This is astounding to me. But, the math sure looks right. I never have seen this put this way before, but Harry Joiner over at Marketing Headhunter.com sure spells it out in a clear way.

When it comes to retail loss prevention, a penny saved is not a penny earned. It’s fifty cents earned! Although this HBR article does not mention this, let me do the math for you:

$27 billion is the bottom line, after tax outflow to these retailers. That means that if these retailers did not incur this blood loss, they would be $27 billion more profitable. To NET $27 billion in an industry that has an average net profit after tax of 2%, these retailers would have to sell $27B / 2% — or $1.350 trillion.

That’s trillion, with a “T”.

To recover a single penny of net profit requires fifty cents in sales (.01 / 2% = .50). This calculation applies to any business. Simply take a penny and divide it by your company’s net margin percentage.

Marketing Headhunter.com | Executive Search for Ecommerce: Retail Loss Exceeds Online Channel

Talk about ROI! By this math, if your programs save your company even as little as $1000.00 against your shrink budget, you’ve just managed to save $50,000.00 in earnings!!

The next time you’re feeling like you’re not making an impact, be motivated by the fact that your efforts, when successful, are actually magnified 50 times in real dollars to the company bottom line.

Want to know how much you’ve contributed? Just take the amount, in dollars, by which you exceeded your shrink budget and multiply it by 50! And, that’s if your net margin is 2%. If it’s more, then you’re doing even better.

Technorati Tags: ,,,,

Share this post :

Popularity: 42% [?]