Retail Dogma

Retail Math 101

In this retail math guide, you will learn the basic concepts and their respective formulas, as well as the practical applications of these concepts.

Watch the video on each concept, and then follow the links for in-depth reads, practical examples & best practices.

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Introduction

Retail math refers to a set of formulas used by retail businesses in their day-to-day operations to calculate certain retail KPIs and metrics that measure the performance of the business.

Importance of Retail Math for Managers & Owners

It is very important for store owners and managers at any retail business to understand and practice using the different retail math formulas on a regular basis, in order to be able to make the right decisions for the business.

There are different sets of formulas for each retail function, and professionals only need to familiarize themselves with the relevant retail math concepts related to their function. For example, the sales and operations team at the retail business will be dealing with a different set of formulas than the buyers and merchandisers.

For retail owners and entrepreneurs, it is important to be familiar with all the formulas, in order to be able to manage the whole business and assess the performance of your teams.

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Retail Math for Sales & Operations

The sales & operations team will be dealing with calculating and analyzing the following retail KPIs through daily sales reports. Tracking those KPIs helps the managers identify the areas of underperformance and create action plans to address it.

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Retail Math for Buying & Merchandising

Using retail math for buyers and merchandisers would help maximizing the return the business is getting from its inventory, by buying it right in the first place, pricing it right and then managing it efficiently to get the highest gross margins out of it.

RESOURCES

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Download the retail math formulas cheat sheet & excel calculators.

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