IMU Matters pt.2

Written By Nico Cabral

How do I determine my IMU?

 

In last week’s post, I discussed the sell-through needed to hit your cash margin targets based on your Initial Markup. A question came in on how to determine IMU, so this week I wanted to focus on that calculation and share a free tool with you!

I learned this from a webinar we gave to our clients. The guest speaker was VP of Merchandising at Bloomingdales, back in the 1950's, 60’s and 70’s.

Here was his math and it is still a good way to think about IMU.

(Desired Profit + Expenses as a % + Markdown%) / (100% + Markdown%) = IMU

OK, so let’s assume some numbers to determine IMU:

  • Desired Profit --- 10%

  • Markdowns ------ 16%

  • Expenses -------- 42%

  • Total --------------- 68%

Therefore, based on the calculation:

  • IMU = 68% / (100% + 16%)

  • IMU needed = 58.62

Here is a link to a FREE Excel-based calculator for determining IMU.

Have fun re-examining your own business!

Different classifications provide different opportunities for maximizing IMU. Most businesses have a range depending on vendor structure, class type, etc.

Please add your comments below. If you have any questions or want to make an appointment to discuss IMU strategy here is a link to my calendar.

Onwards, and Upwards,

Marc Weiss - Co-founder, Management One

 
 

Management One is committed to the independent retail community. We have built a new technology that is an AI - Merchant driven data platform to learn and understand new elements of demand and produced over 30 educational webinars attended by over 20,000 retailers and vendors. Management One created and vetted a host of tools to ensure Indie retailers sustain, thrive, and embrace change. We utilize synergistic partners that share our core values and share the same commitment to our community.

Currently, we plan over 3 billion dollars of independent retail business annually and update that data daily. We invite you to join us and reap the benefits of our educational and data-driven processes to boost profitability and cash flow so you can execute on your vision for the future.

 
Nico Cabral
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