1Section One: retail inventory turnover

In accounting, the Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory turnover equals the Cost of goods sold divided by the average inventory. Inventory turnover is also known as inventory turns, stock turn, stock turns, turns, and stock turnover (Financial dictionary, 2014)


Average inventory will largely be determined by your business model and your business finances. Are you a small specialty shop that primarily deals in service? In that case, you might keep a little inventory on hand, but mainly you deal with special orders. If you have a large retail store that aims to move a higher volume of goods, you need to have sufficient capital and financing to hold that inventory. A report from your accounting software should give you your total cost of goods sold


The easiest way to ensure that there is enough inventory on hand at all times, whether for a manufacturing or retail operation, is to carry an excessive amount of inventory at all times (supply times, 2014). However, this seemingly simple solution is an extremely expensive one. Inventory carrying costs can add up to a whopping 40 percent, over and above the direct procurement costs of an item.


Watch the video about retail inventory turnover, makes you know the detail quick



In general, low inventory turnover ratios indicate a company is carrying too much inventory, which could suggest poor inventory management or low sales. Excess inventory ties up a company’s cash and makes the company vulnerable to drops in market prices. Conversely, high inventory turnover ratios may indicate a company is enjoying strong sales or practicing just-in-time inventory methods. High inventory turnover also means a company is replenishing cash quickly and has a lower risk of becoming stuck with obsolete inventory.


Apple runs its inventory turnover great! In its eighth annual Supply Chain Top 25 (Business Insider, 2013), Gartner analysts once again ranked Apple’s supply chain as the best in the world, boasting an industry-leading 20.2 percent return on assets for the past three years as well as three-year revenue growth of 51.5 percent.

Apple stood out with an inventory turnover period of five days, calculated by dividing the 365 days in one year with the inventory turnover ratio or the cost of goods sold over uarterly average inventory, which in Apple’s case is 74.1. The only other company to beat the Cupertino, Calif., electronics giant was McDonalds with 142.4 inventory turns equating to a 2.5 day turnover for total inventory.

Dell and Samsung followed Apple in the electronics category with turnovers every 10 and 21 days, respectively.


Therefore, a good manage of inventory turnover can bring significant profits to the retail company, here are some tips might help you to control the inventory effectively.


First, and most direct, is to reduce lead time from vendors and suppliers.

Second, and very important, although sometimes more difficult because of organizational alignment, lack of technology or other factors, is to increase forecast accuracy.

Third, and potentially a technique to increase sales revenue as well, is to reconcile safety stock policies with management priorities across the product line.

Fourth, is to reduce purchase transaction costs (distributors) and set-up/changeover costs (manufacturers).

Fifth, is to work off overstock at the distribution centers (any firm) and at stores (retailers) by transferring slow-moving inventory to facilities where the demand exists in lieu of purchasing additional quantities.

Sixth, is to purchase or manufacture to-order instead of to-inventory, when lead time and capacity allow, or use postponement techniques.

Seventh, is to incorporate forecasting and inventory performance into the firm’s continuous improvement program, and measure, report, and review results against goals.


I believe that these tips will help your run the inventory well.




Section two: Retail Atmosphere

In marketing the term atmospherics is used to describe the discipline of designing commercial spaces. During Wikipedia we can find that Atmospherics covers three major art forms important to retail: architecture: exterior structure; interior design and the design of window displays.


You never get a second chance to make a first impression. This age old saying is especially held to truthfully in design and atmosphere of a retail store. The first impression given to the potential customer will determine if the owner has gained a client for life or has lost a prospective long-term buyer (Frederick A. Babb, 2008). Therefore, more and more store owners are placing more emphasis on interior design.


A store owner must do his or hers homework when designing for success. Knowing the targeted client’s likes and dislikes is a must when laying out the blueprint of the business. Wall colors, decorations and background music are selected carefully to match the products being sold.


Here show a great store atmosphere example:


When I doing my case study about lindy’s shop, I realized that the decoration of the shop is also a big part to attractive the customers just as important as the location.

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As a customer, I do like shopping in physical store instead of purchasing goods online, I like taste the shopping experience and the store image which showed me at the same time. I still remember the store named Zhang San Feng which offering drink when I was travelling in Xia Men, there was a big white cat toys just stand in front of the window. Besides that, the shop has been decorated like a Fairy kingdom, a lot of different lovely animal toys inside the store, which strongly attractive me to go in that store to order a drink. That was a very great experience for me.


Here is the great shop atmosphere about the Ray’z Barber Shop “Cool Atmosphere, Real Haircuts”



When placing a plan into reality, some of the factors to consider are visual, aural, olfactory, tactile, ambient conditions, space/function and signage. The famous food retailer McDonald have much effort on its customers’ feeling and experience when they having meal in the store. As an example, the shops in Australia, McDonalds noticed that the major customers are the family brought their kids to have meal, so the store had built a special kid playground for the children, so the parents will not be worry about their kids when they having meal (Andrew Blumetti, 2013).


While on the other hand, some of the stores which have not done well in its shop atmosphere might get bad result when they doing business.

Here are some tips might help the store owners to increase their shop atmosphere and get success.

First, Figure Out the Personality and Style of Your Store. Try to create your store unique and special and make attraction to the customers.

Then, Select Fixtures that Mesh with the Personality of Your Store, If you’re looking to create an upscale ambiance, you should select sleek, modern items. These types of things form the backdrop of your store and make it easier to achieve the kind of atmosphere that you want.

Besides that, notice that every small things matter, make sure you have handle all the things which happened in your shop.

Last but not least, do not overlook the employees. You can order them to wear clothes that make sense when it comes to the rest of your store’s atmosphere and style.

Wish you can use these tips to create a successful store atmosphere.




Section Three: retail store layout

A well-planned retail store layout allows a retailer to maximize the sales for each square foot of the allocated selling space within the store.

Store layouts generally show the size and location of each department, any permanent structures, fixture locations and customer traffic patterns.


Each floor plan and store layout will depend on the type of products sold, the building location and how much the business can afford to put into the overall store design.( Shari Waters, 2013)

Your store is really the first point of the relationship between you and your customer. Once you have attracted them and you have invited them to come in, you’ve done your job. The next step is to make them buy, that’s where visual merchandizing comes in.

Store layout is really a major part in the process which attractive the customers to go into your store to look the products.


Let’s see how store layout affects profit



A good layout is a matter of customer satisfaction (The Store Manual, 2005). A good layout provides you with the opportunity of influencing store turnover. The appropriate shelf layout, the arrangement of the product range or a well-thought out spot for special offers all have a direct effect on turnover. So a good layout may very well create a boom in a store’s turnover!

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Wonderful store design is one of the big factors which cause Zara’s success which founded on just €30 euros is now worth an estimated €32 billion (Marion Hume, 2011). Store design is really working when you are too busy shopping to notice. Zara stores are built to seem airy and light – even on a busy Saturday – while the current in-store look, closely inspired by Prada, is for squadrons of mannequins gathered together to show off the season’s many looks. Besides that, older sites are also being transformed to ensure savings on water and energy use, and to reduce carbon emissions, which make the Zara become more Seductive and sustainable.


Let’s see one of the Zara in Rome~


As my personal experience, I do like shopping in Woolworth because its great store layout. Around the perimeter of the store also around the perimeter the store will be such stock items as me dairy seafood inbred things that most people don’t go to the grocery store that getting. Besides that, here put around the edges the stores that the shopper must experience the whole store and not just a certain section lead to more impulse buys and other unplanned purchases. Furthermore, the name in the produce sections grocers make sure to keep fruit well that an appealing for the consumer to be more likely to make a purchase. additionally retail stores had to keep complimentary items close to each other in this Woolworth we can see vegetarian and vegan options nestled in the vegetable section since the vegetarian or vegan customer will be going to that section anyway


Here are some tips might help you to increase your store attraction.

1 Don’t place merchandise in the “decompression zone.”

2 Choose a store layout that fits your business

3 Minimize counters

4 Beware the “butt-brush effect.

5 Maintain good visibility

Hope you can do your business better by setting great store layout.


Reference List:

Financial dictionary, 2014, “Inventory Turnover”, Investing Answers, viewed 6th Apr.


Frederick A. Babb, 2008, “The Importance of a Retail Stores Design and Atmosphere”, inside business, viewed 6th Apr



Johanna Paola D. Poblete. 2007, “Store layout and design: When selling becomes storytelling”, BusinessWorld, Business World Publishing Corporation, viewed 6th Apr



Jan Fletcher, 2013, “6 Tips for Creating an Optimal Retail Store Layout”, intuit small business, viewed 6th Apr



Meaghan, 2011, “Tips for Creating a Great Atmosphere in Your Retail Store”, CashierLive, viewed 6th Apr



Marion Hume, 2011, “The secrets of Zara’s success”,, viewed 6th Apr



Ndrew Blumetti, 2013, “The Horrors of the McDonald’s Playground: A Walk Down Memory Lane”, A Blumes With a View, viewed 6th Apr



(Ralph Cox, Principal, Tompkins International, 2014, “Seven Tips for Managing Inventory Turnover”, Tompkins International, viewed 6th Apr.



Supply time, 2014, “Less is More (Most of the Time)”, Inventory Management 101, viewed 6th Apr



Shari Waters, 2014, “Types of Store Layouts”, retailing, viewed 6th Apr



Wikipedia, 2014, “Atmospherics”, viewed 6th Apr


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