Retailer Profitability Model: 02 Impacting Profitability

Retailers aim to drive up their operating profit. As you've learned, there are two ways to do that. One is to reduce expenses, and the other is to increase revenue. The smartest approach for a supplier is to focus on helping the retailer grow their revenue. This is done by either increasing traffic or increasing the average transaction size. To drive traffic, you need to either reach more shoppers, or get existing shoppers to visit more frequently. To increase transaction size, you need to get shoppers to buy more items, or you need to get them to buy more expensive items. It's as simple as that. This course demonstrates the impact to operating profit when an increase in one of the four drivers of revenue occurs.