From The Co-Founders


Tips, Tactics & Strategic Insights and Commentary
from The ROI Co-Founders, Pat Johnson and Dick Outcalt
Outcalt & Johnson: Retail Strategists LLC; Retail Turnaround Experts

Smart Way to Improve Productivity

The Most Dynamic Management Tool for Retailers

What is the "return on investment" of a retailer's largest investment? The GMROI calculation is the tool for the job!

GMROI – Gross Margin Return on Inventory Investment – indicates how much Gross Margin you get back for each dollar “invested” in inventory over a year. 

No other formula, no other calculation, simultaneously impacts both Gross Margin and Cash Flow. No wonder we consider GMROI as the #1 measure of inventory productivity.

And since inventory represents between 65%-80% of a retailer's total assets, it deserves a lot of management attention.

Let's start with a little "window shopping." Check below for the GMROI Benchmarks for just a few retail segments. 

  • Yes, there's a lot of variation. In 2023, for instance, results for just these 6 segments range from $1.90 to $7.50. You'll likely see similar variations between departments in your stores, which is one of the advantages of GMROI. Which ones are most productive?
  • Now look at each of these sets of Benchmarks charts individually, and their GMROI over the last 5 years. A few ups and downs, eh? Just not the same ups and downs for everybody. Note: GMROI's that are going up are sure preferable!

There are lots more charts where these came from. Go here to find the Benchmarks for your retail segment, plus to see all 40+ retail segments for which data is available.

Up to This Challenge?

To calculate your own GMROI and find out more about GMROI, go here on The ROI site. What is your GMROI for 2023? Is it better than the year before? 

But most important, what are you going to do to improve GMROI this year?Now's the time to get started!

And if that's not one of your main priorities, then you really should consider getting out of retail. 

For ROI Members, there's much more info available, from a GMROI Calculator to an online self-paced training course, on-demand access to webinars, more in-depth articles, GMROI Guide e-book, and more.


Not a Member? See what else you are missing, then go here to subscribe. 

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