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What Does Units Per Transaction - UPT Mean? A sales metric often used in the retail sales sector to measure the average number of items thatcustomers are purchasing in any given transaction. The higher the UPT, the more items customersare purchasing for every visit.

Investopedia explains Units Per Transaction - UPT Units per transaction can be done on a day-by-day basis, or over a longer period and can bemeasured across individual stores and employees or company wide. The average UPT is calculatedby simply dividing the number of items purchased by the number transactions for the period.

Read more: http://www.investopedia.com/terms/u/units-per-transaction.asp#ixzz1VyEUQDVP

The average transaction Value is calculated by dividing the Value of all transactions by the number

of transactions on a daily, weekly, monthly, or annual basis.

Strategic Performance Analytics GMROI,GMROS

and GMROL, The Key µRetail Measure¶

Some of the tools that are very useful in Strategic Performance Analysis are GMROI,GMROS and GMROL

GMROI - Gross Margin return on Investment

GMROI is a planning and decision making tool used by the retailers to calculate their

profit from the investment made. GMROI measure inventory productivity that expressesthe relationship between your total sales, the gross profit margin you earn on those sales,and the number of rupees you invest in inventory. GMROI also called as GMROII stands forGross Margin Return On Inventory Investment.

Thus GMROI assist buyers in evaluating whether a sufficient gross margin is being earnedby the SKU's purchased, compared to the investment in inventory required to generatethose gross margin dollars. GMROI shift the business focus from the sales to the



profitability. GMROI actually make you to talk in percentage which almost all thesuccessful business people likes talk about.

GMROI = Gross Margin($)/Average Inventory at Cost = Gross Margin % x InventoryTurn

Two main things that we need to calculate is

i) Average inventory at costii) Gross margin of the item

Average inventory at cost is obtain by adding beginning cost inventory for each monthand the ending cost inventory for the last month in the period divided by total monthsplus 1.

Average Inventory at Cost = (beginning of each month + ending cost of last month) /total number of month + 1

consider if we need to calculate the Average inventory at cost for 3 months from Jan 2010to Mar 2010. Then Average inventory at cost = (beginning cost inventory for Jan 2010 +beginning cost inventory for Feb 2010 + ending cost inventory for Mar 2010)/4

Gross margin of the item is the difference between total sales of the item and the cost ofgoods sold.

Gross Profit = Revenue î Cost of Sales

or

as the ratio of gross profit to sales revenue, in the form of a percentage:

Gross Margin Percentage = (Revenue-Cost of Sales)/Revenue

How to improve GMROI:

Gross margin is the value of sales minus the cost of goods sold. To increase gross margin,you must either increase sales revenue or reduce the cost of the merchandise. Theobvious way to increase sales revenue is simply to increase prices. Unfortunately, in acompetitive environment, that is not so simple.

Here are three possible strategies to employ to increase GMROI:

1. Raising Prices

2. Careful Use of Markdowns



3. Reducing Cost of Goods Sold

Raising Prices

A common rule of thumb is to avoid price increases on products that are known valueitems or those that your competitors focus on for price comparisons. Sample Steps forimplementing a price increase at first is by defining a representative sample selection ofproducts from your stores. Each product should be of a particular size or be aimed at aparticular demographic. Select a control group that resembles as closely as possible thefirst group. Increase prices in the sample stores and track how sales perform against thecontrol group during a trial period. If there is little or no effect on sales, you can roll outthe price change throughout your stores.

Reducing Markdowns

Reducing markdowns is another strategy for improving GMROI. To do this, track theSellThrough % by store. Suppose Store A is selling faster than plan and will sell out early.Store B is selling slower than plan but a markdown may help it along. Store C is doingreally poorly and even a large markdown may not be enough to clear the problem. In thiscase, consider moving merchandise from Store C to Store A, where it can still sell at fullprice. This capacity to apply markdowns selectively and transfer goods judiciously is animportant component in increasing gross margin.

Reducing Cost of Goods Sold

Reduction in COGS is used to measure the success of the manufacturing product. thisfundamentally captures material, labor, overhead and tooling costs. You can, forexample, analyze vendor performance and possibly order products from differentvendors. Again, this is not a simple decision and must be considered with other factors.For example, one vendor may be a little more expensive but delivers on time and offersbetter quality with fewer returns. When all the factors are considered, the moreexpensive supplier may, in fact, be "Cheaper."

Specific benefits of GMROI

y GMROI exposes the actuall profits in dollars vs paper profits

y GMROI shift focus from sales to the return-on-investment of the product

y Also GMROI shift SKU's focus from total department to the individual product



y GMROI differentiate product "winners" from products "starving to become winners"

(Product "winners" are those which boost profitability (i.e.) it gives best return oninvestment. Products "starving to become winners" is the one which has all thequalities to become winners but under a specified category)

y GMROI identifies "core" business/never outs

('Core products' are those list out the existing winners which is selected at alltimes. It gives best return on investment. 'Never out" are those product changeoccasionally according to the season and by location.

GMROS - Gross Margin Return on Selling Area

GMROS also called as GMROF (Gross Margin Return on Feet). GMROS is a measure ofinventory productivity that expresses the relationship between your gross margin, and thearea allotted to the inventory. GMROS express the profit percentage(i.e) how much returns you've got per area (selling feet) during a specified period. In asimple term, GMROS is a measure of gross margin returns on space occupied by aparticular category of the store

GMROS = Gross Margin% x Net Sales /Selling Area

GMROL - Gross Margin Return on Labor

GMROL is a measure of inventory productivity that expresses the relationship betweenyour gross margin, and the full time employee. It explains the profit gained by a fullemployee in a specific period of time.

GMROL= Gross Margin % x Net Sales /Full Time Equival.

Full Time Equival= E1*H1*D1 + E2*H2*D2 + E3*H3*D3* + ««/ Hrs. in regular shift * No. ofworking days in a week

Where,E = Employees, H = Hours worked, D = Days worked



y It is a relation between Gross Margin and Stock Turns

y Gross margin is the value of sales less the cost of goods sold

y Increasing gross margin entails increasing sales revenue or reducing the cost of themerchandise

y Increasing Stock Turns means reducing the inventory carry cost

y Thus this measure gives you insight into the retailers performance

A Transaction Processing System (TPS) is a type of information system that collects,

stores, modifies and retrieves the data transactions of an enterprise.

A transaction is any event that passes the ACID test in which data is generated or

modified before storage in an information system

Features of Transaction Processing Systems

The success of commercial enterprises depends on the reliable processing of

transactions to ensure that customer orders are met on time, and that partners and

suppliers are paid and can make payment. The field of transaction processing,

therefore, has become a vital part of effective business management, led by such

organisations as the Association for Work Process Improvement and the



VISUAL MERCHANDISING

Visual merchandising is the activity of promoting the sale of goods, especially by their presentation

in retail outlets.(New Oxford Dictionary of English, 1999, Oxford University Press). This includes

combining products, environments, and spaces into a stimulating and engaging display to encourage

the sale of a product or service. It has become such an important element in retailing that a team

effort involving the senior management, architects, merchandising managers, buyers, the visual

merchandising director, industrial designers, and staff is needed.

Visual merchandising starts with the store building itself. The management decides on the store

design to reflect the products the store is going to sell and how to create a warm, friendly, and

approachable atmosphere for its potential customers.

Many elements can be used by visual merchandisers in creating displays including color, lighting,

space, product information, sensory inputs (such as smell, touch, and sound), as well as

technologies such as digital displays and interactive installations.

Visual merchandising is not a science; there are no absolute rules. It is more like an art in the sense

that there are implicit rules but they may be broken for striking effects. The main principle of visual

merchandising is that it is intended to increase sales, which is not the case with a "real" art.

Visual merchandising is one of the final stages in trying to set out a store in a way that customers will

find attractive and appealing and it should follow and reflect the principles that underpin the store¶s

image. Visual merchandising is the way one displays 'goods for sale' in the most attractive manner

with the end purpose of making a sale. "If it does not sell, it is not visual merchandising."

RETAIL PRICING STRATEGIES

There are many outside influences that affect profitability and a retailer's bottom line.

Setting the right price is a crucial step toward achieving that profit. Retailers are in

business to make a profit, but figuring out what and how to price products may not come

easily.

Before we can determine which retail pricing strategy to use in setting the right price, we

must know the costs associated with the products. Two key elements in factoring

product cost is the cost of goods and the amount of operating

expense.



The cost of goods includes the amount paid for the product, plus any shipping or handling

expenses. The cost of operating the business, or operating expense, includes overhead,

payroll, marketing and office supplies.

Regardless of the pricing strategy used, the retail price of the products should more than

cover the cost of obtaining the goods plus the expenses related to operating the business. Aretailer simply cannot succeed in business if they continue to sell their products below cost.

Retail Pricing Strategies

Now that we understand what our products actually cost, we should look at how our competitionis pricing their products. Retailers will also need to examine their channels of distribution andresearch what the market is willing to pay.

Many pricing strategies exist and each is used based on particular a set of circumstances. Here

are a few of the more popular pricing strategies to consider:

Mark-up Pricing

Markup on cost can be calculated by adding a pre-set (often industry standard) profit margin, or percentage, to the cost of the merchandise.Markup on retail is determined by dividing the dollar markup by retail.

Be sure to keep the initial mark-up high enough to cover price reductions, discounts, shrinkageand other anticipated expenses, and still achieve a satisfactory profit. Retailers with a varied

product selection can use different mark-ups on each product line.

Vendor Pricing

Manufacturer suggested retail price (MSRP) is a common strategy used by the smaller retailshops to avoid price wars and still maintain a decent profit. Some suppliers haveminimumadvertised prices but also suggest the retail pricing. By pricing products with the suggested retail prices supplied by the vendor, the retailer is out of the decision-making process. Another issuewith using pre-set prices is that it doesn't allow a retailer to have an advantage over thecompetition.

Competitive Pricing

Consumers have many choices and are generally willing to shop around to receive the best price.Retailers considering a competitive pricing strategy will need to provide outstanding customer service to stand above the competition.



Pricing below competition simply means pricing products lower than the competitor's price.This strategy works well if the retailer negotiates the best prices, reduces costs and develops amarketing strategy to focus on price specials.

Prestige pricing, or pricing above competition, may be considered when location, exclusivity

or unique customer service can justify higher prices. Retailers that stock high-qualitymerchandise that isn't available at any other location may be quite successful in pricing their products above competitors.

Psychological Pricing

Psychological pricing is used when prices are set to a certain level where the consumer perceives the price to be fair. The most common method is odd-pricing using figures that end in5, 7 or 9. It is believed that consumers tend to round down a price of $9.95 to $9, rather than $10.

Other Pricing Strategies

Keystone pricing is not used as often as it once was. Doubling the cost paid for merchandisewas once the rule of pricing products, but very few products these days allow a retailer tokeystone the product price.

Multiple pricing is a method which involves selling more than one product for one price, suchas three items for $1.00. Not only is this strategy great for markdowns or sales events, butretailers have noticed consumers tend to purchase in larger amounts where the multiple pricingstrategy is used.

Discount pricing and price reductions are a natural part of retailing. Discounting caninclude coupons, rebates, seasonal prices and other promotional markdowns.Merchandise priced below cost is referred to as loss leaders. Although retailers make no profit onthese discounted items, the hope is consumers will purchase other products at higher marginsduring their visit to the store.As you develop the best pricing model for your retail business, understand the ideal pricingstrategy will depend on more than costs. It also depends on good pricing practices.

It is difficult to say which component of pricing is more important than another. Just keep inmind, the right product price is the price the consumer is willing to pay, while providing a profit

to the retailer.

10 Ways To Increase The Perceived Value Of Your Product! by Larry Dotson



1. Sell your product at a higher price. This increases the perceived value becausepeople usually associate the higher priced product as being better.

2. Offer a free trial or sample of your product. This increases the perceived valuebecause people think you're confident in your product, so it must be good.

3. Include tons of testimonials on your ad copy. This increases the perceived valuebecause you have actual proof of other people's experiences with your product.

4. Load your ad copy full of benefits. This increases the perceived value becausepeople think they are getting solutions to a number of problems.

5. Offer an affiliate program with your product. This increases the perceived valuebecause people can also make money with your product.

6. Give people a strong guarantee. This increases the perceived value because itshows that you stand behind your products.

7. Package your product with a lot of bonuses. This increases the perceived valuebecause people feel they are getting more for their money.

8. Get your product endorsed by a famous person. This increases the perceivedvalue because people think that famous people wouldn't want their nameassociated with a poor product.

9. Include the reprint/reproduction rights with your product. This increases theperceived value because people can start a business and make money.

10. Get the word out about your product and brand it. This increases the perceivedvalue because people believe the brand name products have better quality.

TYPES OF RETAIL OUTLETS

A marketplace is a location where goods and services areexchanged. The traditionalmarket square is a city square wheretraders set up stalls and buyers browse the merchandise. This kindof market is very old, and countless such markets are still inoperation around the whole world.

In some parts of the world, the retail business is still dominated bysmall family-run stores, but this market is increasingly being takenover by large retail chains.

Retail is usually classified by type of products as follows:



Food products

Hard goods ("hardline retailers") - appliances, electronics,furniture, sporting goods, etc.

Soft goods - clothing, apparel, and other fabrics.

There are the following types of retailers by marketing strategy:

Department stores - very large stores offering a huge assortmentof "soft" and "hard goods; often bear a resemblance to acollection of specialty stores. A retailer of such store carriesvariety of categories and has broad assortment at average price.They offer considerable customer service.

Discount stores - tend to offer a wide array of products and

services, but they compete mainly on price offers extensiveassortment of merchandise at affordable and cut-rate prices.Normally retailers sell less fashion-oriented brands.

Supermarkets - sell mostly food products;

Warehouse stores - warehouses that offer low-cost, often high-quantity goods piled on pallets or steel shelves; warehouseclubs charge a membership fee;

Variety stores or "dollar stores" - these offer extremely low-costgoods, with limited selection;

Demographic - retailers that aim at one particular segment (e.g.,high-end retailers focusing on wealthy individuals).

Mom-And-Pop : is a retail outlet that is owned and operated byindividuals. The range of products are very selective and few innumbers. These stores are seen in local community often arefamily-run businesses. The square feet area of the store dependson the store holder.

Specialty stores: A typical speciality store gives attention to a

particular category and provides high level of service to thecustomers. A pet store that specializes in selling dog food wouldbe regarded as a specialty store. However, branded stores alsocome under this format. For example if a customer visits aReebok or Gap store then they find just Reebok and Gapproducts in the respective stores.



General store - a rural store that supplies the main needs for thelocal community;

Convenience stores: is essentially found in residential areas.They provide limited amount of merchandise at more than

average prices with a speedy checkout. This store is ideal for emergency and immediate purchases.

Hypermarkets: provides variety and huge volumes of exclusivemerchandise at low margins. The operating cost is comparativelyless than other retail formats. *Supermarkets: is a self servicestore consisting mainly of grocery and limited products on nonfood items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets can be anywhere between 20,000 and

40,000 square feet (3,700 m

2

). Example: SPAR supermarket. Malls: has a range of retail shops at a single outlet. They endow

with products, food and entertainment under a roof.

Category killers or Category Specialist: By supplying wideassortment in a single category for lower prices a retailer can"kill" that category for other retailers. For few categories, such aselectronics, the products are displayed at the centre of the storeand sales person will be available to address customer queriesand give suggestions when required. Other retail format stores

are forced to reduce the prices if a category specialist retail storeis present in the vicinity.

E-tailers: The customer can shop and order through internet andthe merchandise are dropped at the customer's doorstep. Herethe retailers use drop shipping technique. They accept thepayment for the product but the customer receives the productdirectly from the manufacturer or a wholesaler. This format isideal for customers who do not want to travel to retail stores and

are interested in home shopping. However it is important for thecustomer to be wary about defective products and non securecredit card transaction. Example: Amazon, Pennyful and Ebay.

Vending Machines: This is an automated piece of equipmentwherein customers can drop in the money in machine andacquire the products.



Some stores take a no frills approach, while others are "mid-range"or "high end", depending on what income level they target.

Other types of retail store include:

Automated Retail stores are self service, robotic kiosks located inairports, malls and grocery stores. The stores accept credit cardsand are usually open 24/7. Examplesinclude ZoomShops and Redbox.

Big-box stores encompass larger department, discount, generalmerchandise, and warehouse stores.

Convenience store - a small store often with extended hours,stocking everyday or roadside items;

General store - a store which sells most goods needed, typicallyin a rural area;

Retailers can opt for a format as each provides different retail mix toits customers based on their customer demographics, lifestyle andpurchase behaviour. A good format will lend a hand to displayproducts well and entice the target customers to spawn sales.

[edit]Retail pricing

The pricing technique used by most retailers is cost-plus pricing.This involves adding a markup amount (or percentage) to theretailer's cost. Another common technique is suggested retailpricing. This simply involves charging the amount suggested by themanufacturer and usually printed on the product by themanufacturer.

In Western countries, retail prices are often called psychologicalprices or odd prices. Often prices are fixed and displayed on signs

or labels. Alternatively, when prices are not clearly displayed, therecan be price discrimination, where the sale price is dependent uponwho the customer is. For example, a customer may have to paymore if the seller determines that he or she is willing and/or able to.

Another example would be the practice of discounting for youths,students, or senior citizens..



[edit]Transfer mechanism

There are several ways in which consumers can receive goods froma retailer:

Counter service, where goods are out of reach of buyers andmust be obtained from the seller. This type of retail is commonfor small expensive items (e.g. jewelry) and controlled items likemedicine and liquor. It was common before the 1900s in theUnited States and is more common in certain countries likeIndia.

[w hich?]

Delivery, where goods are shipped directly to consumer's homesor workplaces. Mail order from a printed catalog was invented in

1744 and was common in the late 19th and early 20th centuries.Ordering by telephone is now common, either from a catalog,newspaper,television advertisement or a local restaurant menu,for immediate service (especially for pizza delivery). Directmarketing, includingtelemarketing and television shoppingchannels, are also used to generate telephone orders. startedgaining significant market share in developed countries in the2000s.

Door-to-door sales, where the salesperson sometimes travelswith the goods for sale.

Self-service, where goods may be handled and examined prior topurchase

[edit]Second hand retail

S ee also: Charity shop

Some shops sell second-hand goods. In the case of a nonprofit shop, the public donates goods to the shop to be sold.

In give-away shopsgoods can be taken for free.

Another form is the pawnshop, in which goods are sold that wereused as collateral for loans. There are also "consignment" shops,which are where a person can place an item in a store and if it sells,the person gives the shop owner a percentage of the sale price. The



advantage of selling an item this way is that the established shopgives the item exposure to more potential buyers.

ChallengesTo become a truly flourishing industry, retailing needs tocross the following hurdles:[18]

Automatic approval is not allowed for foreign investment in retail.Regulations restricting real estate purchases, and cumbersomelocal laws. Taxation, which favours small retail businesses. Absenceof developed supply chain and integrated IT management. Lack of trained work force. Low skill level for retailing management. Lack of Retailing Courses and study options Intrinsic complexity of retailing

± rapid price changes, constant threat of product obsolescence andlow margins

[edit]Sales techniques

Behind the scenes at retail, there is another factor at work.Corporations and independent store owners alike are always tryingto get the edge on their competitors. One way to do this is to hirea merchandising solutions company to design custom store displaysthat will attract more customers in a certain demographic. Thenation's largest retailers spend millions every year on in-

store marketing programs that correspond to seasonal andpromotional changes. As products change, so will a retaillandscape. Retailers can also use facing techniques to create thelook of a perfectly stocked store, even when it is not.

A destination store is one that customers will initiate a trip

specifically to visit, sometimes over a large area. These stores areoften used to "anchor " a shopping mall or plaza, generating foottraffic, which is capitalized upon by smaller retailers.

[edit]Customer serviceCustomer service is the "sum of acts and elements that allowconsumers to receive what they need or desire from your retailestablishment." It is important for a sales associate to greet thecustomer and make himself available to help the customer findwhatever he needs. When a customer enters the store, it is



important that the sales associate does everything in his power tomake the customer feel welcomed, important, and make sure heleave the store satisfied. Giving the customer full, undividedattention and helping him find what he is looking for will contribute to

the customer's satisfaction.[3]

[edit]

retail net se

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