Better understand your store’s profitability and health
Each section of your store will have an ideal turn rate, based on whether they are high margin or low margin products. High profit margin products may sell slowly, but offer a better return on investment, while low margin products can still return good profits if you sell through them often enough. By knowing the turn ratio for each of the sections of your store, you can compare this to the industry average (or your own evaluation) to determine whether these products are truly working in your store.
Make your money work for you
By comparing a category’s turn rate to its margin and profit, you can plan how often you should invest in new stock. Carrying the minimum amount of product necessary to satisfy demand will increase your return on investment and free up cash.
Be able to Invest in other areas of your store beyond inventory
By stocking what you know to be profitable, and planning your purchasing to get a better return on this investment, you will have more money available to invest in other areas of your store—like marketing, employees, or that break room popcorn machine you’ve been eyeing.