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Retail Management Case Study

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Case Study: Planning Your Own Retail Business
BA320 Retail Management
Robert Harvey
Grantham University

Planning Your Own Retail Business
Based on the impact that each of these compensation strategies has on the net profit of the business, the best option would be the second option or the new plan. The new plan has increased amount of sales traffic flow that increases the amount gross profit, that is enabled by the paying of commission to the employees that only increases the amount of money brought in that increases the overall net profit by 17.77% as opposed to 13. 96% in the original plan. When looking at both of these options for compensation strategy the risk factors must also be looked of which the net profit for the new plan may look good on paper but also needs to be looked from the standpoint that there may be down months in sales from one month to another that could decrease the amount net profit that is made that could potentially make the original plan look better.   From my own experiences in retail business the new plan would provide the best option for the gift shop during the times of the year when it is the busiest but not during the time when the gift shop is the slowest. Taking all of this into account this is another one of the risk factors that would have to be considered when weighing out these options in compensation strategy for the gift shop and so that the owner of the gift shop does not lose his employees to other jobs or other gift shops that pay more money based on the net profit calculations shown.

Hourly wages $6.25 $9.50
Customer traffic 30000 30000
Closure 7200 9600
Transaction totals $230,400 345600
Gross Margin Percent $138,240.0 $207,360.0
Fixed Operating $60,000 $63,000
Variable Operating $46,080.0 82944
Net profit $32,160.0 $61,416

Customer traffic 30000 30000
Closure 24% 32%

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