Which of the following is a type of off-price retailer?
Factory outlet
Factory outlet — option 3.
The distinction the question rests on. Retailers classified by relative price fall into two groups that are easy to confuse :
| Discount store | Off-price retailer | |
|---|---|---|
| Merchandise | Standard merchandise | Leftover, overrun, irregular goods bought at less than regular wholesale |
| Price | Lower prices, on lower margins and higher volume | Lower than even discount stores |
| Supply | Regular, from normal wholesale channels | Irregular; the buyer takes what is available |
| Assortment | Consistent | Changing and unpredictable |
The three kinds of off-price retailer, which is the classification being examined :
| Type | Who owns and runs it |
|---|---|
| Factory outlet | Owned and operated by the manufacturer itself, selling its own surplus, discontinued and irregular stock |
| Independent off-price retailer | Owned by entrepreneurs or by divisions of larger retail corporations |
| Warehouse or wholesale club | Sells a limited selection of branded goods at deep discount to members paying an annual fee |
Why the other options fail. A discount store is a separate category and the sharpest distractor — it is defined by low price on standard goods, whereas off-price is defined by irregular supply. A superstore and a category killer are classified by product line, not by price: the superstore is much larger than a supermarket and carries routinely purchased food and non-food items, while the category killer carries enormous depth in one category — sporting goods, electronics, furniture.
The four bases of retailer classification, worth keeping together: product line (specialty, department, supermarket, convenience, superstore, category killer), relative price (discount, off-price, factory outlet, warehouse club), service level (self-service, limited, full), and ownership (corporate chain, voluntary chain, retail cooperative, franchise, conglomerate).
Hence, the answer is Factory outlet.
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