Personally I think they are missing a parameter. There is an buried assumption reflected in either the margin or the retention that assumes an individual will not ‘shop around’ for the same product and service every time they need it.
For example: I buy Folgers coffee and I drink about 1 red bucket every month. However, I will buy multiples of those red buckets every time I see a sale that is about a $1 below the standard price combined with a coupon - WHEREVER it is advertised. In this locale it’s either: CVS, Walgreens, Giant Eagle, Marcs, Heinen’s, Walmart, or Target that typically have those sales.
Thus the retailers, provided they aren’t breaking the law and violating anti-trust through coordinating sales price/timing and customer data, cannot predict accurately what my retention and/or margin will be.
They can predict the lemmings who do 100% of their shopping in one place all the time independent of price - but they don’t need to worry about them and the calculation isn’t meant for them. They rarely complain and don’t require retention.
My wife and I were born in the depression. Our parents made shopping lists of stuff used everyday/week/month.
They checked the prices of those products on a regular basis. If the product doesn’t spoil or have a short shelf life, they would buy more than one item and store it.
Both mothers were good with basic math and calculating when something was really on sale and to when buy and how much to buy.
We developed the same habits. We pick up orders at Walmart and see the prices on things we use all the time.
We take advantage of Costco’s sale items that we use on a regular basis. I use Systane Ultra eye drops, and Costco has 3 bottles on sale at a great price, about every 3 months. So I load up on it.
We use Walmart’s order on line and order about once a week. They have a list of regular order items and their prices. If something is on sale at a good price and will not spoil, again we buy a good quantity.
Prime somehow monitors, what we are looking at on Walmart and other stores via the internet. Again, if the price right, I will buy on Prime.
My wife follows what our Mother’s did with ads. Our grocery store ads arrive on Wednesday. She glances at them to see if we want to order anything. The 3 stores we use can be blended in with trips to the library, church to avoid driving to just get the on sale stuff.
We fill 3 bags a month with canned goods for 3 local charities. She targets the good prices for 3 or more of the same canned item. Again we don’t drive out of the way to get these items. The 3 charities have people pickup the bags on a monthly basis.
Our DIl’s, sons and younger friends look at us like we are crazy because we do this.