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Cost analysis is the systematic evaluation of expenses incurred throughout the retail business operations. It involves assessing and understanding the various costs associated with producing, storing, distributing, and selling products. This analysis helps retailers gain insights into their cost structure and identify areas for optimization and cost reduction. It involves examining direct costs (such as raw materials, labor, and packaging) as well as indirect costs (like overhead expenses, utilities, and marketing).

By conducting cost analysis, retailers can make informed decisions on pricing strategies, inventory management, supplier negotiations, and process improvement. Ultimately, the goal is to enhance profitability by maximizing revenue and minimizing costs, leading to a more efficient and competitive retail operation.