Inventory Turnover: The Retail Industry’s Hidden Platform| 株式会社ディ・ポップスグループ

Cross-selling: Specific Measures and Success Stories of Dramatically Improving Gross Profit

This is the first installment in a series on how to increase gross profit, which indicates a company’s fundamental earning power. Here, we will explore the concept of cross-selling. Cross-selling is a technique used to increase average transaction value and overall sales by introducing additional related products or services to a customer who is purchasing something. The most common examples of cross-selling include being prompted to add an egg or salad at a beef bowl restaurant, or fries and a drink at a hamburger shop. In this article, we will explain cross-selling using examples from the retail industry. 1. Achieve Immense Results Without Costing Extra Money or Time In previous articles, we covered “Inventory Turnover”, “Sales per Employee”, and “Sales per Tsubo” as methods for increasing profit when managing a company. We intentionally focused on cash flow (CF) and expenses (labor costs, rent) rather than gross profit because, in a competitive environment where companies handle similar products at a similar scale, it is essential to look at CF and expenses to achieve significant differentiation from competitors. We also looked in depth at specific cases of this. Now that the importance of CF and expenses can be understood, we will turn our attention to the heart of corporate management: gross profit. Gross profit is an extremely simple indicator. Also referred to as gross profit margin, it is calculated as the profit remaining after subtracting the cost of goods sold (COGS) from total sales. If the products or services themselves are unique and differentiated, a high gross profit can be achieved. However, instead of focusing on how to create unique products to raise profit, in this article we will set our goal on increasing gross profit while handling similar products. The concept of cross-selling we are discussing today is a method that can greatly affect gross profit without requiring additional expenses or time, so let’s take a closer look. 2. What is Cross-selling? Cross-selling is a method of increasing sales by raising the average transaction value or encouraging repeat purchases. This is achieved by suggesting additional related products and services or recommending a lineup that would complement what a customer already purchased. Representative examples include: ・Recommending a matching necktie to a customer buying a suit ・Offering a screen protector, AC adapter, insurance, or antivirus software to a customer purchasing a smartphone ・Suggesting lenses, filters, or memory cards to a customer buying a camera ・Proposing additional tires, seat covers, a dash cam, a navigation system, or insurance to a customer purchasing a car The examples of cross-selling are truly too numerous to list. This graphic is a visual representation of the assorted examples of cross-selling offered in the previous paragraph. Even without making such suggestions verbally, creating an environment where customers can purchase items later (e.g., carrying a wide assortment of peripherals for PCs or cameras) could be considered cross-selling in a broad sense. Whether recommending products through a sales clerk’s dialogue in a physical store or on a website, cross-selling is practiced to some degree by essentially every company involved in selling products or services. While cross-selling may seem simple at first glance, it has a massive impact on gross profit. In the next section, we will look at just how effective it can be. 3. Why is Cross-selling Important? Understanding Its Effectiveness I would like to show the efficacy of cross-selling using several examples. First, let’s look at the profits of a company selling PCs during a specific period. (This model company is fictional but based on the numbers from an actual business.) Model Case: PCs ・The PC units themselves generate a gross profit of ¥2.8 billion, a profit margin of 20%, and total sales of ¥140 billion. ・PC peripherals, accessories, and related products* earn a gross profit of ¥4.4 billion, a profit margin of 40%, and total sales of ¥110 billion. (*Includes printers, routers, and storage devices; accessories such as mice, keyboards, and bags; consumables like ink and paper; broadband sign-up fees; and related software or books.) These charts show the comparison between the total sales and gross profits of PC units (blue bars) versus the peripherals, accessories, and related products (orange bars). The key points to observe in this example are the profit amounts and total sales. The profit from the PC units—which the customers originally intended to buy—is ¥2.8 billion. Meanwhile, the profit from all of the PC-related products (the cross-sell items needed at the time of purchase or afterward) is ¥4.4 billion. There is a difference in profit of ¥1.6 billion, or 157% in relative terms. This is true despite the fact that the total sales for PC-related products (¥110 billion) are ¥30 billion lower than the sales for the units themselves (¥140 billion). This is not unique to PCs; for many products that customers intend to buy, competition between products and stores is fierce, meaning they are not very profitable. While not true for every item, many cross-sell products have high profit margins. You can see that working hard to pitch these cross-sell items, either at the time of the initial sale or through subsequent repeat business, has a tremendous effect on increasing gross profit, both in terms of total profit amount and efficient profit margins. Next, let’s look at an example involving smartphones. The following example shows the breakdown of one month of profit from smartphone sales for a certain company. (Again, these numbers are based on actual business results.) Model Case: Smartphones ・Total gross profit from smartphone sales: ¥90 million ・Profit from the smartphone devices themselves: ¥50 million ・Profit from related products other than smartphones: ¥40 million In the case of smartphones, the profit from selling the devices themselves is higher than the profit from selling PC units, and as a result, it’s also higher than the profit from smartphone-related products. However, related products still account for nearly 45% of the total profit. This example also demonstrates that diligently selling cross-sell items at the time a customer purchases their intended product has a significant effect on raising gross profit. As these two examples show, cross-selling is highly effective for increasing gross profit, but more than that, its greatest merit is that it incurs almost no additional expenses. This means that the increase in gross profit leads directly to an increase in operating profit. For example, if a store wants to increase sales, it might open a new location, but this requires additional expenses such as rent and labor. In B2B sales, increasing revenue usually involves hiring more salespeople, adding advertising costs, or opening new branch office space; all of these incur extra expenses. While these actions will likely increase sales and gross profit to some extent, there is no guarantee the increase will make up for the added costs. There are likely many cases where those expenses are not covered, leading to a deficit on an operating profit basis. On the other hand, the added cost of cross-selling is relatively little. When sales and gross profit rise through cross-selling, that gross profit essentially has a direct effect on operating profit because there are no new overhead costs. For this reason, cross-selling contributes to net income quite effectively. This is not only true for the examples mentioned earlier. Making full use of cross-selling enables earning profits equal to or greater than those earned from the customer’s intended purchase no matter the industry, from restaurant to apparel. Boosting the overall gross profit margin by roughly 10% becomes a realistic goal, and as mentioned previously, because cross-selling adds almost no additional expenses, that also boosts operating profit. For this reason, if you wish to increase your profits, start by raising the average transaction value through cross-selling rather than searching for new customers through opening additional stores, hiring more workers, or increasing advertising. In a competitive environment where companies handle similar products, achieving cross-selling that significantly outperforms your rivals gives you a major advantage not just in gross profit, but in operating profit as well. I believe you can now see just how big an effect cross-selling has on business management. 4. Key Points for Increasing Sales Through Cross-selling Now that you recognize the importance of cross-selling, I would like to introduce several key methods for successfully implementing it to increase sales. ① Selection of products and accessories The starting place is to carry products conducive to cross-selling and ensure a solid assortment of related items. For instance, appliances like refrigerators or washing machines offer limited cross-selling opportunities beyond extended warranties. However, the examples we discussed (suits, smartphones, cameras, cars, and PCs) are gold mines for cross-selling. With suits, beyond the obvious shirts and ties, you can facilitate cross-selling by carrying an assortment of matching bags, belts, and shoes. Even items like tie pins or shirt garters can contribute to cross-selling. By selecting products that naturally invite add-ons and maintaining a robust inventory of related items, your cross-selling revenue will grow. ② Human education and ingenuity This involves ensuring that employees are educated on the importance of cross-selling. Both the company and its staff must constantly brush up on their product knowledge, sales scripts, and customer service techniques, while figuring out creative ways to look after customers, display products, and procure goods. Companies that can innovate in this way—learning how to explain why a suggested product is necessary from the customer’s perspective, determining the optimal order and timing for multiple suggestions, and identifying the most effective placement for displays—will see an overwhelming difference compared to companies that cannot. Furthermore, a cross-sell item shouldn’t be chosen simply because it is profitable. If it has no relevance or benefit to the customer, it simply becomes forced, which lowers customer satisfaction and leads to negative long-term results for the business. You must put yourself in the customer’s perspective and devise a narrative that explains the relevance and benefits of each specific item. It goes without saying that deep product knowledge and constant ingenuity are essential to achieving this. ③ Utilization of technology When shopping online, recommendations appear based on past purchase history. In the telecommunications industry, systems have begun suggesting recommended products to staff in real-time while they are interacting with customers. Naturally, enlisting technology to visualize data is also vital, such as which salespeople are achieving what levels of cross-selling. While these are just a few examples, it is clear that mastering technology is an indispensable element for boosting sales through cross-selling. While there are other aspects involved in increasing sales through cross-selling, the key factor is employees who are educated in the importance of cross-selling and in the full use of technology. Ultimately, driving up sales through cross-selling and achieving a dramatic leap in management efficiency rests upon the intersection of People × Technology. This graphic contains a broad summary of the three sub-points and the key factor of section 4. 5. Summary In this article, we discussed the concept of cross-selling. We explained that cross-selling is a method that yields immense results not only for gross profit but also for operating profit, without requiring additional expenses or time. By maximizing the sales of products and services related to the customer’s intended purchase, a company can maximize both gross and operating profit, creating a significant competitive advantage over rivals. I have intentionally addressed cross-selling following our previous discussions on “Inventory Turnover”, “Sales per Employee”, and “Sales per Tsubo”, which focused on cash flow and expenses related to inventory, labor, and rent. If you read these in order, starting with the first article on “Inventory Turnover”, the essential points of business management will become much clearer. For those who have not yet read them, I highly encourage you to do so. What we at D-POPS GROUP want to convey through this discussion on cross-selling is the same message as before: business is built by people. The customers who purchase products are people, the sales staff who sell the products are people, and those who utilize technology are all people. While I think it is impossible to win in competition and survive in business without commanding technologies like AI, I also think that technology alone is not enough to survive. At D-POPS GROUP, we believe that business success does not happen simply because the technology is good or the management strategy is sound; rather, the intersection of People × Technology × Management Strategies is what truly matters. In accordance with this line of thinking, D-POPS GROUP’s vision is “realizing a Venture Ecosystem”. Our goal is to support startups through investment to help people shine and solve social issues, providing value that goes beyond mere numbers and efficiency. We hope that you enjoyed this article and look forward to working with you in the future. D-POPS GROUP Managing Executive Officer Tetsuya Watanabe

Media

2026.02.12

Sales Skills Required for Founding CEOs: Management-Minded Sales that Overcome Growth Barriers

As an advisor at D-POPS GROUP engaged in startup support, I often see founders encounter the same wall: sales. In this article, I will explain the specific sales skills that executives should possess, according to my firsthand experience with providing hands-on support. Sales is the Foundation of Post-Launch Growth Over the course of any company’s growth, selling something is an unavoidable activity. This applies not only to B2B businesses but also to B2C enterprises. Sales inevitably occur when developing channels or forming business partnerships and alliances. The era where a great product naturally generates turnover just by being launched is over. We have entered a new era where competitive advantages are created through the design of the dialogue with the customer itself. In the early founding and growth stages of a startup, entrepreneurs often stand on the front lines themselves before a specialized sales force is established. Whether it is fundraising, acquiring partners, or cultivating relationships with major customers, the reality is that the founder is at the center of the negotiation during these critical phases. Entrepreneurs with extensive sales experience can use that background as an asset. Conversely, founders coming from technical or product development backgrounds often view sales as a weak point. In reality, however, the initial growth of a business is more often determined by the quality of dialogue with customers than by the perfection of the product. In this article, I will introduce three “management-minded sales skills” that I hope will serve as a reference not only for sales heads but also for entrepreneurs. 1. A Listening Stance and the Courage Not to Sell Recently, I received a rare phone call. It was a joyful report from the founding CEO of a B2B business solutions startup that I support through investment and business promotion. He was calling to announce that he had received an informal contract agreement from a market-leading company. Just a few months ago, negotiations had seemed to stall, and he had sounded frustrated, but now, his voice carried a clear sense of achievement. After congratulating him, I told him that this was not merely a product of luck, but the result of changing his attitude toward sales and thus taking a major step forward for his future activities. Looking back on this negotiation, he realized that his past failure had resulted from pressing for an early contract immediately after a free trial and attempting to move forward according to his own company’s convenient timing rather than making sure to fully resolve the client’s concerns. This time, he revised his approach. He did not rush the decision to commit to his company’s product. Instead, he worked with the counterparty to organize the points they needed to consider and prepared adequately for the next meeting, naturally bridging the way to the next dialogue. As a result, the negotiations moved forward steadily, leading to this successful step. The noteworthy point is that he did not use any special closing techniques. Instead, he consciously refrained from the forward-leaning posture of trying to oversell. Four months ago, I introduced him to a potential client and sat in on the meeting. I had concerns about his behavior during that session, and after it ended, I gave him some stern advice: “The most important thing in sales is not to get the contract at all costs, but to avoid ruining relationships.” What his negotiation style lacked was a listening stance. This does not simply mean staying silent while the other party speaks. It is a stance of advancing a dialogue while reading subtle reactions: ・Where is the person choosing their words carefully? ・Are there any unspoken implications? ・Did they tilt their head slightly in doubt? Many sales representatives focus on pushing the negotiation toward a contract. However, their essential role should actually be to maintain an environment where the other party feels comfortable to continue their consideration. When pressured to decide, people either stop thinking or show a strong rejection, and they will quietly withdraw from you. Negotiations that end with “We’ll take this back and think about it” generally end in failure. Therefore, you should not try to immediately stamp out their questions. Instead, while keeping yourself organized regarding what should come next and allowing sufficient space to address their doubts, you must seek to continue the dialogue with the other person’s goals in mind. It is widely said that a capable sales person has abundant knowledge and can respond instantly with the right answers. However, the kind of person who earns trust from customers is the one with a sincere attitude: someone who does not interrupt, provides pauses for consideration, admits uncertainties, and promises to look into them before the next meeting. After that failed negotiation, the CEO’s way of interacting with customers clearly changed. What he then gained months later was not just a contract, but the realization that he could truly listen, the success of moving forward without rushing, and a sales sense that he could expect to produce repeated success in the future. A listening stance is precisely what enables the decision not to sell at the moment. If you’re an entrepreneur who feels challenged by sales, you need to ask yourself the following question. “Am I truly trying to listen to the other person, or am I just trying to make the other person listen to me?” The moment you understand that distinction, the quality of your sales will undoubtedly begin to change. 2. Questioning Ability Found in Locating the Root of the Issue What makes the difference in sales outcomes is not how well you can speak. When I served in business development and B2B sales for many years, I always set one goal: get the other party to verbalize their business’s problems. Simply put, it is the killer question: “What business challenges is your company facing now?” Asking a CEO about management challenges, or a marketing head about brand strategy challenges, or an HR head about talent development, or an IT head about internal systems. Reaching the point where I could ask this question was always my goal, particularly for our first meeting. Obviously, if you ask about a company’s issues abruptly in your first meeting with someone, you are not going to receive an answer. First, you have to build up trust, create an atmosphere where they feel safe to talk, and eventually lead to this question within the natural flow of dialogue. Once that relationship is built and the right question is asked at the right time, the moment the other party verbalizes their problem, the essence of the discussion shifts from one-sided selling to collaborative and constructive dialogue. Your own company’s products or services then naturally enter the conversation as a candidate for the solution. Most unsuccessful sales attempts begin with an explanation before hearing the problem. They follow a set pattern: introducing your company and then yourself; describing the product and its market advantages; case studies within the same industry; related costs or durations; then, concluding with something like, “So, our product ought to be useful for your company.” However, at that point, the client will begin to evaluate what you said. Is this really necessary now? Is this salesperson exaggerating? Could there be an error in this data? In the worst case, that mindset then switches to finding a reason to refuse. Management and business both have goals; there is no reason to implement a product unrelated to those goals. This is why the first thing a salesperson should do is understand the other party’s goals and challenges. Furthermore, in reality, you may not always meet the final decision-maker in the first meeting. In that case, ask the company representatives about their operational goals or the challenges in achieving them. Even if they cannot speak for the overall management strategy, they can talk about their own job-related pains. Then, you can think together about solving those problems and search for where your company’s value proposition could belong. Soon enough, these exchanges will lead up to a dialogue with the decision-maker. If you’re still at the stage where the other party hasn’t shared their issues, then it’s meaningless to present a feature list or a price table. You should only begin discussing specific service details after the client has fully understood which of their problems your solution addresses and to what extent. Simply by getting this sequence right, you can drastically change the way that business negotiations progress. By narrowing your explanation down to only the features that the client is interested in, you can reduce your presentation time and allocate the remaining time to constructive, collaborative consideration. Also, effective case studies are not always limited to the same industry; there is no small number of cases when examples from other industries that solved similar problems resonated even more strongly. Ultimately, everything comes back to a proper listening stance. If you enter the mindset of putting yourself in other people’s shoes and listening seriously to what they have to say, the right questions will arise naturally. This is precisely why good listeners are preferred over good talkers in sales. 3. The Courage to Say ‘No’ and the Courage to Withdraw Many believe the ideal B2B salesperson is one who can win every single deal. In reality, that is not necessarily the mark of an excellent salesperson. A salesperson who protects the company and its systems in the long term is one who can identify deals that should not be taken and has the judgment to refuse if necessary. In the sales field, there will be moments when you say to yourself, “I want this deal, but I feel I shouldn’t close it for strategic reasons.” Customers who take excessive customization for granted; those who insistently make one-sided demands; those with a widespread corporate culture of arrogance; supervisors who chase price without understanding value: making deals with clients like these tends to increase indirect costs and mental exhaustion resulting from the necessary development, support, and management. Eventually, the contract becomes a burden on the company. Sales requires patience, but it’s not necessary to carry all of the stress yourself. Unreasonable demands; business discussions that are at an impasse; attending to completely disrespectful people; or negotiations intended solely for price comparison: if you choose to force these impossible deals through, it will lead to a loss for your entire organization. Halting an unhealthy deal before it gets any further is also a sales skill. “Since this does not align with our company’s policies, we will have to decline.” Such a statement is not rude or hostile; it is an expression of sincerity that shows your boundaries. In the long run, a company that clearly shows what it can and cannot do will earn more trust than one that accepts anything. Making the decision to withdraw is also the duty of a leader. I once made a management decision, in agreement with headquarters executives, to intentionally drop out of a large project where price competition had overheated and no profit could be expected. This was not admitting defeat, but a business judgment to withdraw from a fight where we would suffer heavy losses even if we won in the end. This concept is not limited to new prospective clients; there are also existing customers from whose partnership you should withdraw. Clients who take up too much time with low profitability; clients who make no effort to implement agreed-upon terms; clients who lack the will to revive their failing businesses; those who always start from a place of negativity: holding onto these relationships just because “the customer is king” is a choice that erodes the company’s future. A decision not to renew a contract can also be necessary for healthy management. Interestingly, companies that have the courage to say ‘no’ will ultimately attract better customers. Relationships with clients who align with your corporate culture, maintain mutual respect, understand your worth, and continue making efforts to grow become trust-based partnerships that go beyond mere business transactions. Rather than your prices, these customers choose you based on your merit, and become long-term fans. While sales is a job that involves being chosen, it’s a job that involves choosing your associates. Far from being cruel or heartless, the courage to say ‘no’ or to withdraw enables responsible decisions that protect the company, its employees, and its future. Concentrating resources on the relationships that are truly valuable is precisely what generates the next stage of growth. Is that not the very essence of “management-minded sales”? Conclusion: Sales Skills are Part of Management Skills In this article, we introduced three skills: A listening stance and the courage not to sell Questioning ability found in locating the root of the issue The courage to say ‘no’ and the courage to withdraw None of these are merely sales techniques. They represent a management mindset that allows both executives and sales leaders to correctly allocate limited management resources while earnestly facing the market. No matter how great your product is, it will not reach the market without a discussion plan that is equally great. Standing on the forefront of business growth, sales is a necessary part of business management itself. D-POPS GROUP has the vision of “realizing a Venture Ecosystem”※. To this end, we are committed to building systems that allow the members of our Ecosystem to grow sustainably and providing hands-on support through our team of advisors. ※Read “Venture Ecosystem: A Platform for Growth and Sustainability” for more details. We will continue to offer our support so that the companies within our Ecosystem can put this “Management-Minded Sales” into practice. I hope that this article will serve as a practical aid to startup founders and executives alike. D-POPS GROUP Advisor Genta Sugihara

Media

2026.02.05

Sales per Tsubo

D-POPS GROUP is a collective of companies that integrates actual businesses and technology together, a concept that we denote as “Real Business x Technology x Group Synergy”, aiming to realize a Venture Ecosystem that will continue to be indispensable to society even 100 years from now. Measuring the efficiency and profitability of a store location is indispensable for managing physical stores, which is at the heart of “Real Business”. In this article, we will explore sales per tsubo※, which is a critical metric used in Japan for this very purpose. ※The Japanese unit of measurement tsubo is defined as an area approximately equal to 3.3 square meters. The principle of ‘sales per tsubo’ can be considered as directly equivalent to sales density (in either sales/m2 or sales/ft2) with a simple conversion factor. Sales per tsubo refers to the amount of sales generated per tsubo, which will vary by industry. For example, supermarkets with high foot traffic and department stores or electronics retailers dealing in more expensive items will usually generate higher sales per tsubo. In explaining how this metric functions in practice, we will focus on the consumer electronics industry, for the sake of consistency in comparison with our previous articles on Inventory Turnover and Revenue per Employee. 1. One of the Three Key Elements of Store Management We previously looked at examples of inventory turnover (which affects cash flow and, in turn, a company’s balance sheet) as well as revenue per employee (which mainly relates to personnel expenses, and thus impacts P&L). Sales per tsubo primarily relates to rent and, like personnel expenses, is a vital indicator for P&L. Together, inventory, personnel expenses, and rent form the three essential elements of physical store management. If you haven’t read the previous installments on inventory turnover or revenue per employee, I encourage you to do so to see the full picture. 2. Calculating Sales per Tsubo Simply put, sales per tsubo is an indicator of a store’s productivity. The higher the figure, the better. It is generally calculated by dividing annual sales by the total sales floor area (in tsubo). For example: ・A store with ¥50 billion in annual proceeds and a sales floor of 4,000 tsubo earns ¥12.5 million per tsubo. ・A store with ¥1.5 billion in annual proceeds and a sales floor of 1,000 tsubo earns ¥1.5 million per tsubo. ・A store with ¥400 million in annual proceeds and a sales floor of 80 tsubo earns ¥5.0 million per tsubo. ・A store with ¥400 million in annual proceeds and a sales floor of 80 tsubo earns ¥4.0 million per tsubo. Averages vary widely according to areas and types of business. In the suburbs, an electronics store might earn around ¥1.5 million and a hardware store only ¥500,000, while a convenience store and a drug store could reach ¥5 million and ¥4 million, respectively. Factors include how frequently a product gets purchased, unit prices, the size of the products sold, and whether the location is urban or suburban. Notably, while suburban stores may have lower efficiency, their rent is also significantly lower. Therefore, one cannot simply compare sales per tsubo in isolation, but rather view it in the context of local real estate costs. 3. Why is Sales per Tsubo Important? To explain why sales density is critical, let’s look at the following example. As explained above, comparing companies in different locations (urban vs. suburban) or with different product categories is not an effective comparison because rent and unit prices differ too greatly. Therefore, just as we did in the previous article regarding sales per employee, we will use two rival electronics retailers as examples. They sell the same products and are both located in urban areas. (These model companies are fictional but based on the numbers from actual businesses.) Metric Company B Company C Store Count 24 45 Sales Floor Area 75,000 tsubo 74,000 tsubo Sales Per Tsubo ¥10.09 million ¥6.00 million Total Sales ¥750 billion ¥440 billion Ordinary Profit ¥50 billion (6.7% margin) ¥4 billion (0.9% margin) The Company B featured here is the same one from our previous discussion on sales per employee. Company C is a group-managed company with many franchises; for this example, we have extracted only the data for their urban store brands. The figures have been aligned with the fiscal year of the sales per tsubo data, and the floor area has been reverse-calculated from the sales and efficiency figures. These two are known competitors, both operating in urban centers and often opening stores adjacent to one another in major hubs like Shinjuku. Here, I want to draw attention to floor area versus the sales per tsubo. Company B uses 75,000 tsubo to generate approximately ¥750 billion in sales, whereas Company C uses 74,000 tsubo to generate approximately ¥440 billion. When converted to sales per tsubo, Company B stands at ¥10.093 million and Company C at ¥6.002 million. While both companies boast very high efficiency, their total floor areas are nearly identical (around 75,000 tsubo). If you take the difference in their sales per tsubo (¥4.091 million) and multiply it by that 75,000 tsubo of sales floor, you see a difference of over ¥300 billion in total sales. This gap represents the difference in revenue. If we calculate the gross profit for both companies using the industry average of 30%, the gap in gross profit alone is nearly ¥90 billion. It would be quite complicated to calculate their exact costs of rent, so we won’t do that here. However, both are urban retailers in similar locations, so if we assume their rent is roughly the same, this difference in gross profit translates directly into a difference in bottom-line profit. There is a ¥46 billion gap in ordinary profit and a 5.8% difference in profit margin between Company B and Company C, and it should be clear that sales per tsubo is one major factor driving this disparity. As mentioned in the previous article, even with minor differences, the gross profit margin in the electronics retail industry—regardless of the company—generally hovers around 30%. Whether in this industry or any other, when companies handle the same products at a similar scale, there will seldom be any large discrepancies in gross profit margin. In this comparison, as stated, a ¥90 billion gap arises from sales per tsubo. When competing companies sell the same products, in similar locations, using similar floor space, I believe that inventory turnover and sales per employee are the only other metrics that could account for such a massive difference in management efficiency. This is not unique to our model case. In restaurants, apparel stores, supermarkets, or any brick-and-mortar locations, there is no escaping sales per tsubo. Achieving a sales per tsubo that significantly outperforms competitors in similar locations leads directly to a major advantage in the unavoidable competition of business. 4. Key Strategies to Increase Efficiency By now, I suppose you recognize the importance of sales per tsubo, but the next question is how to increase it. There are several key strategies, and I would like to highlight the most representative examples below. ① Focus on purchase frequency or unit price Even if unit prices are low, like groceries or daily necessities, high purchase frequency makes it easier to drive up sales per tsubo. Conversely, for high-unit-price items like luxury brands, the high price per transaction compensates for lower frequency, allowing for high efficiency. From this perspective, it is perfectly logical for community-based drugstores to carry food and daily goods that are bought more frequently than medicine. Similarly, it is a sound strategy for electronics retailers to expand their lineup to include a mix of high-purchase-frequency consumables and high-unit-price hardware. ② Optimize product size and eliminate wasted space In short, this means displaying small products without leaving any gaps. This is plainly visible if you look at Don Quijote, convenience stores, drugstores, or urban electronics retailers. While some stores carry large items, the focus is on smaller goods packed tightly together all the way to the ceiling. From the perspective of sales per tsubo, this is a highly rational display strategy. Take electronics retailers as an example: urban stores are often branded as “　　　 Camera”, like Yodobashi Camera, while suburban stores are “　　　 Denki” (i.e., electronics), like Yamada Denki. There is a reason for this. In the past, urban stores were so small that if they stocked refrigerators and washing machines, they would have no room for anything else. Consequently, urban stores focused on cameras, watches, portable devices, beauty appliances, and small office equipment. Suburban stores, benefiting from lower rent, could afford the lower efficiency of large appliances. This specialization was an inevitable result of optimizing for sales per tsubo. Historically, there used to be a number of urban stores that did focus on large appliances. Just by looking at Akihabara today, one can see that these have mostly been consolidated into the most powerful stores, and only a few of those remain. This, too, was an inescapable outcome driven by sales per tsubo. ③ Master cross-selling and up-selling Cross-selling and up-selling can lead to significant improvement through store-wide effort. When you go to buy a suit, most stores will suggest a matching shirt or tie (i.e., cross-selling). When you look at PCs, many stores will suggest one with a high-performance i-series core processor rather than a cheaper model (i.e., up-selling). Up-selling changes the unit price per item, and as the price goes up, so does sales per tsubo. Cross-selling increases the number of items purchased per customer, which raises the total transaction value per person and, by extension, the sales per tsubo. The examples above are the primary ways to increase efficiency. While there are other factors, the ultimate key—as with inventory turnover and sales per employee—is ensuring employees are educated on the importance of this metric. Success comes from management with a human touch, where the company and staff constantly innovate in procurement, product display, and customer service to boost efficiency, supported by technology that can visualize inventory and sales data. Ultimately, the leap in management efficiency through improving sales per tsubo is also built upon the intersection of “People × Technology × Management Strategy”. 5. Conclusion In this article, we discussed sales per tsubo. In the industry of physical stores, there is no business that does not occupy space. Optimization of space is quantified in Japan as sales per tsubo, which leads to the maximization of operating profit and provides a major competitive advantage over rivals in similar locations. Sales per tsubo is strongly affected by product characteristics (price, size, sale frequency), product assortment and display techniques (filling gaps), and customer service techniques (cross-selling/up-selling). In other words, the catalyst for increasing efficiency lies in the constant ingenuity of both the company that defines the product concept, and the employees who actually perform the procurement, display, and service mentioned above. With this discussion of sales per tsubo, we have now covered the three essential elements of store management: inventory, personnel expenses, and rent. By reading this series—including the previous articles “Inventory Turnover” and “Sales per Employee”—the key points of store management should become much clearer. What we at D-POPS GROUP want to convey through this three-part series is that business is built by people. The customers who purchase products are people, and those who devise strategies and utilize technology are also people. While it is impossible to win in competition without mastering technologies like AI, technological skills alone cannot ensure survival. We believe that business success is not just about good technology or a good strategy; it is about the intersection of “People × Technology × Management Strategy”. Based on this philosophy, D-POPS GROUP aims to realize a Venture Ecosystem by supporting startup companies in order to solve societal problems. We hope that you enjoyed this article and look forward to working with you in the future. D-POPS GROUP Managing Executive Officer Tetsuya Watanabe

Media

2026.01.15

Model Company:	Retailer A	Retailer B
Number of Stores:	550	24
Number of Employees:	16,000 (including 8,500 part-time)	5,000
Net Sales:	¥730 billion	¥750 billion
Gross Profit:	¥208 billion	¥225 billion
Profit Margin:	28.5%	30%
Ordinary Income:	¥35 billion	¥55 billion
Ordinary Income Margin:	4.8%	7.3%
Inventory Value:	¥160 billion	¥38 billion
Inventory Turnover:	4.6 times/year	18 times/year

COLUMN

Inventory Turnover: The Retail Industry’s Hidden Platform

1. A Key Metric for Retail Management

2. Calculating Inventory Turnover

3. Why is Inventory Turnover Important?

[Model Case]

4. How to Improve Inventory Turnover

5. Conclusion

Related Articles