Golf and Measurement
In the game of golf everything is measured. The total individual score is measured against par. This measurement is so vital to the game that players are actually provided a card on which to record the number of times they hit the ball known as “strokes taken.” Some golfers are obsessed with tracking other statistics of the game in hopes of discovering shortcomings in need of improvement.
- Length of drives
- Number of drives that reach the fairway
- Greens in regulation
- Number of putts required to get the ball in the hole
Runners log total miles run. Weightlifters chart progress by keeping journals of the amount of weight lifted and number of repetitions performed. Some of the more dedicated ones even track calories and monitor food portions during the day in an effort to manage progress. The point of all this is evident to athletes: Without benchmark information as a reference point you don’t know where you need to improve. How can you be expected to know what is good if you aren’t sure what is bad?
Retail Is Detail
In the retail business there are numerous areas that require measurement in order to achieve success. Sales volume is the obvious starting point. All retailers want to know how they did compared to last year last month last Saturday. Great care must be taken to make sure that the comparison is valid. For example if last year’s sales were driven by markdowns and this year’s volume for the same time period came in lower it is possible that the sales you had were more profitable than the preceding year.
Other important considerations to keep in mind when measuring sales include the weather the timing of certain holidays from year to year and various promotions that may have occurred. All retailers have a pretty good idea of where they stand on sales for a given period. There are however several other merchandising benchmark numbers that require measuring lest they fail to…
Get the Management Attention They Deserve
This list includes but is not limited to operating expenses markdowns shrinkage initial and maintained markups merchandise-on-order and open-to-buy.
Operating Expenses
Operating expenses for some retailers can account for as much as 43 cents out of every dollar sold. They should be planned out by line item and reviewed periodically. Rent payroll advertising even insurance and interest costs may be more controllable than you think. Compare your expenses against those in your industry and make sure you are within an acceptable range.
Markdowns
I am often surprised to find retailers that do not know how many markdowns they have taken. It is impossible to manage something if you have no starting point. Track markdowns by vendor and classification at the very least. Remember that markdowns are expressed as a percentage of sales. Capturing markdown information by style and size may also prove beneficial. Most though not all computer POS systems do an adequate job of tracking markdown information.
Shrinkage
Inventory shrinkage is another area to which some retailers don’t seem to pay much attention. This comes right off the profit line. If the difference between your book and physical inventory is outside of industry norms start asking questions and tighten things up.
Markups
Review initial and maintained markups on a regular basis. Initial markups need to be sufficient enough to cover markdowns and operating expenses and to satisfy profit requirements. The web is a great resource to research just about anything. A random internet check of styles you carry will let you know if you are selling at competitive prices. Industry associations often publish typical ranges of maintained markups.
Ritchie Sayner
You Can’t Manage What You Don’t Measure
Ritchie Sayner
JAN-FEB 16
Without benchmark information as a reference point you don’t know where you need to improve. How can you be…
Expected to Know What is Good if You Aren’t Sure What is Bad?
Published in the Jan/Feb 2016 issue of Shoe Retailing Today Copyright © 2016 National Shoe Retailers Association Tucson AZ www.nsra.org. All rights reserved.
NSRA.org markup and gross margin figures enable you to gauge your operation against norms.
Try This:
Calculate how the merchandise you have on order for the next season stacks up against your projected sales.
Here is a simple test that I use with my clients all the time:
- Take the on-hand retail inventory of a given classification.
- Add to that the merchandise on-order you have committed to for the upcoming season.
- Don’t forget to estimate for any size fill-ins or reorders that you think you might need.
- Subtract the estimated sales you expect as well as the amount of markdowns you feel might be reasonable.
Compare the ending number you get with your inventory plan. If you are not happy with what you come up with you have a few options:
- Adjust orders
- Promote earlier
- Hope business is better than you planned
- Pray
- Do nothing at all and suffer the consequences of having too much inventory at the end of the season
Measuring analyzing and adjusting these and other quantifiable areas of your business will help you do two essential things: fine-tune the expectations you have of your staff and create a winning strategy.
Ritchie Sayner is vice president of business development at RMSA Retail Solutions. He can be reached at rsayner@rmsa.com. To follow him on Facebook please go to www.facebook.com/RitchieSayner.
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Summary
The article discusses the importance of measurement in both golf and retail emphasizing that tracking performance metrics is crucial for improvement. In golf players measure strokes and other statistics to identify areas for enhancement while in retail metrics like sales volume operating expenses and markdowns are vital for success. The article further highlights that without benchmark information it is challenging to manage and improve business operations effectively.
“Without benchmark information as a reference point you don’t know where you need to improve.”
Real-World Examples of Measurement in Sports and Retail
Measurement plays a critical role in both sports and retail. Here are some real-world examples illustrating how tracking and analyzing data can lead to improvements and success in these fields.
- In golf professional players like Tiger Woods meticulously track their performance metrics such as driving distance fairway hits and putting accuracy to identify areas for improvement and maintain their competitive edge.
- Major retail chains like Walmart use sophisticated data analytics to monitor sales volume track inventory shrinkage and manage markdowns ensuring they remain profitable and competitive in the market.
- Fitness enthusiasts often use apps like Strava or MyFitnessPal to log their workouts and dietary intake allowing them to measure progress over time and adjust their routines to achieve personal health goals.
