The indicator of the structure of the range of goods sold as...

6.3.1. The indicator of the structure of the range of goods sold as a criterion for the competitiveness of a retail trade enterprise

In point 1.3 it was noted that from the position of the subject of economic activity, the competitiveness of a commodity is its ability to ensure commercial success in a competitive environment. With respect to the store, commercial success is provided by achieving a certain level of profitability (the ratio of the level of profit to the aggregate of turnover, distribution costs, etc.).

One of the ways to ensure the competitiveness of services due to the profitability of retail trade is the formation of an optimal assortment structure through profitable and well-sold goods. It is this criterion that guide store managers when deciding whether to include the product in the assortment or stop working with it.

The most common valuation technique based on the profitability criterion is the ABC method (proposed by S.Dibb and L. Simkin), detailed in [501. In the analysis, two criteria are set: the sales volume of the product and the contribution of the product to the cost coverage (Figure 37).

Group A - is the group most valuable to the company, since the increase in these sales has the greatest impact on the store's profit. Having a small share in the total number of titles, they have the largest share in the turnover (Table 36).

Fig. 37. Competitive positioning (based on profitability and profitability)

Table 36

Optimal Assortment Structure

Product group

A

In

From

Share in turnover, %

75

20

5

Share in total, %

5

20

75

Group C - are the goods least valuable for a company's financial condition. Having the smallest share in turnover, they have the largest share in the number of names of goods (see Table 36). But the goods of this group are not subject to exclusion, since the population needs these goods. We are talking about socially important goods and those that determine the assortment profile of the store.

Group B - is represented by goods that have an intermediate share in the turnover and in the total number of items. For these groups of goods, the store must determine ways to increase profitability (group In { ) or increase sales (group B 2 ).

When analyzing the assortment structure, you can compare the share of each of the groups ( A , In and < strong> C) in the total amount of profit (or turnover) with the share of the group in the assortment by the number of items (positions). According to the well-known principle of Pareto, 20% of the goods bring the enterprise 80% of the profit. The assortment structure presented in tab. 36 is considered a classic.

In practice, the real structure of the assortment differs from the "classical". In the appendix 3 on an example of the Moscow shop of firm 12 months the assortment is grouped into three groups - A, B and C.

In the group A included goods that provide an increased share of sales - 52.29% (from alcoholic beverages to related products).

In included products that provide an average sales value of 30% (from dairy products to fish products).

The group C includes products that provide a reduced share of sales - less than 20% (from canned food to houseplants).

The evaluation of the competitiveness of retail trade services can be carried out from the standpoint of: a) consumers; b) the trading enterprise; c) consumers and a trading enterprise.

In option a) consumer preferences are used, in variant b) - the enterprise profitability index, in option c) - both consumer preferences and profitability indicators.

In [57] it is shown that the criteria of consumer preferences have a direct impact on the profitability of the store. The task of evaluation under option c) is to determine the optimal value of the criteria for consumer preferences and profitability for achieving a balance between the interests of consumers and the store as a seller. The evaluation of this option seems most fruitful. One example of an estimate is the paper [57].

Since the evaluation methodologies for variants b) and c) are based on the calculation of financial indicators, their consideration is beyond the scope of the book.

Below is an estimate based on consumer preferences.

thematic pictures

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