GMROI: #1 Inventory Productivity Tool
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"For each dollar I have invested in inventory, how many gross margin dollars do I get back?"
"Is my inventory productive enough, so I can pay expenses and have a profit?"
GMROI - Gross Margin Return on Inventory Investment - is the #1 productivity measurement for retailers. A GMROI of $1.85, for instance, means you are getting back $1.85 in Gross Margin dollars for every $1 you have invested in inventory. It reflects the relationship between margins and turns. Increase one or the other (or both?!), and your GMROI increases. Remember, GMROI affects both profits and cash flow.
GMROI is a comparative measure. It enables you to compare the performance of merchandise departments, vendors, stores, even customer groups! See the iindustry averages for your retail segment at The ROI; compare your inventory productivity with your peers.
Use The ROI's GMROI Calculator. Find GMROI for up to four departments. In nanoseconds! Nothing else like it. Know immediately which of your departments is really the most productive for your operation. (That's the real power of GMROI - compare and contrast.) Start now to drive your inventory productivity.
Since 60% – 80% of a typical retailer’s total assets are in inventory(!), it is essential that retailers know how their inventory investment is performing. What is the "return on investment" of a retailer's largest investment? The GMROI calculation is the tool for the job! It's fast and easy to calculate. Best of all, it provides powerful insights specifically for retailers. read more ...
GMROI (also known as GMROII) stands for Gross Margin Return On Inventory Investment—a measure of inventory productivity for retailers that expresses the relationship between your total sales, the gross profit margin you earn on those sales, and the number of dollars you invest in inventory. GMROI is expressed as a percentage or a dollar multiple, telling you how many times you’ve gotten your original inventory investment back during one year. read more ...
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The Innovative "Strategic Retailing" Solution There are lots of ways to effectively use GMROI. Array the analysis by department, by classification, by vendor, by store, or by region. Prosperous retailers have used GMROI in these ways – and others – for many years. However, we don't yet know of a retailer who uses GMROI the very best way: by Customer Types! Truly...do you know which Customer Type is your most productive? Be a "strategic retailing" leader. Start today to use GMROI by Customer Type. read more ...
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No retailer really wants to pay for bookkeeping or accounting. But it's necessary for two reasons: (1) to accurately satisfy the I.R.S.; (2) to accurately show where the business has been and where it is now. This second reason is essential for what REALLY matters: doing better in the future! The ROI has developed The Screening Test for Retail Bookkeepers. As an ROI Member you may download a free copy of that test to use as you interview prospective bookkeepers. For more information, see The ROI's "Bookkeeping Articles."