There’s a new Sheriff in town… CMROI
When it comes to merchandise planning we have always used Inventory Turn and GMROI (gross margin return on investment) to measure our inventory performance. While both are very effective KPIs (Key Performance Indicators) they don’t always give us a true picture on how the CASH invested in that inventory is actually performing.
With the launch of our new merchandise planning solution, RetailORBIT™ we now have a new retail KPI… CMROI or CASH MARGIN return on investment. This new metric more accurately reflects how cash is turned over in your store. For indie retailers, evaluating and improving how the cash invested in your inventory is truly performing is paramount!
Here’s how to calculate CMROI;
Cash Margin (net sales – receiving) Divided by Average Inventory (over 12 months)
Cash Margin (net sales minus receiving) divided by your average inventory (at retail). This metric can be used to evaluate your entire inventory, a group or category, a single vendor or an individual classification within your store.
Try calculating your CMROI to see just how effective you have been as an investor in inventory… Or even better give us a call and we’ll do it for you, for FREE
If you would like to see a free preview of our updated merchandise planning solution for winning@retail™ please get in touch with us right away.
Dan Holman is a certified Winning@Retail™ consultant with twenty-plus years of success in diverse business development, new ventures, business expansion and strategic sales planning.