Question

. A department has net retail sales of $75,000.00. They have taken reductions of $15,000.00 over the course of the season. The cost of the merchandise was $35,000.00

a) What is the total retail value of this department? ________

b) What was the original IMU% ____________________

c) What is the MMU of this department?________________

5. Name the three major areas that contribute to reductions at retail, and therefore affect the MMU%

Answer 1

b). Original IMU %

= (Original price - Cost) / Original price

= ($75000 - $50000) / $75000 *100

= $25000 / 75000 *100

= 33%

c). Maintained markup (MMU)

Maintained markup is the difference between the cost of your merchandise and your net sales.

MMU = Net Retail Sale - cost of merchandise

= $75000 - ($35000 +$15000)

= $75000 - $50000

= $25000

5. Let’s take a look at the four main causes of inventory shrinkage:

• Shoplifting,
• Return fraud
• Employee theft

Shoplifting

Shoplifting represents the largest single share of retail shrinkage, accounting for 36.5% of annual losses. When you think about shoplifting, you might picture someone walking out the door with a product tucked under their shirt — and that is part of the shoplifting problem.

Return Fraud

One of the more overlooked causes of retail loss is return fraud. It’s overlooked because return fraud can be tough to spot in the first place — its effects only evident as they add up throughout the year. Return fraud can also take several different forms, including:

• Returning stolen merchandise,
• Returning merchandise purchased with counterfeit money,
• Returning used merchandise,
• Using counterfeit receipts to return merchandise, and
• Returning exchanged merchandise

Employee Theft

Employee theft isn’t something retailers want to have to worry about. It’s easy to say you trust your employees and leave it at that.

Failing to properly prepare for internal theft leaves you vulnerable, though. After all, employee theft makes up a sizable portion of annual retail losses — 30% to be exact. It can take many forms and run the gamut, and not all of it looks like the straightforward theft you might envision. Employee theft includes:

• Straightforward merchandise theft
• Ringing up fake returns and issuing fraudulent gift cards
• “Sweethearting” (neglecting to scan all of a friend or family member’s items or improperly using their employee discount)