into the draw chain the skelp
is drawn through the first and second bell, the first bending it almost
into tube shape, the second completing the operation and pressing
together the edges of the plate in the top of the bell so tightly that
they weld.
Plates Called “Skelp” Are First Rolled
The pipe now goes through what are known as cross rolls, the axes
of which are somewhere near parallel with the axis of the pipe. In
these the pipe is rapidly spun around, surface-cleaned and
straightened. Going up a cooling incline it goes to tables where the
ends are cut off and the product inspected.
A very important part of the inspection is the hydrostatic or water
test. One at a time the pieces are tightly fitted in between two water-
tight caps, water is turned into the pipe and gradually brought up to
the testing pressure of 600 pounds or more per square inch
according to specifications.
Charging Skelp into the Heating Furnace

Drawing Butt-weld Pipe
Pipes of diameters between ⅛″ and 3″ are usually made by the

butt-weld process.
Lap-Welded Pipes
Pipes larger than 3″, and boiler tubes or other particularly high
grade welded tubes of 2″ and over are usually “lap-welded.” This
process gives a considerably more reliable product than does the
butt-welding process, for reasons which are readily seen.
How Lap-weld Pipes Are

Made
Bent Skelp for Lap-welding Being Charged into Furnace
Skelp for lap-welding is rolled in just the same way as is skelp for
butt-welding except that the edges are “scarfed” or decidedly beveled
so that the two edges can make a considerable lap without increase of
thickness of that part of the wall. These pieces of skelp are charged
into the heating furnace just as occurred in the butt-weld process
and, after coming to a white heat, they are drawn through a sort of
bell or die which curves them so that one edge considerably overlaps
the other. Back they go into the furnace to regain any heat that has
been lost, for, to weld properly, the skelp must be hot enough that
any scale which had covered it drips off.
The welding rolls are very short
rolls, almost “sheaves” or wheels, with
concave edges of exactly the outside
diameter of the pipe to be formed.
Between these two rolls, at the end of a
long straight bar, is a mandrel or
projectile-shaped ball of high-speed
steel over which the white-hot tube
must be pushed.
The reheated, curved skelp is pulled
from the furnace and the forward end
forced into the rolls which shoot it
through and over the mandrel at high
The Lap-welding Rolls speed, forcing together and welding
with Mandrel in under heavy pressure the overlapping
Position edges of what was formerly the plate.
Amid the noise and the shooting
sparks an unsuspecting bystander is
quite startled by the suddenness of it all.
While still hot the pipes pass to “sizing” rolls which correct any
variation in inside and outside diameters. The cross or straightening
rolls next smooth and clean their surfaces while straightening the
pipes or boiler tubes.
After the first trip through the welding rolls, boiler tubes and
certain other high grades of pipe go back into the furnace where they
are reheated. They are again put through the welding rolls to make
absolutely sure of a tight weld.
After cooling, the ends of each pipe are cut off. Because of the
“scarfing” of the edges and the great pressure of the rolls, it is
difficult to tell where the welds occur, the thickness of the walls being
practically uniform all around. Lap-welded pipe of as great as 36″
diameter has been made in this way.
Pipes in Sizing and Cross Rolls
The water-pressure test is given to all lap-welded pipe as are

certain tests for tensile and torsional strengths, and for ability to
flatten without breaking. In the case of boiler tubes, a piece is cut
from each end of each tube, which must stand flanging or spreading
“cold” and also must crush down endwise under the heavy pressure
applied in the testing machine without fracture or opening of the
welds.
The pipe may be “threaded” to order or shipped as it comes from
the testing bench.
The Finishing End
As remarked, both butt and lap-welded pipe is regularly

manufactured from wrought iron and from steel.
Hydrostatic Test of the Pipes

It was suggested during the discussion of the manufacture of
wrought iron, that, owing mainly to high labor costs, wrought iron
was with difficulty competing with the soft steels. Wrought iron is
noted for its welding properties and it has always had its loyal
admirers. Aside from its application as “bar iron” which always has
been and still is in favor with many metal workers for miscellaneous
purposes and its use as Swedish bar iron or low phosphorus melting
bar by makers of crucible steel as a base for their product, wrought
iron probably finds its next most favored place as a material for pipe
as is shown by the table given in Chapter VI.
While not as strong as steel pipe under hydrostatic test, many pipe
users insist that, presumably on account of its slag enclosures and
cinder films which are supposed by some to surround and protect the
fibers, wrought iron pipe outlasts steel pipe when used under
conditions which induce corrosion. Others are as strenuous in their
denial of this assertion and this subject of comparative wrought iron
pipe and steel-pipe corrosion is still a very live issue. For many years
this matter has been under investigation. Hundreds of tests have
been made and discussed by learned societies and their committees.
The laboratories and testing departments, too, of the large pipe
manufacturers and their customers, have made extended
investigations.
However, the conditions under which pipe is used are so varied
and the time required for any true and decisive test is so long that
really conclusive results have not been forthcoming. With other
materials, each condition and corrosive influence is largely a “law
unto itself,” and one wonders if such may not prove to be the case
with these materials also. As suggested, a great quantity of published
information giving comparative service tests is available for those
who are particularly interested in this subject. How much of the
decline in tonnage and in percentage of the total skelp produced, is
due to the approximately 30% greater cost of wrought iron pipe and
how much to satisfactory performance of its competitor must be left
to you to judge.
Fortunately pipe of both kinds is available, meanwhile, and one
can get whichever he prefers.
The uses of pipe are almost innumerable. Great quantities are used
for conveyance of water, oils and gases, for ice-making and
refrigeration, the heating and draining of buildings, for dry kilns,
hospital beds and apparatus, electric light, railway and telegraph
poles, pipe railings, for conduit work, etc. For many of these
applications, the seamless variety is now utilized, however.
For many purposes coated pipe is highly desirable. This may be by
hot asphalt, or other liquid dip, by surface electro-galvanizing or by
the hot galvanizing method of dipping in molten zinc, by which
method probably the greater portion of coated pipe is treated.
Certain other protective coatings are used to a limited extent.
CHAPTER XXI
THE MANUFACTURE OF SEAMLESS STEEL
TUBES
It is more than likely that the popularity of the bicycle, which

created the recent great demand for strong, light and perfect tubes,
was largely instrumental in developing the seamless tube industry,
which may be said to have “sprung up” within the last twenty-five
years. Previously all of the iron and steel pipes or tubes obtainable
were either of the “butt” or “lap-weld” variety with the exception of
those which were made from long pieces of metal by boring holes
lengthwise through them. Tubes by this boring method are, of
course, quite difficult and expensive to make.
Shorter and thicker billets of steel can more easily be bored. When
the holes have been enlarged by pushing larger and larger-nosed
rams through them in a hydraulic press, they can be rolled down to
size over a mandrel, just as lap-welded pipe is rolled, only in this case
they are put through several times and considerably reduced in
diameter. In this way some of the seamless tubes are made.
The important starting point in all processes for seamless steel
tubes is the piercing operation and it is mostly in the method of
getting the first hole through the billet that they differ, since the hot-
rolling and the cold-drawing processes by which they are finished
have long been known.
One of the most important modern processes for seamless tubes,
the Mannesmann, is based upon the principle that if a white-hot
round steel bar is rapidly rotated between “cross rolls,” a
longitudinal rupture which is almost a hole forms along its center.
We may liken the motion of the bar in the rolls to the whirling of a
lead pencil between the palms of our hands, except, of course, that

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10th Edition, Michael Levy, Barton

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Chapter 1 Introduction to the World of Retailing

3) The retail sector plays a key role in developed economies.

6) More retail transactions take place online now than in stores.

8) Retailing offers entrepreneurial opportunities.

11) All of the following businesses would be considered retailers except

15) A retailer's role in a supply chain is to

31) A retailer that is vertically integrated

35) Retailers function as wholesalers when

37) The U.S. retail industry

59) A retailer's primary competitors are other retailers that

61) Which of the following is not an example of intertype competition?

It may be rather disconcerting to some enthusiastic ones who

The loose end of each coil of rod of wire is hammered or otherwise

alt='BAMBOO RODS WERE USED FOR CONVEYING WATER'

Early Water Pipes

From the double refined puddled

Plates Called “Skelp” Are First Rolled

Charging Skelp into the Heating Furnace

Pipes of diameters between ⅛″ and 3″ are usually made by the

How Lap-weld Pipes Are

Bent Skelp for Lap-welding Being Charged into Furnace

Pipes in Sizing and Cross Rolls

The water-pressure test is given to all lap-welded pipe as are

As remarked, both butt and lap-welded pipe is regularly

Hydrostatic Test of the Pipes

It is more than likely that the popularity of the bicycle, which

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