outdoor specialty retailer operational report realizing growth and profitability part 2 january 28,...
TRANSCRIPT
Outdoor Specialty Retailer Operational Report
Realizing Growth And ProfitabilityPart 2
January 28, 2007
Jay TownleyThe Gluskin Townley Group, LLC
SROR2 Jan 28
Realizing Growth And Profitability
• Introduction to the Outdoor Specialty Retailer Operational Report
• Nuggets from the Report• How to effectively use the benchmarks
contained in the Report• Summary and how to order the Report• Q&A
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Realizing Growth And Profitability
• The First Outdoor Specialty Retailer Operational Report published by OIA
• Objective – to provide a benchmarking resource for retailers:– Compare performance with national
averages and with similar stores– Generate ideas and strategies to grow
your business
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Realizing Growth And Profitability
• Outdoor Specialty Retailers face significant challenges:– All the leverage in the marketplace has
shifted from sellers to buyers– The over-educated consumer is
empowered by the Internet• The strategies and benchmarks of
yesterdays marketplace – don’t work or apply in the evolving consumer-centric marketplace.
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Realizing Growth And Profitability
• Nugget: 81% of retailers reported revenue was up compared to 5 years ago – with an average growth of 32%!– What has your growth rate been over
the last 5 years?– Are you higher or lower than the 32%
average benchmark?
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Realizing Growth And Profitability
• Nugget: Business expenses were lower, at 36% for retailers with under $1 million in revenue, compared to 41% for retailers with $2 million and over.– Your total operating expense is a key
benchmark!– What is your operating expense as a
percent of your total revenue?
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Realizing Growth And Profitability
• Other Outdoor and Indoor active sports specialty retailers– Exercise/Fitness– Ski/Snowboard
Source: National Sporting Goods Association (NSGA)
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Realizing Growth And Profitability
Typical Exercise/Fitness Equipment
Ski/Snowboard
Total RevenuePer Store
$1,781,764 $1,197,183
Operating Margin(As a % of revenue)
38.2% 44.3%
Total Operating Expenses
36.2% 38.7%
Net Operating Profit
2.0% 5.6%
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Realizing Growth And Profitability
• Nugget: 85% of single stores and 93% of multi-store operations have a website– 46% of single stores and 73% of multi-
store operations have E-commerce sites– An average of 7% of annual revenue is
generated for stores with E-commerce sites!
– Your web site is your lowest cost and most effective marketing communications tool.
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Realizing Growth And Profitability
• Nugget: 82% of all stores have POS systems and 85% of all retailers use accounting software. However…– Less than 30% have open-to-buy
systems– Less than 25% book orders via vendors
web sites! – Are you in the 30% and 25%? You
should be!
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Realizing Growth And Profitability
• Nugget: Single store operations reported an average of 13 full-time equivalent employees,while multi-store operations reported an average of 54.– Sales per employee (all employees)
averaged $110,000.– Wages, not surprisingly, are the largest
expense at 31% of operating expense and 12% of gross sales! What are your ratios?
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Realizing Growth And Profitability
• Nugget: 33% of retailers track sales by individual sales floor staff – but 71% operate an incentive scheme based on sales by individuals! – What is your close rate? How many
shoppers that walk into your store actually purchase something? An increase in close rate can be an incremental profit contribution!
– New employee compensation strategies demand benchmarks.
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How To Effectively Use Benchmarks
• Start with accurate and timely monthly reporting on the key financial and operating elements of your business – as a minimum.– Many retailers are on timely weekly
reporting with month to date against their budgets and previous year.
– What is your current reporting frequency?
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How To Effectively Use Benchmarks
• Select what you can control, and don’t but time and effort into what you can’t control. – Examples: Total operating expense
Sales per selling square footGross margin - key categories
Mark-on vs. Realized GMSales per employeeInventory turn by category
• Start with one, if that is what it takes to get started, and add one or two at a time until you have six to eight key benchmarks.
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How To Effectively Use Benchmarks
• Talk to your accountant or bookkeeper and set-up a reporting format that is as compatible as possible with your financial reporting system – but make sure you will receive timely reports of your stores performance against:(1) Benchmarks; (2) Budget; (3) Previous year(s)
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How To Effectively Use Benchmarks
• Weekly reporting (timely) is preferred because – it allows you to adjust and amend your plan with our managers and staff in time to really make a difference and positively impact the business.
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How To Effectively Use Benchmarks
• Case Study:
The Bike ShackDubuque, Iowa
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How To Effectively Use Benchmarks
• Case Study:
Bicycles, Fitness and Running/Walking/Hiking
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How To Effectively Use Benchmarks
• Case Study:
Population: 57,686…and fallingMedian Income: $36,785Grown last 7-years = $1.2 millionClose rate = 80%97% of revenue from repeat clients
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How To Effectively Use Benchmarks
• Case Study:
Part of success is – benchmarking• Goals set by half-day!• Operating system is geared to reporting against benchmarks + (2)&(3)• Managers and staff are plugged in.
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How To Effectively Use Benchmarks
• Benchmarks and performance against them can be very important to staff and staff morale.– How much do you share?– How often do you hold staff meetings? – Customer satisfaction and benchmarks
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Summary
• Introduction to the Outdoor Specialty Retailer Operational Report
• Nuggets from the Report• How to effectively use the benchmarks
contained in the Report• Summary and how to order the Report
SROR2 Jan 28
Summary
• Copies will be mailed to all OIA members.• You can order your copy of the Outdoor
Specialty Retailer Operational Ratio Report by contacting:
Outdoor Industry Association
www.outdoorindustry.org
Phone: 303-444-3353
Booth 56000 at the Show• Drop your card to be part of the next report
