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Difference in Pricing between Discount and Department Stores

Why do many department stores seek a markup of about 30% when some discount houses operate on a 20% markup? Identify and explain at least three reasons.

Solution Preview

Different formats of stores operate on different markup levels depending upon a number of factors.

Department stores traditionally feature service and reasonable price whereas discount houses compete solely on price. Discount stores are relying on low prices (and thus lower margins) to drive customers into their stores.

Discount stores also lower ...

Solution Summary

This solution explains multiple reasons discount stores can operate on 20% compared to many department stores operate on a 30% markup. This solution is 226 words.