1.

TradeUp is a high street retailer that buys, sells and exchanges second-hand entertainment products and technology. These products include video games, mobile phones and tablet computers. TradeUp was established in 2002.

The demand for some second-hand products, such as mobile phones, changes quickly. Amelia needs to make sure that her prices are competitive with other second-hand retailers otherwise she will lose customers.

Table 1 Extract of Income Statement for year ending April 2020

	(£ 000)
Sales revenue	140
Cost of sales	84
Gross profit	56

Amelia has always liked her location in a busy town centre and has never had any direct competition. This location has provided Amelia with loyal customers who like the convenience of being able to visit her store when they are in town shopping. However, another retailer located nearby has announced that it will start to offer a similar service to TradeUp. Amelia has heard that a unit on an out-of-town retail park has become available. She has found out that although the size of the unit at the retail park is bigger than her current location, the rent would be £825 per month, which is lower than her current payment of £1100 per month. There is a bus link every hour to the retail park and lots of free parking; however not all her current employees can drive.