Sales vs Budget and Inventory Management

Sales Against Budget and Previous Year

• Sales performance is compared to previous year and budget targets
• Forecasting considers variables like market trends, commodity price increases, and political stability.
• Examples include omnichannel retail, digitalization, Hong Kong and Thailand political unrest, potential electricity price increases in 2019, and expected changes in tax rates like Singapore's GST increase between 2021-2025
• Trend analysis also includes forecasting changes in fashion trends and consumer eating habits (e.g., plant-based meat).

Stock Turn

• Stock turn reflects the efficiency of inventory management.
• Measures how quickly inventory is sold and replenished.
• A higher stock turn indicates efficient inventory management.

Gross Margin Return on Inventory (GMROI)

• Assesses profitability of inventory investment.
• Calculated by dividing the gross margin by the average cost of inventory.
• A higher GMROI means a higher gross margin for every dollar invested in inventory.

Average Selling Price (ASP) Against the Plan

• Focuses on understanding actual sales price compared to targeted price
• Analyzes whether the average selling price is meeting planned targets for different product categories (e.g., watches versus garments).
• Factors that drive down ASP include less popular products, declining novelty of goods, and overstocking.
• Several factors can influence ASP falling below plan:
  • Selling products before the end of their lifecycle.
  • Introducing more low-priced items than initially planned.
  • Aggressive price promotions or poorly managed discounts.

Monthly Markdowns & Accumulative Markdowns

• Planned markdowns are implemented on a schedule, across different departments or stores.
• Excessive markdowns can lead to profit losses.
• Negotiations with vendors can help minimize markdowns.

Stock Obsolescence

• Represents obsolescence reserves based on historical markdown data.
• Enables proactive management of inventory that is likely to become obsolete.
• E.g. Planning for markdowns on seasonal items or clearance sales.