In the pricing and profit distribution of supply chain roles, we all know that for retailers, the retail link pricing method is double buying wholesale price. According to different products and different industries, the doubling pricing method is different, and the corresponding profit is also different.
The normal retail pricing is the double purchase price. Among them, industries with higher profits may have higher doubling coefficients, and the final gross profit will be higher. On the contrary, industries with lower profits will have lower doubling coefficients, so the gross profit will be relatively low. That is to say, different industries and different products may have different retail gross profit margins.
So how do we understand the gross profit margin of our products and the retailers in our industry? What is its profit benchmark?
For example，suppose we are mainly engaged in the US market, then we must necessarily understand the retail situation in the US. When doing market research and analysis, we can use the authoritative website "American Retail Owners Association" to view the industry's overall and accurate retail gross profit margin data. The data on this website has been cited many times by local economic magazines in the United States, and the data is highly reliable. We can enter www.retailowner.com to search in Google, enter this site to take a look.
We can see that the website provides evaluation tools, program strategies, retail benchmarks, retail calculators and other content sections. We mainly use the data in the section of Benchmarks. Click on Benchmarks in the directory—
Enter this page, you can see how to view accurate retail data, as well as instructions and related operating methods.
In addition, the following is a breakdown of each retail industry, including clothing, electronic products, health and beauty, furniture and other categories.
We can choose from our main industries or similar industries to view. For example，click on the men's clothing retail store in the apparel industry category.
We can see the retail benchmark trend graph provided by the website, which mainly monitors and manages the retailers' regular data from the three sections of margin and profit, inventory productivity, and financial strength. It includes 6 “benchmark” graphs of retail ratios, including pre-tax profit %, gross profit margin %, inventory turnover rate, general return on investment, asset-liability ratio, and current ratio. You can view retail benchmark data for the past 5 years.
We mainly want to check the retail gross profit% and click ratio chart of our industry.
We can see the retail gross profit ratio of men's clothing stores in the US market from 2015 to 2019, of which the gross profit ratio in 2017 was 47.1%, the ratio in 2019 was 47.8%, and the average profit ratio was around 47.48%. Based on this retail gross profit ratio, we can calculate the retail price and price range of men's clothing in the US market.
Let's look at another category, such as auto parts retail stores.
As shown in the screenshot above, five years of retail gross profit ratio data can help us understand the general situation of the US auto parts retail market, as well as provide retail pricing reference and profit ratio analysis.
Generally speaking, when we look at the retail gross profit of our industry or related industries, we can find that basically the gross profit ratio is between 45% and 52%. That is to say, the average retail level of the industry is probably in this range. Sometimes it will be slightly lower than 40%, and sometimes it will be slightly higher than 52%. These are all normal phenomena. Giant retailers such as Wal-Mart in the United States are super. Because the retail turnover is very large, the gross profit will be lower than the average level of the general retail industry and the normal range of gross profit.
In short, using the website of the American Association of Retail Owners can provide us with some industry-leading retail benchmark data as reference and analysis to help us determine the final retail gross profit. Of course, in addition to the gross profit mentioned above, data such as pre-tax profit, retail sales, debt ratio, etc., we can all dig deep and use.