What is cannibalization in retailing?

Cannibalization in retailing refers to the phenomenon where a company's new store or product takes sales away from its existing stores or products, resulting in diminishing returns, especially when multiple locations are introduced in close proximity. This typically happens when the new offering does not attract enough new customers and instead draws sales from established locations, leading to an overall reduction in profitability.

In the context of choice C, it accurately captures the idea of cannibalization by highlighting the issue that arises from having too many stores in one area, which can lead to competition between the retailer's own locations. This internal competition can dilute sales and impact overall performance negatively, causing the company to see less benefit from opening new stores than anticipated.

On the other hand, the other choices do not encapsulate the concept of cannibalization. The introduction of new products can be beneficial and might stimulate sales without necessarily affecting existing products adversely. Increased customer loyalty tends to enhance performance rather than detract from it, and successful expansion into new markets typically indicates growth rather than the internal competition level that defines cannibalization.