Every year is
same. Even leap years are same as other years. Each January is followed by a February. There is always a November before December. Tuesday arrives after Monday. There are always twelve months to a year and three months to a quarter. There are four seasons: winter, spring, summer and fall.
Since each year is same it offers a retail business opportunity to plan for ROI (Return on Investment). An effective policy to have is to never have same merchandise in stock a year later. This means, using a shoe store as an example, that if you invested in forty shoes of one brand, none of those forty shoes should be in stock 366 days later.To further illustrate point, let’s say that forty shoes are manufactured by Rox and style number is 22N7A. There are various sizes for adult females and males. A Purchase Order with number 79563 was issued for investment.
If you sell all forty shoes in a month, that is great. This does not mean you should not invest in forty more shoes of same brand and style. This means that forty shoes you received with Purchase Order 79563 should not still be around a year later. If you still got a pair or more of these shoes, then you are losing money.
An effective ROI strategy is to follow this Stock Rotation Philosophy and this is how it works. You purchase forty shoes from a vendor.
Your cost is $40 and you use your general pricing formula to determine retail price. Let’s say retail is $99.99. You put your shoes on display and they are slow sellers. Two months down road you sell have 35 pairs left.
