Strategy Lululemon Practice Exam

The chosen statement reflects a scenario where many different retailers dilute market power, which indeed can weaken the bargaining power of retailers. When multiple retailers are involved in selling a brand's products, no single retailer holds significant leverage over the brand or manufacturer. This distribution of power means that retailers must compete with one another to offer the best terms to the brand, potentially lowering their bargaining position. In contrast, when a brand relies heavily on one particular retailer, that retailer can exert more influence over negotiations and contract terms since the success of the brand may hinge on that retailer's performance. High switching costs between brands—and the retailer control over marketing strategies—both imply strong positions either for the brands or the retailers themselves, thus strengthening their bargaining power rather than weakening it.