Instructor

Direct product profit (DPP) is a retailing tool used to analyze product sales performance. Although the concept is over 20 years old, its widespread use in grocery stores is a fairly recent phenomena. A product’s DPP is calculated as its adjusted gross margin less its direct selling costs, which normally include transportation, warehous-ing, and retailing or store costs. A product’s DPP and sales volume classifies it in one of four cate-gories to assist in merchandising options. Fifteen small and intermediate size grocery retailers cooperated with a study of produce DPP. Based on weekly produce sales, the stores were separated into three groups. As store group pro-duce sales increased, produce adjusted gross margin and DPP increased. Based on produce sales volume and DPP level, various mer-chandising strategies are suggested