1. Q: What are the factors that affect the profitability and how you can increase the store profitability?
The company’s annual budget will be projected to be achieved in 11 months, during these 11 months, if we fail to
achieve then we have 1 more month to achieve the budget goal, and if we achieve in 11 months then the last
month would be an additional month to make the store ahead of others.
A: The simple and effective formula to increase the profitability is as under,
Increase Sales – Reduce expenses = Increase Profitability
Increase Sales: -
A. Implementation of 7ps of marketing in business bring success
1. Product- High gross, High selling and seasonally correct
2. Price- Outstanding and exceptionally well customers service
3. Packaging-Square watermelon
4. Promotion-communitysupportsyourbusiness;itisagood businesspractice tosupportyourcommunity.
5. Place-Floor Displays, Visibility of Products
6. Position- Follow the planogram
7. People- Special needs people, Asian, Hispanic and others, (Angela – Goshen Store) – Clientele
B. Suggestive selling
1. Walk with the needy customers instead of directing to certain aisle for any items
2. If you see chips in the shopping cart, suggest salsa, Tooth Paste with Tooth brush and etc.
3. Customers' perception of having received value and enjoyment increases because they appreciated your sales
associate's personalized attention, observations and subsequent recommendation.
4. Customer loyalty is positively impacted with the more personal and thoughtful nature of this interaction
C. Items of the Department
1. Choose one item per Department to increase the sales of the department
D. Sampling
1. Choose 1 or 2 items for sampling during high traffic time to increase the sales. It is very important how you
invite the customer to taste the sample. If you ask the following way question than you will get the response
accordingly.
Do you want to taste the sample? - 30 % customer’s response
Would you like to taste the new Items? – 60 % Customer’s responses
Would you like to taste one piece or two pieces of Items? – 95 % Customer’s responses
2. Pre decided mind customers
3. Persistent approach coverts prospects into customers
E. Important events
1. BTC/BTS
2. Graduation, Valentine day, Musical Concert, 4th July, Memorial Day, Thanks Giving, Black Friday, Christmas
and New Year
F: Advance systematic Planning
1. Make sure the Store has enough inventory to cater to the needs of special events (Not over stock)
2. 10 % items generate 90 % sales and 90 % items generate 10 % sales (High selling Items of Dept)
3. In retail business there is an automatic increase of sales compared to previous year – 11 % - 12 %
4. Keep constant eye on previous year statistic and Items performance activity
G: Special needs Community
1. Senior citizens community
2. USA is the country of diverse culture - Asian, African Hispanic and others
H: Personal approach
1. Buyers markets, not the sellers market
2. Visits NPO, Hospital, School and Collages, motels and Apartments , other public place
I: Fund Raising Activities/Community involvement
1. Store Reward cards, Gift cards or Credit cards
J: Customers counts

2. Expenses: -
There are mainly two types of expenses – Controllable and Uncontrollable
Uncontrollable expenses (9.00 %)
1. Mainly of government taxes.
2. Credit card fees- Most Retailer gets charged 1.00 % - 1.25 % on sales
3. Federal Insurance contribution Acts –Currently 7.65 % on wages (Link with wages) 6.20 + 1.45
Controllable expenses
A. Labor : Labor is the number one category in controllable expenses (7.0 % of total controllable expenses )
Unnecessary overtime: Pay for overtime and unworked hours can be 1.3 percent of total payroll.
Buddy punching: 19 percent of employees admit to buddy punching once a year; these costs can reach from
1.5 percent to 3 percent of gross payroll.
Unscheduled absenteeism: Its rate in the US hourly workforce is approximately 9 percent; almost one in
ten workers is absent when he or she should be at work.
Action plan:-
1. Actual scheduled is less 3 % than budgeted, ex. 1000 hr. (Budget) - 970 hr. (Actual)
Benefits: No over time and reduction in labor cost by 3 % (gradually increase up to 10%)
2. Management awareness on buddy punching
3. Coaching for improvement and importance of punctuality- Acknowledge the most punctual employee in
the staff meeting to motivate other staffs. (Thank you card, Buy drink or certificate )
4. More part time employee (Reducing relevant cost like Insurance)
B. Shrinkage
A survey in 118 retail chains in the US states that the country has lost $31 billion and retailers lost 1.7
percent of their total annual sales due to retail shrinkage last year. Retail sales of the 2007 in USA $ 5.8
trillion. The causes of retail shrinkage are mainly employee theft, shoplifting, administrative errors and vendor
fraud.
a. Employee Thefts: Employee theft is contributing to 49 % of total shrinkage.
(Merchandise, Cash, dishonesty and time)
Action Plan:
1. Constant Communication, Motivation is the key to reduce the shrinkage.
2. Proper training
3. Importance of having job with reputed company
4. Discipline without punishment ( Reduce turn over)
5. Constant monitoring on high sensitive areas (Cash, lottery, MO and missing check) and high valued
merchandise
6. Management approval is needed for refund of high dollar merchandise
7. Last option of prosecution
b. Shoplifting: Shop lifting is contributing 29 % of total shrinkage
Action plan:
1. Proper training to Floor associate, Cultivate the attitude to help the customers “May I help you to find
something”
2. Organized Aisle will reduce the chances of shoplifting activities
3. Keep eyes on suspicious activities, Study the shoplifter
4. Acknowledge, appreciate and congratulate the vigilant staffs
5. Share the statistics and educate associates that how shrinkage will affect their earnings. ( Bonus)
6. Look for the possible spots ( Scramble the merchandise, Chips- candy, Cookies- household )
c. Invoice Error: Invoice error is contributing 15% of shrinkage .This category has very wide range and the
invoice error can happen at any stage of merchandising cycle. ( Wherhouse to POS )
1. Invoice Error – Shortage, wrong product, wrong packaging, over priced, Invoice pending, finalize and etc.
2. Pending Return claim of vendor or wrong return
3. Different product can be scanned as same product – Mountain Dew and Diet mountain dew ( POS and help
hand) At Speedway AM matched the price of Pepsi and not quantity ( 20 oz and BIB)
4. Negative on hand quantity, Not properly correct the negative on hand quantity
5. Wrong mark down, Failure to record all markdown
6. Improper Recalls ( Full quantity, late or wrong items)
7. Miscounting physical inventory

3. 8. Higher/Wrong refund to buddy
9. Throw away merchandise without record or wrong record
Action Plan:
1. Little extra attention at every stage makes very big difference
2. Consistence Training and follow up on management side is very important
3. Submission of claim in timely manner will saves lots of money
4. Negative on hand quantity to be corrected with utmost care and full dedication
5. Work harder is an important but work smarter is very important – Develop the attitude of ownership at all
level of staffs.
6. Proper communication of reducing the unnecessary expenses is very vital
d. Vendor Fraud:
This category is responsible of 5 % of total shrinkage. Like the invoice error category this category has
also wide range of scope to contribute the shrinkage. Wrong invoice, product, price, quantity and etc.
Action Plan:
1. One of the key factors to earn the success on this category is to take little extra attention on invoice
detail, check in procedure and study the attitude of vendor.
Other category
This category is contributing a small amount of shrinkage, but again this is also not ignorable category.
Unnecessary uses of Lights, Utilities, too much store supply and other services are the main subcategories
that is contributing 2 % shrinkage
Action plan:
1. Educate, motivate and communicate to avoid unnecessary usages of lights, utilities and store supply.