What Does Units Per Transaction - UPT Mean?

A sales metric often used in the retail sales sector to measure the average number of items that customers are purchasing in any given transaction. The higher the UPT, the more items customers are 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 be measured across individual stores and employees or company wide. The average UPT is calculated by simply dividing the number of items purchased by the number transactions for the period.

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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 Retail 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 expresses the 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 for Gross Margin Return On Inventory Investment. Thus GMROI assist buyers in evaluating whether a sufficient gross margin is being earned by the SKU's purchased, compared to the investment in inventory required to generate those 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 the successful business people likes talk about. GMROI = Gross Margin($)/Average Inventory at Cost = Gross Margin % x Inventory Turn Two main things that we need to calculate is i) Average inventory at cost ii) Gross margin of the item Average inventory at cost is obtain by adding beginning cost inventory for each month and the ending cost inventory for the last month in the period divided by total months plus 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 2010 to 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 of goods sold. Gross Profit = Revenue 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. The obvious way to increase sales revenue is simply to increase prices. Unfortunately, in a competitive 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 value items or those that your competitors focus on for price comparisons. Sample Steps for implementing a price increase at first is by defining a representative sample selection of products from your stores. Each product should be of a particular size or be aimed at a particular demographic. Select a control group that resembles as closely as possible the first group. Increase prices in the sample stores and track how sales perform against the control group during a trial period. If there is little or no effect on sales, you can roll out the price change throughout your stores. Reducing Markdowns Reducing markdowns is another strategy for improving GMROI. To do this, track the SellThrough % 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 doing really poorly and even a large markdown may not be enough to clear the problem. In this case, consider moving merchandise from Store C to Store A, where it can still sell at full price. This capacity to apply markdowns selectively and transfer goods judiciously is an important component in increasing gross margin. Reducing Cost of Goods Sold Reduction in COGS is used to measure the success of the manufacturing product. this fundamentally captures material, labor, overhead and tooling costs. You can, for example, analyze vendor performance and possibly order products from different vendors. 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 offers better quality with fewer returns. When all the factors are considered, the more expensive supplier may, in fact, be "Cheaper." Specific benefits of GMROI
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GMROI exposes the actuall profits in dollars vs paper profits

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

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

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

(Product "winners" are those which boost profitability (i.e.) it gives best return on investment. Products "starving to become winners" is the one which has all the qualities to become winners but under a specified category)
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GMROI identifies "core" business/never outs

('Core products' are those list out the existing winners which is selected at all times. It gives best return on investment. 'Never out" are those product change occasionally 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 of inventory productivity that expresses the relationship between your gross margin, and the area 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 a simple term, GMROS is a measure of gross margin returns on space occupied by a particular 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 between your gross margin, and the full time employee. It explains the profit gained by a full employee 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. of working days in a week Where, E = Employees, H = Hours worked, D = Days worked

It is a relation between Gross Margin and Stock Turns

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

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

Increasing Stock Turns means reducing the inventory carry cost

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 stores 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. A retailer 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 competition is pricing their products. Retailers will also need to examine their channels of distribution and research 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, shrinkage and 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 retail shops to avoid price wars and still maintain a decent profit. Some suppliers haveminimum advertised 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 issue with using pre-set prices is that it doesn't allow a retailer to have an advantage over the competition. 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 a marketing 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-quality merchandise 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 in 5, 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 merchandise was once the rule of pricing products, but very few products these days allow a retailer to keystone the product price. Multiple pricing is a method which involves selling more than one product for one price, such as three items for $1.00. Not only is this strategy great for markdowns or sales events, but retailers have noticed consumers tend to purchase in larger amounts where the multiple pricing strategy is used. Discount pricing and price reductions are a natural part of retailing. Discounting can include coupons, rebates, seasonal prices and other promotional markdowns. Merchandise priced below cost is referred to as loss leaders. Although retailers make no profit on these discounted items, the hope is consumers will purchase other products at higher margins during their visit to the store. As you develop the best pricing model for your retail business, understand the ideal pricing strategy 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 in mind, 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 because people usually associate the higher priced product as being better. 2. Offer a free trial or sample of your product. This increases the perceived value because 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 value because 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 because people think they are getting solutions to a number of problems. 5. Offer an affiliate program with your product. This increases the perceived value because people can also make money with your product. 6. Give people a strong guarantee. This increases the perceived value because it shows that you stand behind your products. 7. Package your product with a lot of bonuses. This increases the perceived value because people feel they are getting more for their money. 8. Get your product endorsed by a famous person. This increases the perceived value because people think that famous people wouldn't want their name associated with a poor product. 9. Include the reprint/reproduction rights with your product. This increases the perceived value because people can start a business and make money. 10. Get the word out about your product and brand it. This increases the perceived value because people believe the brand name products have better quality.

TYPES OF RETAIL OUTLETS

A marketplace is a location where goods and services are exchanged. The traditionalmarket square is a city square where traders set up stalls and buyers browse the merchandise. This kind of market is very old, and countless such markets are still in operation around the whole world. In some parts of the world, the retail business is still dominated by small family-run stores, but this market is increasingly being taken over 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 assortment of "soft" and "hard goods; often bear a resemblance to a collection of specialty stores. A retailer of such store carries variety 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 extensive assortment 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 highquantity goods piled on pallets or steel shelves; warehouse clubs charge a membership fee; Variety stores or "dollar stores" - these offer extremely low-cost goods, 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 by individuals. The range of products are very selective and few in numbers. These stores are seen in local community often are family-run businesses. The square feet area of the store depends on the store holder. Specialty stores: A typical speciality store gives attention to a particular category and provides high level of service to the customers. A pet store that specializes in selling dog food would be regarded as a specialty store. However, branded stores also come under this format. For example if a customer visits a Reebok or Gap store then they find just Reebok and Gap products in the respective stores.

General store - a rural store that supplies the main needs for the local 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 exclusive merchandise at low margins. The operating cost is comparatively less than other retail formats. *Supermarkets: is a self service store consisting mainly of grocery and limited products on non food 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 m2). 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 wide assortment in a single category for lower prices a retailer can "kill" that category for other retailers. For few categories, such as electronics, the products are displayed at the centre of the store and sales person will be available to address customer queries and give suggestions when required. Other retail format stores are forced to reduce the prices if a category specialist retail store is present in the vicinity. E-tailers: The customer can shop and order through internet and the merchandise are dropped at the customer's doorstep. Here the retailers use drop shipping technique. They accept the payment for the product but the customer receives the product directly from the manufacturer or a wholesaler. This format is ideal for customers who do not want to travel to retail stores and are interested in home shopping. However it is important for the customer to be wary about defective products and non secure credit card transaction. Example: Amazon, Pennyful and Ebay. Vending Machines: This is an automated piece of equipment wherein customers can drop in the money in machine and acquire 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 in airports, malls and grocery stores. The stores accept credit cards and are usually open 24/7. Examples include ZoomShops and Redbox.  Big-box stores encompass larger department, discount, general merchandise, 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, typically in a rural area; Retailers can opt for a format as each provides different retail mix to its customers based on their customer demographics, lifestyle and purchase behaviour. A good format will lend a hand to display products 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 the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer. In Western countries, retail prices are often called psychological prices or odd prices. Often prices are fixed and displayed on signs or labels. Alternatively, when prices are not clearly displayed, there can be price discrimination, where the sale price is dependent upon who the customer is. For example, a customer may have to pay more 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 from a retailer: Counter service, where goods are out of reach of buyers and must be obtained from the seller. This type of retail is common for small expensive items (e.g. jewelry) and controlled items like medicine and liquor. It was common before the 1900s in the United States and is more common in certain countries like India.[which?]  Delivery, where goods are shipped directly to consumer's homes or 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). Direct marketing, includingtelemarketing and television shopping channels, are also used to generate telephone orders. started gaining significant market share in developed countries in the 2000s.  Door-to-door sales, where the salesperson sometimes travels with the goods for sale.  Self-service, where goods may be handled and examined prior to purchase [edit]Second hand retail


See 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 were used 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 shop gives the item exposure to more potential buyers. ChallengesTo become a truly flourishing industry, retailing needs to cross the following hurdles:[18] Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws. Taxation, which favours small retail businesses. Absence of 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 and low margins
[edit]Sales

techniques

Behind the scenes at retail, there is another factor at work. Corporations and independent store owners alike are always trying to get the edge on their competitors. One way to do this is to hire a merchandising solutions company to design custom store displays that will attract more customers in a certain demographic. The nation's largest retailers spend millions every year on instore marketing programs that correspond to seasonal and promotional changes. As products change, so will a retail landscape. Retailers can also use facing techniques to create the look 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 are often used to "anchor" a shopping mall or plaza, generating foot traffic, which is capitalized upon by smaller retailers.
[edit]Customer

service

Customer service is the "sum of acts and elements that allow consumers to receive what they need or desire from your retail establishment." It is important for a sales associate to greet the customer and make himself available to help the customer find whatever he needs. When a customer enters the store, it is

important that the sales associate does everything in his power to make the customer feel welcomed, important, and make sure he leave the store satisfied. Giving the customer full, undivided attention and helping him find what he is looking for will contribute to the customer's satisfaction.[3]
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