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Retail Performance Ratios

July 20, 2012

To further analyze your current brand(s) and assist you with your assortment planning, you will need to calculate two performance ratios in addition to tracking your inventory turnover.

Week supply is the average number of weeks worth of merchandise you have on hand. Calculate the dollar value of your end of month inventory and then divide this figure by your average weekly sales. This ratio (calculated by brand, family and product) will help you decide at what pace you should order this group of products. Your week supply should never be more than twice the number of weeks between orders, plus one. For example, if you order every 2 weeks, you should never have more than a 6 week supply on hand.

Sales per linear foot is calculated by measuring the total linear footage of your shelving and racking systems and identifying how much space is attributed to each brand. Sales per brand or group of products are then divided by the linear footage allotted to each. Best sellers should be rewarded with lots of space; the highest result should be given more space until this brand orgroup of products is just slightly above average

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