“Math for Merchandising”: A Guide To Retail Math

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According to the Bureau of Labor Statistics, more than 14 million people are employed in the retail industry and they are responsible for generating almost two-thirds of the Gross Domestic Product (GDP), or more than $4.1 trillion dollars. And all these businesses, no matter how small, run on numbers. All of them are striving to sell products at a price that is high enough to pay all the expenses and have a bit left over. In short, math for merchandising is everywhere.

So what does all this have to do with you?

Well, if you are similar to most, you did not get a good understanding of math concepts in school, either because the classes bored you to tears, or the classes were not offered. But now, in your career, your employer expects you to know how to know the relationship between fractions and decimals, use percentages to analyze and compare information, determining the best pricing for sale merchandise, compute the average cost for a group of items purchased at varying prices over several weeks or months, and how much to markup an item to sell it at a profit. Clearly it may time for some help.

And that’s where “Math for Merchandising” comes in. Written in clear language by a veteran of the retail business and college instructor for more than 20 years, this book will provide you with all the knowledge and tools required to be more than competent in the retail field.

Ms. Moore has arranged the book in a logical sequence and begins with the most basic concepts of numbers and even how to get the most out of your hand held calculator (it knows more than you think it does). This most important chapter is provides many different examples of everyday business math requirements and shows you, step by step, how determine the answers and be confident doing it.

Once the basics have been established, Mrs. Moore lays out the remainder of “Math For Merchandising” book in a logical manner.  Chapters include:

  • Markups to sell
  • Fundamentals of a six month merchandising plan
  • Analyzing last year’s six month merchandising plan
  • Cost sheets and pricing
  • Sales per square foot of floor space
  • Operating statements

This book is a must have for anyone with profitability responsibilities and is especially helpful in today’s challenging retail market.

Also available is “Math for Merchandising, A Retailer’s Handbook”. This is a smaller book intended for reference use in the workplace. All the information found in the larger book is here, but without many of the fuller explanations. This effective editing distills all the important “how-to” information into a single, smaller edition.

Either volume is a must have for anyone who is making retail a career, or is not quite clear on the mathematical concepts and execution required for effective planning and tracking of retail sales strategies.

Math for Merchandising



Retail Math Skills are Important for Retailers

Merchandising Math Handbook for Retail Management

Pick up any retailing, marketing, business management or fashion book and each one emphasizes how businesses rely on financial analysis to meet the shifts and demands of the consumers, the trends, and the marketplace to maintain and improve operational performance. In short, retail math skills are highly prized by almost all employers.

And, in today’s economic climate, staying on top of the numbers is more important than ever!  But, it is equally important to know how to find the financial answers you need, and how to analyze the information too. Again, the ability to effectively use retail math skills is critical.

But, where do you start?

Fortunately, the industry, with stores of all shapes and sizes, catalog shopping, and e-tailing-retail merchants, relies on the same fundamental math skills and formulas to operate their business, no matter what type or size.

In larger organizations, several people may be working on a task, even specializing on certain details, whereas in a smaller organization, one person may have to wear several hats to get the job done.  And, this is true at all levels of the operations.

For example, a sales associate, might be using math skills daily to calculate the discount on a sales item, add taxes, or make change. Or, a supervisor or manager may be using math skills to develop a marketing plan or project sales for a new department. All segments of a business: merchandising, marketing and advertising or even operations, rely heavily on maintaining accurate budgets and financial plans to implement their ideas and strategies.

Simply put, merchandisers consider numbers as one of their “tools of the trade.”

Math for Merchandising, a Retailer’s Handbook, introduces and illustrates the fundamental math skills businessmen and women use daily, in an easy to follow format, in five sections covering:

  • The fundamentals of retail math skills: fractions, decimals, percentages
  • Purchasing and pricing
  • Planning and forecasting
  • Determining profitability
  • Basic business formulas and definitions of key retailing terms


Merchandising Math Handbook for Retail Management

Retail Math Skills Are Important


The Fundamentals Of Retail Math

Merchandising Math Handbook for Retail Management

Fundamentals of Retail Math

Numbers drive a business.  No one will question that.  But business owners, to make sound decisions,  use fundamental tools which include:

  • basic retail math formulas
  • forms and reports in which the numbers are used
  • technology used to integrate the numbers into logical, easy-­to-use formulas

The basic retail math formulas are driven by fundamentals of fractions, decimals, dozens, and round­ing in order to work with and use percentages as a means of comparison.  For example, in merchandising we speak in fractional terms all the time, but when working out problems, we have to write the decimal equivalent of the fraction.  Most calculators don’t have keys for working with fractions, and software programs like Excel require that you are able to write the decimal equiv­alents of fractions so you can solve retail math problems.  This allows merchants to calculate something as simple as taxes, or the number of pieces of merchandise to transfer or to compare this year’s sales to last year.

Learn more about determining the percentage of sales increases or decreases  just by reading Lesson 1 in the Math for Merchandising Retailer’s Handbook.

Retail Management – Purchasing and Pricing Plans

Merchandising Math Handbook for Retail Management

What should someone pay?  How much did it really cost to make?  Did you ever wonder how much the designer really makes?

All of these are valid questions-ones you can calculate!  That is right, applying fundamental math skills in some easy to use formulas and forms, you can calculate numbers so you have the best information on hand to make the right business decisions.   Continue reading Retail Management – Purchasing and Pricing Plans

Retail Sales – Planning and Forecasting

Merchandising Math Handbook for Retail Management

Business profits are driven by careful planning.  This includes developing business plans that evaluate and forecast:

  • sales, working with the sales volume, or net sales
  • stock, including stock-to-sales ratios, average stock, and turnover.
  • markdowns (stock reductions)
  • purchases both at retail and at cost

Calculating available purchases, known as the  Open-to-Buy (OTB), which is the dollars available to spend during a specific period of time, is a constantly changing number that provides a check and balance system to maintain merchandise flow. Continue reading Retail Sales – Planning and Forecasting

Retail Sales – Profitability

Merchandising Math Handbook for Retail Management

No one will question that profits are the name of the game.  So, just what has to be measured to figure out if your business is profitable–and even more importantly, what do you evaluate and how can you analyze what shifts and changes can increase your bottom line.

The simplest of business math skills will help you determine the sales per square foot of retail space and the financial profitability of a business.  If you are operating a healthy business you can see it in the strenght of the sales per square foot and in the details of an operating statement. Continue reading Retail Sales – Profitability

Learn How Numbers Work!