nickshanagher

Retailers need to introduce new products to provide their shoppers with "good news" and to generate interest. But for each new product that you introduce you need to consider delisting an existing line. Easy, you might think. I will just print out the list of products in the category and take off the one with the lowest sales. However, if you do this research from the US suggest you might be wrong. What you need to consider is what sort of demand you have for each product, a white paper by Demand Tec, a US specialist software provider shows. It says that there are two kinds of sales: incremental sales, when products add to the total shopper spend and are not readily substituted by another item transferable sales, where shoppers find an alternative easily when it is not available. Using its software, it shows a category with 50 products from top seller to bottom seller. At the same time it also measures the incremental sales each product provides. The number 50 in ove...

In all businesses it is fairly easy to calculate the hypothetical profit margin that you could make but the important thing is to work out the actual profit margin that you do make. In a shop, work out the average daily running costs and then take this away from takings and you have a basic measure of profit. Where it gets interesting is when you try to work out which parts of your business are delivering the profits. For many businesses, putting in place the processes to break down and measure profitability is a big task. Starting from scratch, you have to think hard about where costs should be allocated. You then have to work out what the actual sales figures really are. In retailing, many retailers make the mistake of focusing on mark-up and forgetting rate of sale. If you have a product with a 100% mark up that sells once a week, you may find that a product with a 20% mark up that sells 100 times a day is the real profit generator. The process of finding out is also good for ...