Retailing 8th Edition by Patrick Dunne,Robert Lusch, James Carver

Exercise 5

You launched your first entrepreneurial venture eight months ago, "The Curiosity Store," which is a toy store that has as its mission "to provide an engaging learning environment where children can develop their inquisitive and curious nature and hence their skills and talents." Sales have been growing each month but you estimate breakeven sales are $40,000 a month, and The Curiosity Store is still 25 percent below that level. You are especially concerned because the last two months sales growth has begun to slow. One of the things you had learned in the retail class you took at the local community college was that customer traffic was a key driver of retail success. At the same time you know that many children and their parents in the trade area you serve shop at Target and Walmart for toys or shop online. Perhaps one possibility for growing sales is to get more customers to shop the store and also do so more frequently. Consequently, you are considering selecting two-dozen toys that will be rented and not sold. The toys have a retail price that ranges from $36 to $78. For toys under $50 the one-week rental fee will be $5 and for toys above $50 the fee will be $7. Incidentally, your cost on the toys is approximately 50 percent of the retail price. When the toys are returned the customer will be offered the toy at the regular retail price less the one-week rental fee and then will receive another 10 percent discount if they purchase the toy. Should you adopt this new strategy