Retail Math – Managing by Numbers
The first time a Retail Manager realizes that their company, district or store, and their performance in managing that, is being judged by the numbers they quickly understand that there is more to managing retail than getting all of the work done, making everything look nice and being good to customers.
Unfortunately, that is when many get lost. If the Store Manager has never worked with retail math, or with any KPI’s (Key Performance Indicators) other than sales achievement compared to target or last year, then they are pretty much set up to fail unless they learn some retail math. At store level it may not be absolutely necessary to understand things like GMROII (Gross Margin Return on Inventory Investment), but it wouldn’t hurt. Knowledge is power. Retail math knowledge is a powerful tool for a Store Manager.The first time a Store Manager realizes that their store, and their performance in managing that store, is being judged by the numbers they quickly understand that there is more to managing a store than getting all of the work done, making everything look nice and being good to customers.
GMROII aside, there are many calculations that need to be made, at store level, to really understand how the staff and management are performing. Things like ASPC (Average Sale per Customer), UPT (Units per Transaction) Sales per Square Foot, etc.
Failure to make the calculations, interpret the results and take the required action based on those results will spell disaster for the Store Manager and the company.
Reports that provide the results of any number of KPI’s are really not very helpful if there is no understanding of what calculation was done to come up with the result. Without this understanding, a Store Manager simply sees the number and how it compares to some bench mark or company standard. If it is not a favorable comparison then the Manager has to take some action. Without knowing the details behind the numbers, taking action can be difficult at best.
It’s really not good enough to be coached by your superior on different actions you can take. A Store Manager must truly understand the results, the calculations and the implications if they are going to take appropriate and productive actions to correct unfavorable results and capitalize on favorable results.
Many Store Manager’s are embarrassed by their lack of understanding in this area and, as a result, they fail to ask for help or seek help on their own. Instead, they try to muddle through and do the best they can. If their Manager fails to recognize the lack of understanding and does not offer help in the form of retail math training, then even the best looking store in the best location with lots of target customers and great sales associates will underperform.
To gain Retail Math knowledge, get your copy of Retail Math Made Simple right here: http://www.dmsretail.com/retailmathbook.htm
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