What Is The Formula For Calculating Net Profit Margin Calculating Shelf Productivity

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Calculating Shelf Productivity

Knowing how profitable each shelf is for your store’s products is as important to any retail store as product placement in the store will be. Knowing what a person’s shelf product is, under certain circumstances will not only help you increase profitbut it also helps you improve product selection and placement in your store. The idea is that you want to get as much profit as possible from each shelf in your store. And I mean shelf space in the broadest sense of the word.

Step 1: Decide on a unit of measure

One of the first things you need to do is decide on a unit of measure. Understand that in order to compare one place to another, they must be in the same unit of measurement. E.g. If you use 1 foot of shelf space you need to add it to every area of ​​the store you wish to count. Comparing the proverbial “apples to apples” is key to making this work.

Step 2: Number your shelves for tracking

Once you’ve decided on a unit of measure that works for you, write numbers on your shelf spaces (on paper at least) so you can identify specific spaces and shelves. I would recommend using a store map combined with a brand spreadsheet. Also note that the larger the unit of measurement, the easier your profit comparison will be. So using a smaller unit of measurement would seem more valuable. E.g. use 1 foot instead of 2.

Step 3: Assign the product

If you have spent some time on product placement in the meantime, you will already have products assigned to certain areas in your store. So it’s a simple matter of linking the product to the shelf space number.

Step 4: Calculate the dollar value of revenue for each item

Although knowing margin percentages can be helpful, the true measure of productivity is actual dollars earned. So check the full income of something (revenue – sales price = gross profit).

Step 5: Use the dollar value to calculate the product’s dollar value

Simply repeat the number of units sold, of a particular product, and dollar value of total profit. The most important part of comparison is that you have to measure it over time. So use 1 week, 1 month, 6 months or whatever time frame you wish to use. Apply this to every shelf in your store, and you’ll soon identify your top-producing shelves as opposed to your lowest-producing shelves. Get in touch with the seasons and you’ll soon see what’s producing when.

Step 6: Take your time, analyze and experiment.

The amount of information that can be gathered about your store’s product from this type of analysis is vast and immeasurable. Especially over time. Note however that this type of analysis takes time, especially in an environment that may have many cycles. So make sure that the time used to calculate your product is compatible with your store and product types. Of course with this data you can calculate the exact times of a certain line, for example.

To conclude, have your analysis storage product it will make you better at marketing, and increase profits for sure. The only thing you have to remember is that you have to do it regularly and be patient. Building a useful database takes time, and some effort.

I wish you the best in your endeavors and invite you to share your stories and ideas here.

Cheers!

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