Retail Math – Why It Is Important
Sales – Expenses = Profits
Retail organizations – in fact, any type of organization – have figured out this equation.
Or have they? Plenty of businesses go ‘Out of Business’. Maybe they didn’t have it figured out.
While that is surprising, to say the least, it’s not that far-fetched when you think about it. Not everyone is a numbers person.
Sometimes enthusiasm for a great idea overshadows the reality.
Suffice to say that any business person needs to understand how to figure out how they are doing in terms of dollars and cents. The end result will always be the same if no one is paying attention to the numbers – failure.
Even a company that is selling their products like hotcakes can’t rest on the fact that they have a product that everyone wants. Perhaps the hotcakes cost more to make than they are selling for. Perhaps there are way too many people working in the hotcake store and all of the profit is being spent on wages. It only makes sense that we have to know these things, right?
There are sayings that come to mind here: “Look after the pennies and the dollars will take care of themselves.” And, “A fool and his money are soon parted.”
If your store is part of a chain chances are pretty good that your Head Office personnel are watching the financial picture pretty closely. But that would be the big picture. As a Store/District/Region Manager you still need to measure, monitor and follow up on all KPI’s determined to be relevant for your store(s).
So, let’s say you track and review all of your KPI’s regularly. What do you do with what you learn?
Do you sit down with each staff member and talk about your findings? And during those sessions, do you hold the employee accountable and discuss ways to achieve more? If you answered yes to these questions you are ahead of a lot of other Store/District/Region Managers out there.
If you answered no, you would benefit from some training on retail math, metrics and KPI’s. And if you do talk to your employees about KPI’s but come up short when it comes to how to improve any metric, then you should seek help for that.
And there is plenty of help on the DMSRetail website. Cheers!