Monday, October 19, 2009

How to measure your Retail Store performance

Four Important Retail Performance Parameters to check if your Store is profitable

1. Customer Transactions
2. Stock Transactions
3. Space Transactions
4. Employee Transactions

Customer Transactions
A - Customer conversion ratio
Retailers ability to turn potential customer into a buyer
= No of transactions / Customer traffic x 100

B - Return to Net Sales
Indication of customer satisfaction by showing value of returned goods and allowances as %age of net sales
= Total Returns and allowances / Net Sales x 100

C - Transaction per hour
Keep track of number of transactions they carry on per hour/day/week or season
= Number of Transactions / Number of Hours

D - Sales per transaction
Measure to give rupee value of average sale
= Net Sales / No of transactions

E - Hourly customer traffic
Tracks total customer traffic/ hour/day/week. Can apply to each dept or entire store.
= Customer Traffic / Number of hours

Stock Transactions
A - Inventory Turnover
Number of times stock is sold and replaced in a period of time
= Net Sales / Average retail value of Inventory

B - % Inventory carrying costs
Track % age of net sales represented by fixed inventory cost
= Inventory carrying cost / net sales x 100

C - Gross Margin return on Inventory
Margin on sales with original cost value of merchandise to yield a return on merchandise investment
= Gross Margin / Average value on inventory at retail price

D - Markdown Goods percentage
if ratio increases retailer need to look at merchandising practices and pricing. Markdowns are symptoms of poor buying, advertising, store layout
= Net Sales at Markdowns / Total net sales x 100

E - Shrinkage to Net Sales
To determine % of net sale lost due to shrinkage
= Actual Inventory –Book inventory / Net Sales x 100

Space Transactions
A - Occupancy cost/ Square foot selling space
Measure of comparing performance of units at different locations
= Occupancy Cost / Square feet of selling space

B - Gross Margin return on Floor space (GMROF)
Gross profit per linear foot of shelf space which is annual gross profit divided by the total linear footage devoted to the product category.
= Gross Margin / Total linear footage devoted to a product category or entire store

C - Sales per square foot
Total sales value in rupee for every square feet of retail space
= Net Sales / Square feet of selling space

D - Stock per square foot
Use of space involving different product lines or compares performance of different departments or stores sing common standard
= Net Stock / Square feet of selling space

Employee Transactions
A - Net Sales per full time employee
= Net Sales / Total full time employee

B - Customers served per full time employee
= No of customers served / Total no of full time employees

C - Labor productivity
= Total labor costs / Net Sales

D - Gross Margin per full time employee
= Gross margin / Total full time employees

E - Supplier/ Quantity or value purchased per buyer
= Total suppliers / quantity or value purchased / Total buyers

Source: (PGDRM) Symbiosis,SIBM

Industry Watch
Consumer goods cos notch up unexpected sales 
Economic Times
"This year, festive period sales have been a complete surprise. After many many months, we are seeing a real stability in demand," said the country's largest retailer Future Group CEO Kishore Biyani.....

Insight of the Week
Big Retailers Still Struggle in India
Most Indians continue to find big retail stores more interesting as cultural phenomena than as places to do their actual shopping......

Management Quote of the Week
General Joe Stilwell - "Keep smiling. The higher the monkey climbs, the more you can see of his backside".

Humor of the Week
Man discovered COLORS and invented PAINT;
woman discovered PAINT and invented MAKEUP.

Man discovered the WORD and invented CONVERSATION;
woman discovered CONVERSATION and invented GOSSIP.

Man discovered AGRICULTURE and invented FOOD;
woman discovered FOOD and invented DIET.

Man discovered FRIENDSHIP and invented LOVE;
woman discovered LOVE and invented LOVE TRIANGLES.

Man discovered TRADING and invented MONEY;
woman discovered MONEY and invented SHOPPING.

Thats it!!! Thereafter man has discovered and invented a lot of things... While women are still STUCK with shopping.............. . !!!


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