Financial Assignment

RETAIL MARKETING

RETAIL JARGON / FORMULAS

Trend Definition: This year’s business vs. Last year’s business

Formula: This year’s sales / last year’s sales

Example: Year Volume

2017 12,000

2018 15,000

Trend = 15,000/12,000 = 125%

Conclusion: We sold 25% more goods this year than last year.

Sell Thru % Definition: Percentage of stock sold for a given time period.

Formula: Units sold / beginning on-hand stock

Examples: Week of January 1, 2019

Beginning on-hand stock = 1,000

Units Sold = 200

Sell thru % = 200 / 1,000 = 20%

Conclusion: We sold thru 20% of our stock in the week of January 1st.

Retail Mark-up Definition: Mark-up % which determines retail price charged to our customers. Formula: Retail – Cost / Retail

Example: Cost = $15

Retail = $28

$28 – ($15 / $28) = 46.4%

Conclusion: The mark-up % is 46.4%

RETAIL JARGON / FORMULAS (continued)__

Turn Definition: Amount of times the average inventory sells in a given period (aka: “Velocity”) of time. Formula: Sales / Average Stock

Example: Units sold = 1,525

Average stock = 600 units

Turn = 1,525 / 600 = 2.54

Conclusion: We turned our stock 2.54 times last year

Markdown % Definition: What % your markdown was to your sales volume?

Formula: Markdown dollars / sales volume

Examples: Sales volume = $52,000

Markdown $ = $3,400

Markdown % = $3,400 / $52,000 = 6.5%

Conclusion: 6.5% of our sales were markdowns.

Gross Margin: The difference between the price that the customer pays for merchandise and the cost of the merchandise. It is the dollar amount of profit before other expenses are subtracted.

Markdowns Percentage reduction in the initial retail price.

Market A group of vendors in a concentrated geographic location or even under roof.

Mark Up The difference between the retail of merchandise and the cost of that merchandise.

Open to Buy The amount of merchandise a buyer may order during the balance of a period. Plan that keeps track of how much is spent in a month and how much is left to spend.

Receipts Merchandise which has arrived from vendors and has been counted and recorded as stock.

UPC Universal Product Code. Black and white bar code, found on the ticket box of the merchandise, which has a 12 digit number assigned to it.

Vendor Any firm from which a retailer obtains merchandise.