Page 79 - DMGT553_RETAIL_STORE_MANAGEMENT

Retail Store Management

Notes you the profit or loss in the month it occurs, and resets the margin for the new month, giving
you a true month-to-month comparison.
In this unit, we will discuss basic overview of retail arithmetic. Further, we will focus quantitative
terms related with a retail store and its calculation.

5.1 Health of Your Business

To determine how well or (perish the thought) how badly their business is doing, retailers
routinely compare each month with the same month a year prior. This is because, given the
large seasonal swings almost all retailers experience, there is little meaning in comparing this
month’s sales with last month’s. So, if this February you did $110,000 in sales and last February
you did $100,000, your business would be 10% ahead of last year. And, if this continues for a
while, you can be happy with your trend. Of course, if the numbers were reversed and you did
$100,000 this year and $110,000 last, you would be 9% behind, and you would have to take
prompt remedial action.

Did u know? Under the retail methodology, the selling price of an item is always 100%.
Therefore, both cost (the amount you pay for an item) and markup (the amount by which you
increase the price to cover your expenses and profit) must equal 100%.

In looking at these figures, you must exclude new stores or departments you opened. To determine
how healthy your business is, the comparison between years must be apples to apples, that is,
same store performance.

!
Caution Make sure that any accountant you involve with your business fully understands
retail accounting. If not, you could truly be at a loss.

Self Assessment

Fill in the blanks:
1. Retailers typically keep a ........................-column ledger in order to fully understand what
is going on with their business.

2. In the ........................ column, they keep a running record of the cost of the merchandise, the
landed price including the cost of goods and shipping costs.
3. In the ........................ column, they keep a running record of the retail value of the
merchandise, the sum of the retail price tickets on all the items in the store.
4. To determine how well or (perish the thought) how badly their business is doing, retailers
routinely compare each month with the same month a year ........................
5. Under the retail methodology, the selling price of an item is always ........................%.

5.2 Quantitative Terms Related with a Retail Store and its
Calculation

Math is used at every level of retailing. From the basic functions of counting money and making
change, to computing the total amount of a sales transaction involving calculating percentages
to determine discounts, sales tax and shipping charges. More complex retail tasks require more

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