I was down to C and E. Though C seemed good, I chose E as i was not able to relate "they" in C.
It can point to either factory outlets ormanufacturers . Please advice.
Factory outlet stores, operated by manufacturers, are usually located miles from downtown and regional shopping centers so as not directly to be competitive against
[highlight]department stores[/highlight] in the same trading area.
Please see the highlighted non-underlined portion of the sentence - "department stores".
Only stores can compete with each other. Manufacturers can't compete with department stores.
Thus, "they" has only one LOGICAL antecedent, Factory outlet stores, and is used properly as pronoun.