Sales & MarketZing !

In continuation with our previous post about the AND approach to business of share and profitability . here is our take on this AND principle getting implemented in retail . retail dynamics ,is not about getting walkins alone but in doing walkins AND the more per customer act too! so the game is like in most business is to get more customers and more per customer ! here is the simple equation of retail business growth. sales = cash memo size (cms) (x) number of converted custom (converted customers =bills cut /number of customers ) cms (cash memo size)= sales/number of bills cut sales going up ,is dependent among other things ,on the "upt" factor ,upt is nothing but units per transaction .higher the upt ,normally means higher cash memo size too. This is how businesses can use this dynamics ... so if walkins are falling ,and the cms is growing ,along with upt growing ,with conversions holding then you should be ok . if sales needs to go up ...

Here goes the list of key retail maths that's done commonly to judge performance and trends i) Gross margin = Sales - Cost of good sold ii) GMROF = Gross Margin ( GM ) / the sqft area ( that delivered this GM) iii) Markup= the amount by which the cost price is taken up by , for example if the cost is 10 rs and the markup is 25 % then the selling price is 10 +2.5 =12.5 iv ) GMROI = the Gross margin ( GM ) / cost of inventory (that delivered this GM ) v) GMROL = Gross Margin ( GM ) / the amount of labor involved in delivering this GM vi) OTB ( open to buy ) is an indicator for the merchandiser whether he/she can buy more = Sales + markdown + opening Inventory -closing Inventory for the period vii) Margin = (Sales-cost)/sales viii) sell thru ( indicates off takes ) = Sales / ( sales + closing inventory ) ix) upt = Units sold /no of bills generated x) No of weeks stocks = Inventory / sales per week . of the unit that's being measured More later !

Retail Maths _ PART 1 Some basic factors that directly affects profits of a retail operations :: 1 Operating Income: Gross Sales = The total retail price charged on an item X No. of units actually sold Net sales = Gross sales – Customer returns & allowance Customer returns or allowance % = Rs. Cust. Returns allowance X 100 ---------------------------------- (Gross sales) 2.Total cost of merchandise : Cost of merchandise = Billed cost + Inward freight & transportation charge + Alteration & work room charges – Cash discount 3.Operating expenses: Operating expenses = Direct + Indirect expenses Cost of merchandise sold % = Cost of goods sold X 100 ---------------------- (Net sales ) Gross margin % = Gross margin X 100 -------------------- (Net sales) Net profit % = Net profit X 100 -------------------- (Net sales) More Later ! ( items in the denominator ( in brackets) have to move to the right sorry can't handle that ! )