Retail Performance Measures Analysis
9.35. What types of performance measures used by retailers?
The performance measures used to evaluate retail operations will depend on the level of the organization where the resources the manager controls and the decision the manager is making. There are many factors that to be considered before a retailer evaluates the overall performance of a store. Thus, it is very difficult to use one single measure to evaluate the performance of a store. For example, a store manager could easily increase sales and inventory turnover by lowering prices, but the gross profit margin would be affected as a result. Thus, managers must aware how their actions would affect multiple performance measures.
There are three main types of performance measures, namely, input measures, output measures, and productivity measures. Input measures are to assess the amount of resources used by the retailer to achieve outputs. Output measures are to assess the results of retailers’ investment decision, for example, sales revenue results from how much inventory to have in the stores. While, productivity measures is the ratio of an output to an input to determine how effectively a retailer uses a resource and can use to compare different business units. For example, a retailer with two stores area, one with 10,000 square feet and another with 20,000 square feet. In this …show more content…
A buyer could increase and generate high sales and inventory turnover by offering the merchandise at a very attractive low price. Thus, gross margin return on investment (GMROI) is use to evaluate the profitability of a buyer’s investment in inventory. Merchandise managers and buyers are responsible for the advertising and other forms of promotion to promote and generate sales for a particular group of merchandise. Thus, the ratio of net sales to advertising expenses is use to measure the effectiveness of the advertising and promotional
The performance measures used to evaluate retail operations will depend on the level of the organization where the resources the manager controls and the decision the manager is making. There are many factors that to be considered before a retailer evaluates the overall performance of a store. Thus, it is very difficult to use one single measure to evaluate the performance of a store. For example, a store manager could easily increase sales and inventory turnover by lowering prices, but the gross profit margin would be affected as a result. Thus, managers must aware how their actions would affect multiple performance measures.
There are three main types of performance measures, namely, input measures, output measures, and productivity measures. Input measures are to assess the amount of resources used by the retailer to achieve outputs. Output measures are to assess the results of retailers’ investment decision, for example, sales revenue results from how much inventory to have in the stores. While, productivity measures is the ratio of an output to an input to determine how effectively a retailer uses a resource and can use to compare different business units. For example, a retailer with two stores area, one with 10,000 square feet and another with 20,000 square feet. In this …show more content…
A buyer could increase and generate high sales and inventory turnover by offering the merchandise at a very attractive low price. Thus, gross margin return on investment (GMROI) is use to evaluate the profitability of a buyer’s investment in inventory. Merchandise managers and buyers are responsible for the advertising and other forms of promotion to promote and generate sales for a particular group of merchandise. Thus, the ratio of net sales to advertising expenses is use to measure the effectiveness of the advertising and promotional