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GMROI – GMROF – GMROL : How To Make More With Less

As a retailer, your primary means for earning profits is your inventory investment. So it only makes sense to put your inventory rupee into merchandise that will give you the greatest return on your investment. But how do you know whether you should, for example, cut back on running shoes and build up your collection of cycling shoes?

GMROI – GMROF - GMROL can be a very useful tool in your analysis.

GMROI (also known as GMROII) stands for Gross Margin Return On Inventory Investment - a measure of inventory productivity that expresses the relationship between your total sales, the gross profit margin you earn on those sales, and the number of rupees you invest in inventory.

GMROI is expressed as a percentage or a rupee multiple, telling you how many times you’ve gotten your original inventory investment back during a specified period.

GMROF stands for Gross Margin Return On Footage - a measure of inventory productivity that expresses the relationship between your gross margin, and the area allotted to the inventory.

GMROF is expressed as a percentage or a rupees multiple, telling you how much returns you’ve gotten per area (selling feet) during a specified period.

GMROL stands for Gross Margin Return On Labor - a measure of inventory productivity that expresses the relationship between your gross margin, and the full time employee.

GMROF is expressed as a percentage or a rupees multiple, telling you how much returns you’ve gotten from each piece of full time employee during a specified period.

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Author:. Nilesh Shah nileshshah@rancelab.com Over 10 years of experience in the field of software development, sales and marketing. He has assisted over 500 Retailers and Restaurateurs in implementing the Retail and F&B software with barcode & pos hardware for their business. He holds a designation of Director, Marketing in Rance Computer Pvt Ltd. He holds the certification from Microsoft Corporation and NIS. His current research focuses on developing and implementing intelligent retail systems... Go Deeper | Website