Pareto rule – and what it means to you and your fashion business….

If you know that 80% of your business comes from 20% of your customers, you will be better able to work to keep that 20% of your customer base very, very happy.

If you are a retailer and you know that for each line you carry, 20% of the assortment will produce 80% of the sales, you are in a better position to determine exactly which styles will generate the most business and profit.  (Remember, this means that 80% of the assortment will only produce 20% of the sales… so we begin to see something about assortment planning and how much of each style to stock in store… or in the case of a manufacturer in the warehouse.)

This is the Pareto rule… read more at Wikipedia

This rule is not really exact but it is a great way to get an understanding of where you make your money in a business. 



Filed under Fashion School

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