Term
| Profit (retailers standpoint) |
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Definition
| Money GAINED from the buying and selling of merchandise |
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Term
| Gross Profit (or gross margin) |
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Definition
The DIFFERENCE between the cost of the raw materials and the price of the finished product
NS-COGS=GM-EXP=P/L |
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Term
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Definition
| What remains after all expenses are paid |
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Term
| Why do we study profit calculations? |
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Definition
Permit COMPARISONS between stores to deterine STRENGTHS and WEAKNESSES
Indicate DIRECTION of the business
(Is it prosperous or headed toward bankruptcy?)
Provide a statement of analysis so any changes in management or policy can be made |
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Term
| What is the point of profit? |
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Definition
It encourages growth and change, competition, capital investment plus research and development
the goal is to IMPROVEMENT OF PROFIT |
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Term
| What are the basic profit factors? |
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Definition
Sales Volume (or net sales)
Cost of Merchandise Sold (COG)
Operating Expenses (OE) |
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Term
| How to calculate Sales Volume |
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Definition
Gross Sales (GS)- Customer Returns and Allowances (CR&A)= Net sales, sales volume, or operatimg income
Customer returns dollar figure is expressed as % of GROSS sales
--all other %'s will be based on NET sales (merchandise that remains sold.) |
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Term
| How do you figure Customer Returns and Allowances %? |
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Definition
| Customer R & A$/ Gross Sales |
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Term
| Cost of merchandise sold is affected by 4 items: |
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Definition
Billed cost of purchase/invoice cost
Freight or transportation chargest
Alteration and workroom costs
- Cash discounts (within specified time) |
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Term
| What are Direct Operating Expenses? |
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Definition
They come into being with a department and cease if it is discontinued
Salaries
Departmental advertising
Selling supplies
Rental space for dept.
etc. |
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Term
| What are Indirect Operating Expenses? |
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Definition
Exist even if a department is discontinued (prorated to all sellind deptartments on the basis of sales volume)
Ex.
Store maintenance
security
Insurance
Salaries of top Management
Depreciation of Equipment |
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Term
| COG & OE are expressed as a ____ of NS |
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Definition
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Term
| What are some ways to increase profit? |
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Definition
Increase sales (productivity)
Decerase cost of goods (low cost purchases through larger cash discounts, lowered shipping charges, etc.)
Reduced Operating expenses |
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Term
| What is the Skeletal Profit and Loss Statment? |
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Definition
A quick method to determine profit or loss
NET SALES...... (always 100%)
-COGS
=GM
-OE
=NET PROFIT OR LOSS |
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Term
| What are best for doing comparisons, $ or %? |
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Definition
Percentages (%) are always best when doing comparisons
You may have a larger volume store, $15,000 increase may be great for one business but not so good for another. The % will determine if it was good or bad |
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Term
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Definition
External Theft
Internal Theft
Paperwork Errors |
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Term
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Definition
| Stopping losses before they occur |
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Term
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Definition
| anything that results in the loss of $ or merchandise |
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Term
| Takes a lot to know where to price goods, you need to know: |
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Definition
Price range
Price zone
Volume Price zone
Promotional price zone
price lining
prestige price zone |
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Term
| Takes a lot to know where to price goods, you need to know: |
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Definition
Price range
Price zone
Volume Price zone
Promotional price zone
price lining
prestige price zone |
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Term
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Definition
when you price merchandise you want to amek a profit
companies strive to make profit |
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Term
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Definition
| requires skilled training and experience |
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Term
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Definition
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Term
| What are some pricing factors? |
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Definition
Profit
Pricing
Compeition
Volume
Type of store
type of merchandise
Customer Demand
Economy
Government Regulation (public policy) |
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Term
| Type of Merchandise includes: |
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Definition
Whether it's in season
Electronics (shipping)
Exclusive brands
Imported merchandise thats exclusive to your store
Special Handling (merch behind case, fine jewelry, wedding dresses) |
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Term
| What is the purpose of a markdown? |
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Definition
Move goods or stimulate sale of merchandise to which customers are not responding satisfactorily
Get more traffic into store by having sale/special
Meet competitors prices
Open to buy money (get more cash flow to purchase more merchandise) |
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Term
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Definition
more of a 'guide' than a 'goal'
You don't want more markdowns than you planned for, but if you used fewer, then thats good! |
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Term
| What is the cause of markdowns? |
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Definition
Buying Errors
pricing errors
selling errors
Special sales from stock
Broken assortments, remnants, and so on
Necessary Price adjustments
Remainders from special sales |
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Term
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Definition
Overbuying in quantities
Buying of wrong sizes
Buying of poor styles, quality, materials, and colors
Poor timing in ordering goods
Receiving and accepting merchandise that has been shipped late |
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Term
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Definition
Poor timing of markdowns
Setting the intial price too high
Not being competitive in price for same goods
deferring markdowns too long
Calculated risk of carrying "prstige" merchandise |
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Term
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Definition
Poor stock- keeping
Careless handling that results in soiled and damanged goods
Failure to display merchandise properly or advantageously
Uninformed Salespeople |
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Term
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Definition
Merchandise becomes "slow selling"
The customer demanded is sufficient to sell the merchandise with a minimum price reduction
The consumer's interest in the merchandise to stock may diminish because of the appearance of a new fashion or product, or a lower price |
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Term
| Markdowns are not negative; actually a good thinga s long as you don't go below your goal |
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Definition
| attract the attention of someone who wouldn't usually buy the product in the first place |
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Term
| Is there an equation that tells you exactly how to do your markdowns on all merchandise? |
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Definition
No, too many things to consider:
Competition
type of merchandise
what's happening here compared to other places
Have to be observant
Have to think about how much they marked it up in the fistm place to see how much you can afford to mark it down |
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Term
| When we talk about retail reductions, we're referring to 3 different things: |
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Definition
markdowns
employee discounts
shortages/shrink |
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Term
What does
Customer returns and allowances / gross sales in dollars = ? |
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Definition
| customer returns and allowances % |
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Term
| When all operating expenses are deducted from the gross margin figure, the result is: |
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Definition
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Term
| What is meant by price range? |
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Definition
| least expensive vs. most expensive |
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Term
| What are some ways to increase profit? |
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Definition
Increase sales
Decrease cost of goods
Decrease Operating expenses |
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Term
| How do you figure a cash discount when given the %? |
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Definition
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Term
| What is a keystone markup? |
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Definition
Double the cost (100% markup)
Keystone Plus is more than doubled the cost |
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Term
| What are some characteristics of amateur shoplifters? |
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Definition
Steal on impulse to get 'something for nothing'
have a desire to own the things they steal whether or not they can afford them
may have psychological or addictive problems
may steal 'just for kicks' or because they know others do it
often don't recognize that shoplifting is a crime |
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Term
| What are some characteristics of professional shoplifters? |
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Definition
Make a career of stealing
often work in pairs or groups
tend to concentrate on the more expensive merchandise which will make their activities pay off
are more cautious than amateurs
may abandon a planned theft when they feel that conditions are unfavorable (as when a sales associate obviously is watching them closesly) |
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Term
| What does a shoplifter look like? |
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Definition
| Could be ANYONE: DO NOT GENERALIZE JUST BY APPEARANCE |
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Term
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Definition
they tend to be more nervous and watchful than honest customers
they may be more easily startled when spoken to
they may check behind themselves as they leave a store to be sure no one is following
eyes and hands are chief clues: taking and concealing merchandise may cause unnaturally jerky movements
they are usually wearing or carrying something to facilitate the concealment of merchandise |
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Term
| When and where do shoplifters operate? |
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Definition
Crowded departments which offer more concealment of the actions of a potential theif
peak shopping periods, especially if sales associates are busy at the cash registers
areas within stores with sparse coverage by sales associates
anywhere that sales associates are not paying attention to customer who are "just looking"
Fitting rooms.. useful for concealment under clothes or in packages
restrooms... also useful for shifting stolen items into bags or boxes
counter tops near entrances or exits
behind, between racks of merchandise or other fixtures where the sales associates' view is obstructed |
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Term
| How is merchandise stolen? |
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Definition
| palmed, jackets laid over merchandise, booster box, slipping small things inside clothing, wear merchandise out of store, wear clothes under their own clothes, ticket switching, changing markdown with red pen |
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Term
| HOw can you stop shoplifter? |
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Definition
| ALERT SALES ASSOCIATES, don't leave small merchandise on counters, be aware of customers and acknowledge their presence, be aware of places people can hide, know prices, know areas of greatest shortages, never leave your store or department uncovered, keep fitting rooms cleaned out and monitored |
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Term
| What do you do if you think someone has stolen something? |
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Definition
NEVER ccuse a cusotmer of stealing merchandise
NEVER attempt to personally apprehend or detain a shoplifter
ALWAYS call security
ALWAYS scrutinize your suspects for appearance and clothing: height, general build, color of hair and eyes, and noticeable facial or physical characteristics
NEVER give cusotmer empty boxes or bags |
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Term
| What does it mean for an employee to steal by opportunity? |
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Definition
| Opportunity is given where policies and procedures to prevent internal theft are nonexistant or not enforced |
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Term
| What does it mean for an employee to steal with motive? |
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Definition
| Motive is given where employees do not appreciate the profit-making goals of the company or do not feel their personal compensation is adequate |
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Term
| monitoring these areas has proven to be successful in reducing the opportunity for employees to steal: |
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Definition
Shipping/receiving areas
trash disposal areas
Stock and employee areas |
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Term
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Definition
| return of used clothing for a special occasion |
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