Retail Dogma

# RETAILDOGMA

THINK LIKE A MERCHANT

# Retail Math

## The Sales Equation

The sales equation for retail & ecommerce businesses is: Sales = Traffic x Conversion x Average Transaction Value (ATV) Sales Equation Example For a business that has received a traffic of 1354 customers and had a conversion rate of 30% and an average transaction value (ATV) or average order value (AOV) of 112\$, the formula …

## Markup: Definition, Formula & Excel Calculator

Markup is the amount added to the cost price of a product, in order to set the sale price to the end consumer. It is expressed as a percentage of the cost price, and when used to set the initial price of the product is called initial markup (IMU) Markup Percentage Formula Markup (%) = …

## Markdowns: Definition, Types & Strategy

Markdowns are price reductions applied on the original price of the product, in order to accelerate its sale velocity and generate cash. Markdown Formula Markdown (%) = (Original Price – Sale Price) ÷ Original Price x 100 Markdowns are expressed as a percentage of original price and are calculated by deducting the sale (reduced) price …

## Retail Math 101

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. ADVERTISEMENT Attachments Retail Math Formulas Cheat Sheet Retail Benchmarks …

## Units Per Transaction (UPT)

Units per Transaction (UPT), aka Items per Customer (IPC), is a retail KPI used to measure how many items customers add to the shopping basket on average. It is used together with Average Transaction Value (ATV) & conversion to assess the effectiveness of the sales process and the sales team at the store. Units Per …

## Open to Buy in Excel Sheet

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## Average Transaction Value (ATV)

Average Transaction Value (ATV), aka Average Order Value (AOV) in ecommerce, is a sales KPI used to measure the effectiveness of the sales process and the sales team in the store. The more skilled the sales team on the floor, the higher ATV they can deliver for the business. It is usually combined with other …

## Average Inventory

Average inventory is usually used during the calculations of different inventory metrics that are used to assess the efficiency of inventory management practices at a company. What is Average Inventory? Average Inventory is the average value of inventory that a company holds over a certain period of time. This period could be a month, a …

## Days Sales in Inventory

Days Sales in Inventory (DSI) measures how many days it takes to sell the company’s inventory. It is used together with other metrics like inventory turnover ratio and GMROI to track how efficiently a company manages its inventory. While a low DSI can be positive or negative; ie it could mean that either the company …

## Same Store Sales : Understanding LFL Comparison

Same store sales or comparable store sales measure the growth of a retail business on a like-for-like basis, where it excludes the stores that were not operating during the same period last year. It is often referred to as “LFL” or “Comps”. Who Uses This Measure? Same store sales or comps is often used by …

## Intake Margin: How to Set it Right?

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## COGS: Cost of Goods Sold for Retail Businesses

Cost of Goods Sold (COGS) reports the costs associated with the products sold by the company. They are reported on the P&L statement as and expense and directly affect the gross profit of the business. Gross Profit = Sales – COGS How to Calculate COGS for a Retail or E-commerce Business? The formula for calculating …

## GMROI: Gross Margin Return on Investment

Inventory is usually the biggest asset for retail or e-commerce businesses, and so it is important to be able to measure its ROI and take some steps to improve it over time. One of the inventory metrics used to evaluate inventory performance is GMROI. What is GMROI? GMROI stands for Gross Margin Return on Investment …

## Inventory Turnover

Inventory turnover ratio (IT) measures how many times a company turns its inventory during a certain period of time. It gives an idea about how efficiently a company is managing its inventory. How To Calculate Inventory Turnover? Inventory Turnover Formula: Inventory Turnover (IT) = COGS ÷ Average Inventory To calculate IT you will need the …