Inventory turnover is a critical metric in determining a retailer’s inventory efficiency and sales effectiveness. For apparel, footwear and accessory retailers, it’s especially important to adapt to constantly changing trends and styles to avoid the costs associated with storing excess inventory and offering steep discounts at the end of a season. A higher merchandise turnover indicates more sales in a given period, resulting in lower storage costs and more effective purchasing and manufacturing.
- < 3.2
- > 4.3
"Consumers are expected to spend $2.9 trillion on cross-border ecommerce by 2022."
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Stock-outs as a % of Sales
When customers are faced with a stock-out situation, they either purchase items from another store, delay their purchase, replace the item with another one, perhaps even from a different brand, or not purchase the item at all. In addition to lost sales, the result is a frustrating experience for your customers. In the apparel, footwear & accessory industry, customer experience is critical, and therefore identifying and supplying the optimal amount of merchandise to reduce costly stock-outs is essential.
- > 2.5%
Labor as a % of Sales
Labor is one of the biggest expenses a retailer manages. In fact, in many cases labor costs more than the inventory the store is carrying. Retailers require resources to cover the floor and work with customers from open until close, receive shipments, stock shelves, work the registers and maintain accurate inventory counts. A good staff is critical to the success of an apparel, footwear & accessories business, however it’s critical to use payroll funds wisely to remain profitable. Labor as a percentage of sales is a great indicator of staffing efficiency. A percentage that is too high indicates that you may be overstaffing given the amount of sales your stores are generating.
- > 23.5%
Stock-outs as a %
Labor as a %
Costs as a % of
Marketing as a %
SG&A as a %
IT Costs as a %
Source(s): APQC, WERC, IR 500, Finlistics
Your business may just be beginning to track this metric, perform this business function or identified this as a problem. Improved execution in this area should be a high priority.
Your business is competitive in this area, but there’s still room for advancement. Consider investments to improve related operations to achieve better results.
Best in Class
Your performance in this area is considered best in class and is superior to the average company in your sector. You’ve laid a solid foundation in this business function, and the next step is optimization.
You’re achieving the optimal results for this metric. Your business processes in this area are highly efficient and stand out against competitors. Keep investing in this area to maintain these results.