It is a measure of profitability commonly used by the retailers, and it was first used in the retail food industry. Direct product profit (DPP) equals an item’s gross margin rupees, plus discounts and allowances earned, less direct handling, selling, and inventory holding costs. DPP focuses on the contribution profit of individual retail items in individual stores. It enables the retailer to develop results for brands, categories, departments, stores etc., thus forming the basis for merchandising decisions.
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