Why might a retailer prefer to utilize a distribution center?

A retailer might prefer to utilize a distribution center primarily to alleviate the higher costs of in-store inventory. Distribution centers allow retailers to consolidate inventory in a single location rather than keeping extensive stock at each retail outlet. This not only reduces storage costs but also improves inventory management by efficient handling and distribution of goods.

By utilizing a distribution center, retailers can respond more flexibly to demand fluctuations without overcommitting resources to in-store stock. This setup can also lead to better shipping rates and economies of scale, as larger shipments can be sent from the distribution center to multiple retail locations at once. In contrast to the other options, using a distribution center is primarily aimed at cost-efficiency and optimizing inventory levels, making it a strategic choice for modern retailers.