Improving profitability in retail often starts with questioning long-held assumptions. One of the most common—and most misleading—is the reliance on averages.
At first glance, averages seem useful. Statements like “our gold category turns 2x per year” create a sense of clarity. But in reality, averages blur the truth.
They hide what is actually happening at the SKU level.
When inventory decisions are based on category averages, retailers unintentionally fund slow-moving products while starving their best-performing SKUs. Capital gets distributed evenly, but demand is anything but even.
The real insight lies beneath the average.
A more powerful question to ask is not “What is our average turn?” but “Which SKUs are driving the majority of that turn?”
In most cases, a small percentage of SKUs contributes to a disproportionately large share of sales. These high-velocity products are where profitability truly lies.
By identifying and supporting these outliers—while controlling or eliminating slow movers—retailers can significantly improve inventory productivity and returns.
Because profit doesn’t live in the middle.
It lives in the extremes.
Stop managing averages.
Start managing velocity.
