QUESTION $7$

Save$-$a$-$lot is a Missouri$-$based discount supermarket chain store located in $36$ states. The company is a low$-$cost food retailer that cuts costs by limiting product breadth and depth. Save$-$a$-$lot

struggles to compete with Aldi, a fellow discount supermarket. Industry experts liken the underperformance to poor upkeep of Save$-$a$-$lot stores and Aldi's greater brand recognition. Which of

the following is a possible disadvantage of low$-$cost strategies that discount retailers such as Save$-$a$-$lot and Aldi must be alert to$?$

High profits can be enjoyed if a cost leader has a high market share.

Low$-$cost firms often win price wars.

If perceptions of quality become too low, sales will decline.

Low$-$cost firms are more resilient to economic downturn.

Cost leaders have loyal customer bases.