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GMROI Work Sheet
Rethinking your Store's Profitability
Understanding GMROI
(Gross Margin Return on Investment)
The Resources:
Objectives:
- to have retailers re-think the way they evalaute store profitability
- realize cost savings and improved profitability through Inventory Management
The Benefit:
Inventory Management and Quick Ship Programs help retailers achieve their optimum level of financial performance:
- Faster Inventory Turns
- Improved Cash Flow
- Faster Delivery to your Customer
- Fewer mark-downs on slow moving inventory
- Reduced vendor list means fewer interruptions
The Solution:
- Reduce your inventory, increase product turns and improve net profitibility
- A recent study in Furniture Today magazine illustrates that a 1 turn improvement in inventory results in an
additional 8 points of gross profit margin!
- Utilize Inventory Management and increase your store operating profits by up to *$140,000
(Based on an average retail store sales of $2 million.
Results will vary depending on level of retailer participation)
Instructions:
Gross Margin Return on Investment =
Gross Margin $ Profit / Average Inventory Level
or
How much money you make in a year for every $1.00
you invest in your average inventory cost
- G.M.R.O.I. analyses profitability through inventory levels
- Increasing Inventory Turns means higher returns on your investment
What do I need to know?
- Sales by product line
- Inventory by product line
- Margins by product line
Complete the R & T financial worksheets & compare your stores performance with retail furniture benchmarks.
R & T Furniture will help you understand your results and provide you with recommendations to improve your bottom line
profits.
Action Plan for Improving your Profits:
- Select vendor capable of providing inventory supply improvements
- Review product offerings of each supplier to minimize number of vendors necessary
- Put in place action plan from financial review to reduce inventory by 10% each
year
Let R&T show you ways to improve your bottom line!
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