Retail Op Essay

1462 Words Nov 3rd, 2012 6 Pages
OPIM340 Retail Operations
Assignment 1: Retail Valuation (45 points)
Due: start of class Lecture 2

1. How does the strategic profit model assist retailers in planning and evaluating their marketing and financial strategies? (Limit your answer to 3-4 sentences max) (3 points)

2. Explain inventory turnover? Why does a low inventory turnover indicate more risk than a high turnover? Why do different products have different benchmarks for inventory turnover? (3 points) Average Inventory at Cost is $1,000. Say you have gross profit margins of 20%. If you sell $5,000 per year of this product, you make 20% of that or $1,000 in gross profit. What is your GMROI? (1 point) What is your Inventory Turnover? (1 point) What are
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The business was by far the fastest growing segment in the company, but the increased store traffic diluted the Tiffany retail experience for its traditional customer base. In early 2002, the company pulled back on its silver offerings and increased its diamond selection. Both entry-level and average prices for the silver items increased, and product line advertising was reduced. In contrast to Tiffany’s 175-year-old tradition, Blue Nile was founded in 1999 but already has grown to become the largest online retailer of certified diamonds and fine jewelry. The company’s primary value proposition stems from offering a simple way for men to select diamond engagement rings, which account for some 70 percent of Blue Nile’s annual revenue. Customers also can create their own jewelry by choosing a particular diamond, which Blue Nile will set in their preferred earring, pendant, or ring-design. Every order is shipped free, guaranteed and returnable within 30 days, so the customer’s uncertainty and risk is reduced. Due to the significant costs of diamonds and lack of customer knowledge about them, a diamond purchasing decision requires extensive problem solving. Customers need substantial information and trusted guidance throughout their purchasing process. Blue Nile’s Web sites and trained customer service people provide education and detailed product information that enable customers to compare diamonds and fine jewelry products objectively and

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