Galleria - RTS

ROI Calculator

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  ROI DATA INPUT  
  This section should be filled in based on your high level financial performance data.  
  Retailer Values Input Your Data    
  1. Corporate Net Sales ($, £ or € in Millions).      
  2. Corporate Net Income ($, £ or € in Millions).      
  3. Average Gross Margin (%).      
  4. Operating, general and administrative expenses ($, £ or €).      
  5. Amount of Total Inventory held In-Store ($, £ or € in Millions).   This number should be total in-store inventory, excluding warehouse & distribution inventory. If you are not able to determine in-store inventory you can adjust total inventory in line 9 below.  
  6. Shrink associated to Wastage & Mark down product ($, £ or € in Millions).   Take a % out for theft and damage goods.  
  7. Store Count (#).      
           
  This section contains variables that you can adjust to effect the results below.      
  Variable Data Input Your Data      
  8. Average Number of Planogrammed Items Per Store (#).   Estimate of items carried per store, exclude non-planogrammed items. This is an estimate of the number of items that are currently actively planogrammed in store.  
  9. % of Inventory that is in Store (%).   % of total inventory that is in the store, including merchandising space, overstock and backroom inventory. This number allows you to adjust the inventory number in line 5.  
  10. Average Store Labor Rate ($, £ or € per hour).   Estimate of average labor rate across all workers in stocking.  
  11. % of Revenue from Planogrammed items (%).   What % of total revenue is planogrammed & therefore can be impacted by optimization. This allows total revenues to be adjusted down to exclude revenues from areas of the business which are not planogrammed i.e. internet business, fuel sales, revenue from services, etc.  
  12. % of Revenue from Seasonal Items that are
Planogrammed (%). 		  Estimate what % of the total planogrammed items are seasonal.  
  13. % of Revenue from Perishable Items that are
Planogrammed (%). 		  Estimate what % of the total planogrammed items are perishable.  
  14. % Revenue Increase due to Store Specific Planogramming (%).   AMR estimates a 10% - 20% sales increase from store specific plans.  
  15. % of Items Underfaced (%).   P&G estimates 14% of items have less than 7 days of supply. What percentage of planogrammed items are currently underfaced and would benefit from additional stock.  
  16. % of items Overfaced (%).   P&G estimates that 86% of items have greater than 7 days of supply. What percentage of planogrammed items are currently overfaced and could have stock reduced.  
  17. Cost of Working Capital (%).   For example, Base Rate + 2%.  
  18. Average Time to Restock an Item from Back Room (# of minutes).   Estimated average time to travel to the back room, retrieve stock and replenish a location.  
  19. Overhead Rate for Store Labor (%).   Overhead uplift due to benefits, management costs, etc.…  
  20. % of Shrink that can be improved (%).   % of the shrink that can be reduced with better inventory control. For example, 10%. This enables you to apply a percentage based on the amount of improvement to shrink based on better inventory controls.  
  ROI RESULTS      
  By ensuring the right products are in the right stores in the right quantities, you can expect to see sales lifts of 10% - 20% in selected categories.      
  Sales Increases        
  Expected Change in Net Sales (Millions)    
  Expected Change in Net Income (Millions)    
  Change in Corporate Net Income (%)    
           
  By reducing stock on selected slow moving items, you can expect to see improved turns for those items and reduced inventory which translates into a reduction in working capital.      
  Working Capital Savings        
  Average Turns per year    
  Slow Moving Items Turn-Rate    
  Reduction in Working Capital    
  Cost of Working Capital    
  Change in Corporate Net Income (%)    
           
  By increasing stock on selected fast moving items, you can expect to see improved holding power on the shelf, reduced out-of-stocks and in turn less replenishment trips for those items which reduces store labor.      
  Store Labor Savings        
  Fast Moving Items Expected Turn-Rate    
  Expected Change in Turn Rate    
  Reduced Stocking Labor Hours per store per week (man hours)    
  Labor Saving (Millions)    
  Expected Change in Corporate Net Income (%)    
           
  By reducing inventory on your slow moving seasonal and perishable items, you will reduce shrink. The percentage in line 27 above allows you to apply a % to scale the amount of improvement.      
  Shrink Reduction        
  Expected Change in Seasonal Shrink (Millions)    
  Expected Change in Perishables Shrink (Millions)    
  Expected Change in Corporate Net Income (Millions)    
  Expected Change in Corporate Net Income (%)    
         
  Total Changes        
  Expected Change in Corporate Sales (Millions)    
  Expected Change in Corporate Net Income (Millions)    
  Expected Change in Corporate Net Income (%)    
         
  GMROII        
  Expected Inventory Turns    
  Current GMROII*    
  Expected GMROII*    
     
  References    
  1: AMR Research Article: Five Food-Retailing Technologies That Will Drive Value in 2008
Monday, March 03, 2008 by Mike Griswold 		 
  2: A Comprehensive Guide To Retail Out-of-Stock Reduction In the fast-Moving Consumer Goods Industry
P&G-Research Conducted by : Thomas W. Gruen, Ph.D., University of Colorado at Colorado Springs, USA
And Dr. Daniel Corsten, IE Business School Madrid 		 
  3: Retail Strategies Report
July 2007 © 2007 AMR Research, Inc. 		 
  *: A GMROI of 3.2 means for every dollar spent in inventory you receive $3.20 in Net Income per year.