by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
Australian Journal of Pharmacy : November 2006
retail management 1.7 Y now you have been exposed to AJP Retail Management columnist Bruce Annabel’s (and others) measures of success, like GMROS (gross margin return on space), GMROI (gross margin return on investment), gross profit dol- lars and so on. However, my ongoing love affair is with the average sale, and with the simple measures that can give you a snapshot of in-store productivity. The magic number relates to lines sold per transaction. It can tell you what you’re selling, how you’re selling it, whether you’re in stock, whether you and your staff are adding value and sales, whether you’re an order taker or whether you not only talk the talk about giving customers total solutions, but also walk the walk! It can tell you whether the time and money spent on sales training is working, and whether your merchandising and ranging strategy is paying off. In short, it’s my first line ‘productivity thermometer’. It’s how I know how well things are work- ing. It doesn’t lie. It doesn’t camouflage added-value activities. B In order to really get value from this article or the principles we’re talking 64 ? THE AUSTRALIAN JOURNAL OF PHARMACY VOL.87 NOVEMBER 2006 A magic number you can count on Minor improvements in lines sold per transaction can make a huge improvement in pharmacy retail revenue. Pharmacy retail specialist and founder of the FeelGood category management system (www.feelgoodguide.com.au), HILARY KAHN, tells you how about, stop reading now and find out what your lines per transaction are, first for the shop as a whole, if you can for the front of store, and if you’re really smart, for any of your categories—especially focus on health. Believe us, acting on this particular metric—lines per transac- tion—can stop leakage to competitors. How do you do it? Let’s use transac- tions number of a ‘busyish’ pharmacy over one week. If the total number of products sold was 2,350 items and this was divided by the 2,200 transactions it took to sell those items, the lines sold per transaction would be 1.06. For the sake of the exercise, let’s assume that the average price of an item is $12, and the average profit on the item is $3.50 (we know that’s wrong, because prices and proft dollars may be higher, or lower). Why is 1.7 the magic number? Because 20 plus years ago, if any department store category didn’t achieve at least that, they were considered to be not even breaking even! If 1.7 had been achieved in the above example, the 2,200 transactions would have sold 3,740 items, not 2,350 and, on the $12 basis, would have increased sales by 1,390 items—$16,680 in additional sales, and $4,865 in additional profit for the same period (one week!). Multiply this figure by 52 weeks, and additional phar- macy sales would be $867,360! Like any score, if you don’t set a target or goal, you won’t achieve it, or if you do, it’s probably accidental and more good luck than good management. Having the total store figure doesn’t really tell a story which is specific enough. Do it for the dispensary, then for the front of store, then category by category. That’s the only way you’ll get a reading upon which you can act. What brought this on? Years ago, I was asked to look at perfor- mance in a department store in Hobart. Many of their departments simply weren’t working, but the one that really caught my eye was china. They stocked brands like Waterford, Villeroy and Boch and other prestige names, among a full suite of less expensive brands. But their average sale was $11! What did that tell me? Here is a list of possible causes: