# What are 3 productivity measures that could be used to show how the discount retail industry is evolving?I am trying to figure out the best productivity measures to use to assess how the retail...

What are 3 productivity measures that could be used to show how the discount retail industry is evolving?

I am trying to figure out the best productivity measures to use to assess how the retail industry (that Walmart is part of) is changing.  Also, I would like these measures to be related to Walmart's competitive advantage within the retail industry.

Michael Ugulini | (Level 3) Educator

Posted on

One productivity measure that could be used to show how the discount retail industry is evolving is the Average Sale Per Customer measurement. This is a simple calculation, and you can monitor it in a business to see if you are growing your sales and whether your sales staff is encouraging your customers to purchase more through up selling. To calculate the Average Sale Per Customer you divide your Total Sales by the Number of Sales Transactions. If your retail shop sold \$10,000 worth of merchandise in a day and you had 100 customers then the Average Sale Per Customer was \$100. A discount retailer such as Walmart focuses on this figure as it indicates if customers are buying more during a shopping excursion.

A second productivity measure that's useful in retail is the Inventory Turnover measurement. Inventory Turnover figures give a business an indication of how fast they are converting their stock into cash by way of Sales. One way to calculate this figure is to take your Cost of Goods Sold figure and divide it by your Average Inventory. This figure is the number of times on average that you sell your inventory during a defined period - how may times your inventory 'turns'. A company like Walmart wants to see their inventory turn often as it means they're selling consistently and not incurring the 'carrying costs' of unsold or slow moving inventory.

A third productivity measure that's useful is Gross Margin Percentage. A retailer, such as Walmart, wants to know what percentage of sales dollars they have left over for the company after they account for the costs associated with purchasing the merchandise. A business wants to have a healthy Gross Margin Percentage, which helps contribute to a better bottom line - Net Income. Gross Margin% = Gross Profit Dollars/Sales.

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