Beauty Business Inventory and Retail Strategy 3

Question 1

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

Accepted Answer

About 67%

Answer

Margin = (18-6)/18 = 12/18 ≈ 67%.

Question 2

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

Accepted Answer

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

Answer

Aligning products with actual client needs maximizes sell-through.

Question 3

What is 'backbar' inventory in a salon context?

Accepted Answer

Professional products used during services, not sold to clients

Answer

Backbar refers to professional-use products consumed in services.

Question 4

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

Accepted Answer

High-value items contributing most revenue

Answer

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

Question 5

Why should a salon track expiration dates on retail cosmetics?

Accepted Answer

Selling expired products risks safety issues and legal liability

Answer

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

Beauty Business Practice Test