What is Return on Investment (ROI) in Retail? Explained

Return on Investment (ROI) is a financial metric that measures the profitability and efficiency of an investment. In the context of retail, ROI assesses the gain or loss generated relative to the cost of an investment, expressed as a percentage. The formula for ROI is (Gain from Investment - Cost of Investment) / Cost of Investment * 100. For retailers, investments can include initiatives such as marketing campaigns, store expansions, technology upgrades, or inventory management systems. A positive ROI indicates that the investment has yielded a profit, while a negative ROI suggests a loss. Retailers use ROI as a crucial tool for evaluating the success of various initiatives and making informed decisions about resource allocation and strategy.