Retail Definitions: IMU - Initial Markup — Management One Inventory Planning

For any retailer, the initial markup (or IMU) is the starting point for maximizing profitability. Quite simply, it describes the difference between what a retailer pays for an item and what they sell it for, originally. However, in order to find the “right” IMU, each retailer needs to factor in their overall expenses, establish a breakeven and gauge customer demand/interest.

The right IMU varies depending on the type of goods and the retail vertical, but the methods for improving IMU are always the same, because the math behind IMU is always the same.

Understand the arithmetic, and you can manipulate it to change the IMU.

If you want to increase IMU, there are only two ways you can go—mathematically speaking. You either increase the original retail price or decrease the cost. Depending on vendor agreements, this might not be possible, in which case choosing vendors with better terms is the only solution. Here is the formula below for calculating the IMU% :

Whether increasing IMU is the best way to achieve growth—and how you increase original retail, or decrease cost, or both—that's up to the retailer to decide. By analyzing trends in your retail data expressed through Retail ORBIT®, our certified M1 Retail Experts can offer knowledgeable advice on how to maximize your IMU.