GMAT - Graduate Management Admission Test

The following appeared as part of a recommendation from the business manager of a department store. �Local clothing stores reported that their profits decreased, on average, for the three-month period between August 1 and October 31. Stores that sell products for the home reported that, on average, their profits increased during this same period. Clearly, consumers are choosing to buy products for their homes instead of clothing. To take advantage of this trend, we should reduce the size of our clothing departments and enlarge our home furnishings and household products departments.� Discuss how well reasoned... etc.

Based upon sales reports over a three-month period that indicate an increase in profits for stores that sell products for the home and a decrease in profits for clothing stores, the business manager of a department store concludes that consumers are choosing to purchase home furnishings rather than clothing. On the basis of this conclusion, the manager recommends a reduction in the size of the clothing department and an increase in the size of the home-furnishings department. This recommendation is problematic in two critical respects.

In the first place, the author�s conclusion that consumers are choosing to buy products for their homes instead of clothing is based upon too small a sample. Data gathered from a three-month period is insufficient to establish the conclusion drawn from it. It is quite Argument Page numbers possible that the three-month period chosen is idiosyncratic and not representative of entire year�s sales. If so, reducing the size of the clothing departments and enlarging the home-furnishings departments may be a costly mistake.

In the second place, the data collected during the three month period may be biased. The fact that the data reflects sales in local stores is cause for concern. It is possible that the sales trend in a particular location is not representative of sales in other regions. For example, sales of clothing in Florida during the winter months are likely to be quite different from sales of clothing in Alaska during the same period.

In conclusion, this argument is not persuasive as it stands. A more convincing argument must provide additional sales data, collected at different periods of the year and at different locations, that substantiates the trend in question.