NEW YORK — It’s back-to-school time, but it’s not just the students who are dusting off their calculators.
Retail math is a key skill for vendors who have to understand their customers’ businesses and be able to figure out more than just that season’s fashion formula.
“Young, middle-level management in most of these [vendor firms] are very smart, but most of them have no formal retail background,” said Robert Salem, an adjunct assistant professor at the Fashion Institute of Technology, who also consults for companies in the industry through the school’s Center for Professional Studies.
The center holds about 500 seminars a year, some open to the public and some specifically for certain companies. While the center offers instruction in several areas, including merchandising, retail math is one of the hottest areas of study right now.
Among the center’s clients are Dolce & Gabbana and Liz Claiborne Inc.
Salem brings with him to the classroom more than 40 years in the industry. In 2001, he retired as corporate vice president of marketing at Leslie Fay Co., after 11 years with the company.
He said many of the people who take his classes are uncomfortable with simple arithmetic, but know they need to speak the language of their retail customers.
Here’s a quick lesson in gross-margin math:
After a sales performance that fell short of expectations, a vendor is giving a retailer gross margin assistance in the form of a check: The all-too-familiar chargeback.
“It’s very important for the manufacturer to understand that assistance must be applied to factors on the profit-loss statement that appear above the gross margin line,” said Salem.
That means the money from that check should be used to increase the initial markup or reduce the markdown, rather than go directly to the bottom line of the department within the retailer that’s collecting the money.
If the money’s applied directly to the department’s bottom line, the vendor’sperformance might appear worse than it actually was to higher-ups in the organization.
Maureen Sullivan, director of organization development at Liz Claiborne described retail math as a critical skill, so much so that the firm uses a variety of educational services to offer instruction on the subject at different skill levels.A deeper understanding of the math used by retailers, she said, helps develop the ability to independently analyze interactions with customers.
“It allows our associates to be more sophisticated around problem solving,” said Sullivan.
Claiborne has a broad program providing continuing education for its 11,000 employees that makes use of inside talent — senior executives sometimes teach courses — and outside sources, such as FIT.
“Development is one of the key competencies that we as an organization are focusing on this year and next,” said Sullivan.
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