Retail, Metrics, Rajnish,performance measurement, rajnish kumar itc

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Retail Metrics Rajnish

Retail Metrics Rajnish

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  • 1. Retail Metrics
  • 2. Measuring Retail performance- An overview
  • 3. Taking Stock : what the Analysts want to see 1.Change in Total Sales % 2.Comps : Change in Comparable Store Sales % 3.Earns – Gross Margin % 4.Turns – Inventory Turnover 5.GMROI – Gross Margin Return on Investment 6.RONW – return on Net Worth 7.Sales Per Square Feet
  • 4. Change in Total Sales %
    • Reported Monthly Quarterly and Annually
    • A retailer with strong sales growth is presumed to have a strong retailing concept at least one that matches with the current mood of the customer and economy
    • Issues
    • Inflation in economy can have an effect on overall sales number
    • New Store openings- Share in the total sales
  • 5. Comparable Store Sales (Comps)
    • Sales Growth % for only the stores open Throughout the reporting period – eliminating new stores
    • Compare to direct competition
    • Compare to Sector
    • Reflects consumer preference over cart competitors
    • Reflects increase Share of the Wallet
  • 6. Gross Margin %
    • Gross Margin % = { 1-(COGS/Net Sales)}
    • COGS – cost of goods sold
    • Gross Margin Must Cover :
    • Cost Of Capital
    • Cost of Storage
    • Cost of Obsolescence
    • Ranges from 15 % to 100 % depending on category
    • A one point increase in SG& A(Selling,General and Administrative Expenses) as a percentage of sale is associated with a one point increase in Gross Margin.
    • It enables retailers with different gross Margins to achieve similar return on sales average.
  • 7. Inventory Turns Inventory turns = {Net Sales/Inventory at Retail} Or Inventory Turns = {COGS/Inventory at cost} Both Measures are equivalent Net Sales/Inventory at cost
  • 8. GMROI
    • Gross Margin return On investment
    • Measured as
    • = Earns X Turns
    • For a retailer or a format to be successful the GMROI should be equal to or greater than 100
    • However this number could change with the context of lower operating costs
  • 9. Return on Net Worth (RONW)
    • Net profit/net sales X Net Sales/Total Assets X Total Assets/Net worth
    • Profit Margin X Assets turnover X Leverage
    • Margin x Assets x Finance = High Yield
  • 10. Return On Space
    • = rupee margin/number of racks units
    • Should be measured per month basis Quarterly, Half Yearly and Annually
    • 1 wall Rack Unit = 1.5 X 1 Floor Rack unit