Lecture 6 - part 2: trinity model

Question 1

The assets in retail:

Answer 1

1) Goods -> variable assets
2) Bricks -> fixed assets
3) People -> human assets

Question 2

Productivity or efficiency?

Answer 2

It is not about the lowest cost solution but highest efficiency solution.

Question 3

The model, per column:

Answer 3

First column:
- Margin
Second column (productivity):
- Sales Rate
- Goods intensity
- Floor productivity
- Self service ratio
- Labour productivity
Third column (efficiency:
- Stock efficiency
- Floor efficiency
- Labour efficiency

Question 4

Margin

Answer 4

Gross profit margin / sales

Question 5

Sales rate

Answer 5

Sales / stock

Question 6

Goods intensity

Answer 6

stock / retail floor space

Question 7

Floor productivity

Answer 7

sales / retail floor space

Question 8

Self service ratio

Answer 8

retail floor space / FTE

Question 9

Labour productivity

Answer 9

sales / FTE

Question 10

Stock efficiency

Answer 10

GPM / stock

Question 11

Floor efficiency

Answer 11

GPM / retail floor space

Question 12

Labour efficiency

Answer 12

GPM / FTE

Question 13

Three rules of thumb:

Answer 13

1) Optimize GMROI
2) Increase stock as long as GMROF increases
3) Optimize GMROL

Question 14

GMROI

Answer 14

Gross margin return on inventor (stock efficiency)

Question 15

GMROF

Answer 15

Gross margin return on space “floor” (floor efficiency)

Question 16

GMROL

Answer 16

Gross margin return on labour

Question 17

Uses of the trinity model

Answer 17

1) external benchmark
2) internal benchmark for stores over time
3) internal benchmark for departments over time
4) evaluation instrument for sourcing
5) SWOT analysis