Page 93 - DMGT553_RETAIL_STORE_MANAGEMENT

Retail Store Management

Notes
Percentage Increase/Decrease
% Increase/Decrease = Difference between Two Figures ÷ Previous Figure
Quick Ratio
Quick Ratio = Current Assets - Inventory ÷ Current Liabilities

Reductions
Reductions = Markdowns + Employee Discounts + Customer Discounts + Stock Shortages
Sales per Square Foot
Sales per Square Foot = Total Net Sales ÷ Square Feet of Selling Space

Sell-Through Rate
Sell-Through % = Units Sold ÷ Units Received
Stock to Sales Ratio

Stock-to-Sales = Beginning of Month Stock ÷ Sales for the Month
Questions:
1. Analyze the case and interpret it.
2. Write down the case fact.

3. What do you conclude from it?

Source: http://retail.about.com/od/retailingmath/a/retail_formulas.htm
5.4 Summary

Retailers typically keep a two-column ledger in order to fully understand what is going
on with their business.
In the left column, they keep a running record of the cost of the merchandise, the landed
price including the cost of goods and shipping costs.
In the right 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.
A low turnover item must give you a high margin in order to pay the rent for sitting on
your shelf for a long time.

In contrast, a high turnover item obviously has to pay less rent, and therefore can make a
lower margin.

Products can vary dramatically in what they cost to sell.
Some products (like glassware) break easily so customers or sales people are likely to
damage a certain percentage of the stock.
Certain goods have a tendency to disappear because of shoplifting (electronics).

Others are extremely heavy or awkward to move from the warehouse to the selling floor,
so the freight and handling costs may be high.

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