Data: Source, Measurements &

Report Analysis
 Data Sources
POS Data
Historical Sales data, including campaign
information
Historical Price data, including campaigns &
margin
Market data from suppliers: Total Market, Shares
& Trends
Customer data: demography profiles; incomes;
segments; behavior patterns
Competitor data, especially competitor prices and
assortment
 Measurements

A. Markup
B. Markdown
C. Gross Margin (GM)
D. Average Inventory Cost
E. GMROI
F. Stock Turn Rate
G. Days of Stock
H. Measures of Assets
I. Measures of Performance
 A) Markup or Mark-on

Markup is the amount of money above their cost of

a product that a retailer will charge for that product.

Cost Price + Markup = Selling Price

Therefore, Markup = Selling Price Cost Price

Markup Percentage or Rate of Markup

Markup % = Markup x 100

Cost Price
 B) Markdown

Markdown is the reduction in price of a product from its

original selling price or MRP.

Retailers generally use markdowns to generate sales and/or

clear inventory / or festive offers to attract customers.

Markdown Price = Original Selling Price New Selling

Price
 Markdown Percentage

Markdown % = Markdown Price x 100

Original Selling Price
 C) Gross Margin (GM)

Gross Margin (GM) is the difference between the total cost

of goods sold(COGS) and the total sales.

GM = Total Sales Total Cost of Goods Sold

 D) Average Inventory Cost

The average inventory cost is found by adding the beginning

cost inventory for each month plus the ending cost inventory
for the last month in the period and divide by 2.

Average Inventory Cost = (Beginning Inventory +

Ending Inventory) / 2
 E) GMROI or GMROII
An important tool in analyzing inventory, sales and profitability is
GMROI (also known as GMROII which stands for Gross Margin
Return On Inventory Investment).

The GMROI calculations assist category managers or buyers, in

evaluating whether a sufficient gross margin is being earned by the
products purchased, compared to the investment in inventory
required to generate those gross margin rupees.

GMROI = Gross Margin

Average Inventory Cost
 F) Stock Turn Rate

Stock Turn Rate is a ratio that compares average inventory to cost

of goods sold. It can be computed in units i.e. volumes or Rs. i.e.
value.
For comparative purposes, it is desirable that the Stock Turn Rate
calculation be standard.

Stock Turn Rate = Total COGS

Average Inventory Cost
G) Days of Stock or Inventory in Days
Days of Supply is a measure of inventory efficiency and is
especially useful to retailers when used to co-ordinate with
delivery & stocking schedules.

Days of Stock = Average Inventory x 30

Total COGS

In case if COGS is not known than:

Days of Stock = Average Inventory x 30
Total Sales
H) Measures of Assets

There are 3 Measures of Assets:

1) Space
2) Inventory Units or Capacity
3) Inventory Rupees
Space

An important measure for

retailers is in determining how
Space is used to generate sales.

Space is measured in 3 ways:

i) Square feet (shelf length x
shelf depth)
ii) Linear feet (shelf length)
iii) Cubic feet (shelf length x
shelf depth x shelf height)
Inventory Units & Inventory Rupees

Inventory Units also

known as Capacity, are the
number of products that fit
on a shelf across the front
of the shelf, to the back of
shelf & the number of
products stacked on each
other.

Inventory Rupees is the

total value of the products
required to fill the shelf.
 I) Measures of Performance

Sales Per Square Foot: It shows how productive the space

is in generating sales.

Sales Per Square Foot = Sales

Square Foot
Gross Margin Return on Floor Space
(GMROF)

GMROF = Gross Margin

Space Provided
Gross Margin Return on Persons
Employed (GMROP)

GMROP = Gross Margin

Persons Employed
Thank you.