What is retail math?

I must admit that it never occurred to me that this term might need defined until I had a student ask about it in class.  Sometimes you work in and around an industry for so long you forget that has a language of its own that might be unfamiliar to those outside of (or brand new to) the industry.

As Valerie Lipow states in her article at career-advice.monster.com, “Math is used at every level of retailing, from the part-time sales clerk to the executive suite… And the higher up in retailing you go, the more math skills you need.”

The term retail math refers to those ratios and equations used by retailers in quantifying their performance.  Most of these equations utilize basic math skills that are no more complicated than high school algebra.  It is through the use of retail math that retail buyers and managers determine how fast their inventory is selling, whether or not they are making a profit, what their return on investment is, and whether or not they have cash available to spend.  On the Formula Sheet page of this blog you will find a listing of some of the most common retail math formulas used by retailers, wholesalers and manufacturers.  And in the Beginner’s Guide category you will find explanations of some of the more common retail math measurements.

Students often ask me how important it is for them to learn retail math.  My answer is that it depends.  It depends on how high you wish to go in the retail organization you are planning on working for.  The better you understand the meaning of each measurement, and the relationships between those measurements, the better you will be able to do your job – and the higher you will rise within your chosen profession.

If you would like to read more about how retail math is defined, I recommend Retail Math by Valerie Lipow at monster.com.

photo credit: <a href=”http://www.flickr.com/photos/eleaf/2536358399/”>Eleaf</a> via <a href=”http://photopin.com”>photopin</a> <a href=”http://creativecommons.org/licenses/by/2.0/”>cc</a>

2 thoughts on “What is retail math?

Leave a Reply