Inventory and Retail Strategy Flashcards

A salon buys a product for $6 and sells it for $18. What is the gross profit margin?

Answer: About 67%

Margin = (18-6)/18 = 12/18 ≈ 67%.

Which approach helps a beauty business decide which retail lines to carry?

Answer: Match products to the client base's needs and price sensitivity

Aligning products with actual client needs maximizes sell-through.

What is 'backbar' inventory in a salon context?

Answer: Professional products used during services, not sold to clients

Backbar refers to professional-use products consumed in services.

A store's 'ABC analysis' would classify which items as 'A'?

Answer: High-value items contributing most revenue

In ABC analysis, 'A' items are the high-value, high-priority products.

Why should a salon track expiration dates on retail cosmetics?

Answer: Selling expired products risks safety issues and legal liability

Expired cosmetics can harm clients and expose the business to liability.

Which pricing strategy uses a rounded figure like $19.99 to appear more affordable?

Answer: Charm (psychological) pricing

Charm pricing ending in .99 makes prices feel lower to buyers.

A retailer wants to move seasonal stock before it becomes obsolete. What is most effective?

Answer: Time-limited promotional bundles

Limited-time bundles create urgency and clear seasonal inventory.