Reframing Retail: Counting money $, not comparing margin %s

“Most of the values and the rules and the techniques we’ve relied on have stayed the same the whole way.Some of
them are such simple common-sense old favorites that they hardly seem worth mentioning.“ Sam Walton, founder of
Wal-Mart

“A young priest asked his bishop, “May I smoke while praying?” The answer was an emphatic “No!” Later, when he
sees an older priest puffing on a cigarette while praying, the younger priest scolded him, “You shouldn’t be smoking
while praying! I asked the bishop, and he said I couldn’t do it!”

“That’s odd,” the old priest replied. “I asked the bishop if I could pray while I’m smoking, and he told me that it was
okay to pray at any time!”

Abstract

Current retail merchandising systems, planning and evaluation are based on a framework of sales and gross margin
percentages. This paper introduces a different theoretical framework for retail which has been used in practice for
decades by at least 2 global retail chains. We argue that Revenue (or Gross Merchandise Volume GMV) is largely
irrelevant for assortment decision making. The reason is that a retailer is a conduit for payment by the customer to the
manufacturer. The amount involved in this payment, Cost of Goods Sold, is irrelevant for a retailer’s Bottom Line
result, which is Gross Margin $ - Operating Expense $. To optimize assortment decision making for a store, managers
should consider the Dollar Contribution of products and the possible Opportunity Cost incurred when choosing one
option over another.

Purpose of the paper

Retailers receive capital from shareholders who are looking for a low risk and high Internal Rate of Return (IRR)
which can be maintained for a long period of time. Decision support and management accounting frameworks based
on a common-sense arithmetic approach, could help more retailers achieve this goal.

The purpose of this paper is to introduce for the first time the use of a conventional management accounting system
in an unusual manner for retailing. The system is contribution margin. In retail contribution margin is usually based
on percentages, however for decades at least 2 leading retailers have favored standard Dollar Contribution
frameworks over percentages.

Keywords: Retail, Management Accounting, Dollar Contribution, Frameworks

The Framework = Dollar Contribution | Marginal Income | Direct Costing | Variable Costing |Opportunity Costing |
In German: Deckungsbeitrag | Dutch: “Rekenen in Centen, in plaats van Procenten” | Profit per X that drives
economic engine

DPP = Direct Product Profitability, ABC = Activity Based Costing, ECR = Efficient Consumer Response

ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 1
Not about pricing

Note that this paper is not about pricing. The Dollar Contribution and Opportunity Costing conclusions are just as
relevant for a retailer who has premium (or prestige) pricing with high gross margin percentages as for an
underseller who undercuts the competition’s prices with low gross margin percentages.

Theoretical background

In retail theory, gross margin is the same as contribution margin. The standard reference textbook “Introduction to
Management Accounting” by Horngren et al. describes the conventional use of Dollar Contribution in manufacturing
whereby a leap is made specifically for retail to percentages. According to the authors (p. 65) “a grocery store sells
hundreds of products at many different prices. In such a company it would not be meaningful to compute a break-
even point in overall units sold. Instead we use total sales and total variable costs to calculate the variable cost
percentage and the contribution margin percentage.” This leads to a suboptimal framework. Using just gross margin
percentages to compare individual products in a retail assortment with one another is not “following a common-
sense arithmetic approach”.

We believe that in past retail practice, before the invention of the barcode and implementation of Information
Technology systems, it was not a question of whether product level Dollar Contribution computations were
“meaningful” but whether they were “feasible”.

Utilizing price stickers like this, the only information most merchandisers had at the
end of a day was the sales amount, not exactly which products had been sold. To
estimate profitability they had to start with the sales amount and use an estimated
average gross margin percentage of the assortment to figure out how many gross
margin dollars they had left to pay operating expenses (rent, salary, overhead, etc).
This running estimate is done using an algorithm called the “Retail Inventory
Method”. To estimate Net Profit retailers subtract an average operating expense % from the average gross margin
%. The conventional percentage based retail formula can be espressed as follows:

Net Profit = Sales x (Gross Margin % - Operating Expenses as % of sales)

The framework(s) we wish to describe are based on a conscious decision NOT to make the leap to variable cost
percentages and contribution (gross) margin percentages.

Retailers can use the same “common-sense arithmetic approach” as is customary in manufacturing. The former CEO
of C&A Global, for example, noted that C&A only had a handful of products in 1906, the year it drastically cut its
contribution margin ratio from ½ to ¼. With only a few Stock Keeping Units (SKUs) it was logical and “meaningful” for
C&A to evaluate each SKU individually based on Unit and Total Dollar Contribution. Retail = Detail.

C&A has always tracked sales at SKU level, long before the
introduction of the barcode. This is the price label C&A used in the
1950’s. Each day containers were filled with torn off partial labels
and sent to central datacenters (das Kontor) to count up how
many of each SKU had been sold.

If a retailer knows exactly what it is selling, it doesn’t need to keep

track of an estimate of the average gross margin percentage to
figure out many gross margin dollars it has earned.

The situation at ALDI was similar, with only 600 SKUs, management
had more than half a day each year to consider the Dollar
Contribution of each product individually.

At IKEA, where there were also a limited number of SKUs, founder

Ingvar Kamprad learned about Costing (as did C&A managers) in
production factories. He saw IKEA as a “mechanical selling machine”. That might be why Kamprad considered the

ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 2
leap to gross margin percentages when considering individual products absurd. He asked his planning department:
“What the hell are (gross margin) percentages anyway?” This question led to “endless bickering for over a decade”
within IKEA. In fact according to Kamprad, “unsound margin-raising instead of counting money” is the biggest threat
to IKEA’s continued existence.

This paper should answer the question: “What if you do not “use total sales and total variable costs to calculate
the variable cost percentage and the contribution margin percentage” and use Dollar Contribution instead?”

Relevance: The problem with a percentage framework

Like Ingvar Kamprad, Sam Walton the founder of Wal-Mart, has written that the choice of framework, the way of
thinking you choose, is an essential factor in retail success. Thinking in terms of increasing Dollar Contribution
instead of maintaining gross margin percentages helped Wal-Mart flourish even when it was smaller and less
efficient than competitors. Here is how Walton explained it in his 1992 autobiography: “It’s amazing that our
competitors didn’t catch on to us quicker and try harder to stop us. Whenever we put a Wal-Mart store into a town,
customers would just flock to us from the variety stores. It didn`t take those stores long to figure out that if they were
going to stay in business against his Wal-Mart, they had better start discounting themselves….Now most of these
guys already had distribution centers and systems in place, while we had to build one from scratch. So on paper we
really didn`t stand a chance. What happened was that they didn`t really commit to discounting. They held on to their
old variety-store concepts too long. They were so accustomed to getting their 45 percent markup, they never let go. It
was hard for them to take a blouse… and sell it for $5 and only make 30 percent… we were ending an era in the
heartland. We shut the door on variety-store thinking.”

Using Walton’s example of a blouse, let’s consider 2 stores of equal size: a new discounter which operates a
single inefficient store with higher expenses and buying costs* than a similarly sized existing store which is part
of a large existing chain.
Total Dollar Contribution = Unit Dollar Contribution x Units Sold per Year
Total Dollar Contribution = Gross Margin Dollars

(see page 254 Exhibit 6-2 Single Discounter or Variety or Department

Introduction to Man. Acc) Underseller Store Store, part of a chain
Retail price $5,00 $6,20
Cost of Goods Sold $3,50* $3,40
Unit Dollar Contribution $1,50 $2,80
Unit sold per year 25 000 10 000
Income Statement:
Total Dollar Contribution $37 500 $28 000
Operating Expenses $35 000* $30 000
Operating Income $2 500 $2 000 loss

Even with a lower selling price and higher buying price for the same blouse as well as higher Operating
Expenses, the Underseller is making more money than the established higher margin competitor. The higher
Total Dollar Contribution of the $5 blouse clearly flows through to the bottom line. The variety store is
incurring an Opportunity Cost by not making optimal use of its store.

ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 3
How could Walton’s competitors not see this? We believe the framework chosen is part of the reason. If the
two stores shown above were merged, the consolidated Profit & Loss would look like the table below. The net
margin is wafer thin.

Sales $187 000 100%

Cost of Goods $121 500 -65%
Gross Margin $65 500 35%
Operating Expenses $65 000 -34,7% “Breakeven %”
Operating Income: $ 500 0,3% Net margin %
Recall the retail percentage formula (Quix, Van Der Kind):
Operating Income = Sales x ( Gross Margin % - Operating Expenses %)
The merged company sells blouses at two price points with different margins: 30% and 45% and Operating
Expenses were 34,7%. According to conventional retail theory the average gross margin percentage of the
merchandise mix should be maintained above 34,7% for the company to breakeven.
What if a merchandiser was asked to choose one single price point and gross margin percentage for the merged
company? Based on this way of thinking or framework, it would be logical to choose the alternative whose
gross margin percentage, 45%, is higher than operating expenses 34,7%. In this case that is the loss making
product! The manager might make an incorrect decision, but the manager is not the problem, the choice of a
framework based on arithmetic that doesn’t add up, is. You cannot bring percentages to the bank.
A counter-intuitive insight: Sales are largely irrelevant for retailers

When discussing retail assortment profitability old C&A merchants often describe the ideal product: a fur coat lined
with diamonds. You order it on the first day of the year, the second day it arrives and is sold almost immediately,
paid in cash, at a price many millions above the buying price. The store, which costs a few million to operate, can
then be closed for the rest of the year, management can go on vacation and only has to remember to pay the
supplier a few weeks later.

The key is, it doesn’t matter at what price the coat actually sells or what its gross margin percentage is. Selling
prices and sales are largely irrelevant. Sales are made up of Cost of Goods Sold and Contribution Dollars. The Cost of
Goods Sold (buying price) part of sales is money that the customer pays the factory for manufacturing a product. The
retailer is merely a conduit of this money and should not consider it income. This is especially clear for
supermarkets, Dieter Brandes explains, ALDI never “buys stock”. Customers often pay supermarkets before
supermarkets pay their suppliers.

When using the Dollar Contribution framework to consider assortment and pricing trade-offs, you don’t have to
know the sales or average gross margin percentage of the store or even of the individual products. (case David E.
Bell, Harvard) Gross margin dollars can be considered the Top-Line of a retailer’s Income Statement.

Some online retailers already report their numbers in this way. Takeaway.com, for example, reported Top-Line
“Revenue” in 2015 of €77 million, which is the Income it received after paying Cost Of Goods Sold. Takeaway.com’s
“sales” that is total value of merchandise sold or Gross Merchandise Value (GMV) of €651 million in 2015 is merely a
footnote in its reporting.

Use in practice at ALDI and C&A

In the book “Bare Essentials: The ALDI Success Story” Dieter Brandes wrote a critique of Direct Product Profitability
(DPP) and Efficient Consumer Response (ECR). His argument is that they are too complicated and impractical for
retail.

ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 4
When asked what ALDI’s alternative was for contribution margin percentage planning and evaluation, Brandes didn’t
understand the question. When told that some retailers stop selling a low gross margin percentage product in order
to maintain the store’s average gross margin percentage above a preset target, he couldn’t believe it at first. It was
obvious to him that: ““If an article marked up at 30% sells much better than planned (even when average costs were
planned to be 35% of sales), that only increases bottom line profit. That works as follows, total sales increase as does
gross margin in Euros. The gross margin percentage will dip slightly, but so will the operating expenses expressed as a
percentage of sales. For example GM% from 37% to 36% and Operating Expenses from 35% to 34% respectively….
What is important is M$ x V ”

By “M$ x V” Brandes means: Unit Dollar Contribution Margin x Volume of Units Sold
The ALDI system is very simple. The goal is to offer best quality at the best prices, while making a healthy bottom line
profit. ALDI stores had only about 600 SKU’s (stock keeping units), compared to about 200 000 SKU’s at a large
department store. The assortment consists of the highest volume items of daily consumption (...which make sense
for the average household). Each store is roughly the same size so each SKU is sold in all stores.

In the profit & loss statement, you can find the Dollar Contribution for the whole assortment.

ALDI Profit & loss example (fictive numbers)

Sales $ 30 000 000

Minus Cost of Goods(COGS)-$ 26 000 000

Gross margin $ 4 000 000  Dollar Contribution Focus

Minus rent -$ 1 500 000

Minus salaries -$ 1 500 000
Minus other costs -$ 500 000

Net profit € 500 000

The total Contribution, which is the sum of the Contributions of all 600 articles, is € 4 000 000.
The Contribution for an individual article (SKU) is the Sales-Cost of Goods Sold (COGS) of that product. For
example:

Gouda cheese: Sales $ 200 000 – COGS $ 180 000 = Dollar Contribution $ 20 000

The sum of Dollar Contribution of all the products is the total Gross Margin in dollars.

Product Contribution

Markus Coffee Red $ 50 000

Merlot wine $ 40 000
Salmon $ 35 000
Water $ 30 000
...
Etc etc
...
Gouda cheese $ 20 000
...
Etc etc
...
Milk 2% fat $ 1 000
Sugar $ 800
Milk 4% fat $ 700
Brown sugar $ 600
Skim milk 0% fat $ 300
Total of 600 SKU’s € 4 000 000  Gross Margin

An interesting aspect of ALDI (and IKEA) is that they do NOT manage sales or gross margin dollars per square meter
at the level of individual SKUs. They both re-order and replenish products in a way that limits logistical costs and

ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 5
keeps things simple. ALDI manages stock so that it has to be replenished about once a week (52 stock turns a year)
for every product and at IKEA Ingvar Kamprad had a rule of thumb that every product should have about 3 weeks of
stock in the store.

Consider wine currently being sold at ALDI, a 2 Euro bottle of Merlot or 10 Euro Garnacha. If both have the same
stock turn ratio, dollar sales per week per bottle will be 10E/2E = 5 times higher for each bottle of Garnacha and thus
Garnacha will have Sales / m2 which is also 500% higher than Merlot. You can see this when visiting an ALDI or Lidl
by the pallets full of water and soda which take up much more space than at conventional supermarkets, which
often use space management software to keep sales per square meter of shelf space roughly equal.

An exception to the 1 week of stock rule were special non-food products at ALDI. These were tested in 3 stores and
then ordered for 3 thousand stores in a quantity that usually was only sufficient for a few hour or days, so that no
stock need be marked down.

An example is Personal Computers which Aldi started selling in 1995. Consider selling the following 2 different types
of boxes in a store, with roughly the same dimensions and rate of sale:

A: Personal Computer with a Dollar Contribution of more than $20 per box
B: Family size Toilet Paper a Dollar Contribution of roughly $1 per pack

It shouldn’t be surprising that in the weeks ALDI sold PCs the bottom line result improved significantly.

Profit per X? The ALDI denominator of the ALDI economic engine is Stock Keeping Unit. In other words Profit per X
whereby X = SKU.

Different Speeds at C&A

C&A described itself in the 1960’s as a “fast‐moving, large‐volume, low mark‐up operation.” Every week buyers and
merchandisers would go through the part of the assortment for which they were responsible and distinguish
between “fast movers” and “slow movers”.

The Speed on Line in manufacturing is determined by the setup of the manufacturing process not by customer
demand. In 2016 Tesla Motors CEO Elon Musk explained: “Actually our speed on the line is incredibly slow, including
the Model X and S, it’s maybe five centimeters per second. This is very slow. I’m confident we can get to at least one
meter per second, so a 20-fold increase.”

At C&A speed is measured not in distance per time unit, but stock turns per year: “TurnOver Speed” Stock levels
were managed so that varying TurnOver Speeds at different price points resulted in the same Relative Dollar
Contribution.

When considering the question ‘How can you calculate which articles in the assortment are the most profitable?’
C&A’s answer was “Relative Contribution”, which is the Dollar Contribution related to a key resource used. For

ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 6
manufacturing this is the amount of time an important machine takes to make something, for ALDI it is being one of
the limited number of SKUs in the assortment, at C&A it is floor space. At fashion retailers, buyers and
merchandisers have to decide which products they want in their assortment on the limited amount of space they
have been allocated. The number of units in a given amount of space is limited. Thus the number of units is a
bottleneck (constraint) for the buyer and merchandiser. They can choose between many different products to sell in
the area allocated to them, the (expected) relative Contribution can help them to determine which combination of
products (with prices and GP Dollars) make use of the designated area most effectively and therefore should be part
of the assortment.

Profitability (Relative Contribution) = Contribution per Unit Sold x TurnOverSpeed

(Can also be expressed as = Dollar Contribution / Units in stock)

To express it in another manner, Relative Contribution refers to the amount of a ‘production’ resource that is
required to generate Contribution. The relative Contribution (also known as congestion-specific Contribution) makes
the Opportunity Cost transparent for the event that they decide against selling a certain product to free up space for
something else.
The following illustration is an overview of the Dollar Contribution framework as used by C&A between 1906 and the
1990s. In the first decades when selling mostly similar large items like coats from hangers, the emphasis was on
Relative Dollar Contribution per Unit in stock (3) (a proxy for space used).

ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 7
Later when smaller items like socks were added to the assortment the basic unit of measurement to calculate
Relative Dollar Contribution became square meters of selling space (4). Planning at the beginning of a season and the

ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 8
following evaluation were based on Dollar Contribution per m2. A Brenninkmeijer described it as follows: “Meters are
the Alpha and Omega … The Deckungsbeitrag (Dollar Contribution) per square meter determines the profit.”

Profit per X? The C&A denominator of the C&A economic engine is square meters. In other words Profit per X
whereby X = space.

Opportunity Cost (5 in diagram above), what Dollar Contribution could have been made in a certain area of the store
in a certain time period?

Opportunity Cost = Space x Time

Activity Based Costing challenge due to differing Speeds on the Line in retail

According to Elon Musk, in manufacturing:

Output = Space (m3 of factory) x Density (of machines) x Velocity (Speed on Line)

In manufacturing the Speed on Line is determined by the machines used. In retail the TurnOver Speed is determined
by customer demand in relation to stock. This means that similar red and green T-shirts will be produced at the
roughly the same speed (and thus cost) in a factory, but might be sold at greatly different speeds (and thus with
different Opportunity Costs) in a store, as we saw in the diagram above.

“Making it up in volume” manufacturing versus retail

"I'll sell at a loss but make it up in volume!" goes an old joke. If a

manufacturer sells a coat that costs $12 to manufacture and sells it
for $6, chances are he won’t make a profit no matter how many he
sells.

In 1906 at C&A coats were bought for fl. 7,- they were sold for fl.
15,-. Dollar Contribution per Unit was fl 15 - fl 7 = fl 8,-. Net Profit
was fl 2,- per coat. Operating Expenses per coat sold were fl 6,-
based on Activity Based Costing (or Direct Product Profitability) you
might say it cost C&A fl 6,- a Unit to sell coats.

In that year, Bernard Joseph Brenninkmeijer, the son of one of the

founders, decided to sell coats with a Dollar Contribution of fl 1,- per
Unit whilst the costs of selling had been fl 6,- per Unit and make up
the difference in volume.

He bought a test order and figured he could sell 12x more coats in
the same space and time as he had previously. In effect his “Speed on Line” in his “selling factory” increased
twelvefold. As a result his Dollar Contribution per Unit in stock increased by (12 x fl 1,-) / ( 1 x fl 8,-) = 50%. Net
Profits increased by a larger factor due to the fact that many of his costs (such as rent) were fixed. See diagram of
Winst (Net Profit) at C&A with 1906 indicated.

Internal Rate of Return (IRR) and Return On Capital Employed (ROCE)

Many retailers, especially supermarkets like ALDI or Costco, have an inventory “float”, they pay suppliers after
customers have paid them. Theoretically, you could argue that given a certain Dollar Contribution for a selling
activity, the LOWER the gross margin percentage the better, because these retailers will have a larger amount of
float dollars (Cost Of Goods Sold) to help finance their activities until they pay suppliers.
Other retailers such as C&A often first pay a supplier before selling a product and receiving cash from customers.
This leads to the thought that Gross Margin Percentage Return on Inventory (GMROI) is an important metric. Peter
Drucker explained why this is not the case in his book: Managing for Results (1964):

ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 9
‘Making resources productive is the specific job of management […]. The leading company always operates at about
twice the average productivity of capital. Many managers think that it makes a difference if the money is “our own”
or “borrowed” (or “rented”) whether it is debt or equity. In fact it makes absolutely no difference to the productivity
of money who the legal owner is or what the legal terms are. Money is money and all money, regardless of source or
legal obligation, costs roughly the same. Furthermore, a manager has to know specifically where the money is
invested in a particular enterprise. One cannot manage an aggregate.
Focus on the money. In retail, the money is the building, the selling space. It doesn’t matter whether it’s rented,
leased or owned. The stores with the highest return on shelf space are the winners.’

>> Include examples? Store with building on the balance sheet versus store renting (hidden form of leverage)? Dress
bought for $3 using 20x more $ of building per $ of stock compared to dress bought for $60? <<<

Conclusion

Contribution to theory

We believe that Dollar Contribution in combination with Opportunity Costing is a third solution, for retailers
currently faced with the current dilemma of choosing between either Costing where Operating Expenses are
expressed as a percentage of sales (obviously flawed) or implementing complex Direct Product Profitability systems
which are better suited to manufacturing than retail.

Practical Implications
The contribution margin approach is very useful for day-to-day decision making. It is a very simple approach, which
you can easily explain to workfloor personnel and will improve their decisions. And even for short term decisions by
the headquarters, it could be very useful (and cheap) to apply.

Implementation into: target setting, training and IT Management Information Systems is important.

>>Avoiding the gross margin death spiral which proved fatal for A&P, C&A England, Kmart and Super de Boer
Netherlands, etc. Planning starting with Dollar Contribution as top line instead of sales followed by gross margin %
target<<

Limitations
Manager should always explicitly be told to only use Dollar Contribution for short term decisions. In the short term,
committed costs such as for personnel and buildings are fixed and hence 'sunk' costs, so the only thing that matters is
if the variable costs are covered. In the long term, committed costs are variable. Then it becomes relevant to find out
whether it would be more profitable to cut on committed costs or perhaps to expand. For long term decisions, other
things become relevant, such as: Do we cover our fixed costs (e.g. in every store)? Do we have overcapacity and do
we want this? Does every product or type of customer use a similar amount of resources ('overhead') or are some
more labor intensive? Etc. etc. This is where methods such as Activity Based Costing come in handy. I do agree that
the traditional ABC is very difficult to implement, but the newer 'Time-Driven ABC' method solves many of the issues
with ABC and even gives insight in overcapacity.

Many small, items sold in a small amount of space.

Markdown math: Buying price = sunk cost, so selling price including buying price relevant for markdown decisions to
free up space?

Further research

Price elasticity : Andreas Hinterhuber : An extremely high margin percentage article with a slightly lower price will
tend to make more Dollar Contribution as well as an extremely low gross margin percentage article where the price
is increased. (More of a pricing issue, but results should be measured in Dollar Contribution).

Brand equity types: Price Premium vs Volume Premium

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ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 10
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Feedback:
Dag Ansgar John, dank voor de toezending van de paper.
Wat mij betreft is het artikel vergelijkbaar met wat je me eerder toestuurde. Eerlijk gezegd vind ik dat wat teleurstellend.

Ik realiseer mij dat veel winkelbedrijven nog steeds met marge % werken; we hebben er net een hele discussie over achter
de rug bij Expert elektronica, waar ik in de RvC zit. Maar ik zie ook dat dit marge% voor de winkeliers vooral een gemakkelijk
en toegankelijk instrument is om een beeld te krijgen van de ontwikkeling, en voor het maken van vergelijkingen op
categorie- en winkelniveau voor langere periodes: GMROI, GMROS en GMROL, respectievelijk inventory, space (m2) en
labour.
De werkelijke analyse van prestaties gaat bij de meeste winkelbedrijven die ik de laatste jaren heb gezien een stuk dieper,
namelijk vanuit DPP, direct product (of category) profitability. Daarbij wordt het schappenplan als vertrekpunt genomen.
Schappenplannen zijn in kleding echter zeldzaam, behalve bij bedrijven als HEMA.
Ik zou het interessant vinden als in de paper daar meer in de diepte was gegaan. Want het oude denken R=OxM%-K is
inmiddels echt achterhaald, dankzij de streepjescode informatie die beschikbaar is.
Dus wat mij betreft is het pleidooi nog steeds geldig, maar wel inmiddels voor moderne winkelbedrijven achterhaald!
Jullie raken dit slechts zijdelings bij de opmerkingen over IKEA, een bedrijf dat bij mijn weten geheel DPP georienteerd is!
Groet, Jan Kessels Oud CEO Bijenkorf etc
jan@uithetvak.nl

Death Spiral http://www.victoria.ac.nz/sacl/centres-and-institutes/cagtr/working-papers/WP85.pdf

On Dec 16, 2016 16:57, "Wouter Pol" <w.pol@windesheim.nl> wrote:

Beste Ansgar John,

Het rekenen in centen ipv procenten is niet nieuw, maar zou in de praktijk inderdaad vaker toegepast mogen
worden. Het is voor de hand liggend en ook gebruikelijk om met % te werken. Zeker als het gaat om de brutomarge.

De invalshoek om te werken met Opportunity Costs bij het maken van assortimentsbeslissingen kende ik nog niet
vanuit de praktijk en ook niet vanuit de boeken. Wel herken ik uit de praktijk dat items worden toegevoegd met een
hogere % marge dan het gemiddelde en items worden gesaneerd met een lagere marge in % dan gemiddeld. Dus

ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 12
ook een variant van Opportunity Costs, maar dan dus weer o.b.v. %, terwijl o.b.v. centen wellicht een andere (lees:
betere) beslissing zou zijn genomen.

Blijft interessante materie.

Goed weekend en groet,

Wouter Pol l Hogeschooldocent Small Business en Retailmanagement l
Business School l Hogeschool Windesheim l Campus 2-6, 8017 CA Zwolle l
Gebouw X, kamer X6.36, postvak 86 l Tel.nr. 088-4698160 l w.pol@windesheim.nl

Dank je Wouter,
Opportunity Cost is een begrip die ik leerde van mijn oom die CEO van C&A Global was van 1960-1988.
Bij het invoeren van Deckungsbeitrag (in Duitse productie) is het wel gebruikelijk.
https://de.m.wikipedia.org/wiki/Deckungsbeitrag
In het Nederlands Alternatieve kosten: https://nl.m.wikipedia.org/wiki/Alternatieve_kosten

ANSGAR JOHN BRENNINKMEIJER, DR. BIANCA GROEN, BJÖRN KIJL, RUUD VERSCHUUR 13