From Home Furnishing Business
From the Editor : Retail Math 101
2013 by Sheila Long O’Mara in Furniture Retailing, Industry
Numbers don’t lie, or do they? I’m a wordsmith, not a math whiz. Even given that, I know the basic numbers that are important in the business of furniture.
Customers are steadily in your store or stores; employees busy and the cash register offers the frequent cha-ching as sales tally. (At least, I’m hopeful you’re hearing the ringing at your sales desk.)
We all know the importance in measuring same-store sales figures to last year’s revenue. The measurement tracks whether you’re growing or just maintaining. Comparisons are great, but what other components should be tracked.
1. Sales per square foot
As most know, this data helps with planning inventory purchases. Dividing your total net sales by square feet of selling space—not including your warehouse or distribution center—gives you your store’s square foot of selling space. Sales per square foot is a great measure of return on investment. Are you buying the right product for your market? Lower than the industry average, your merchandise mix could be off and not keeping pace with your target consumer’s wants.
2. Sales by category
The furniture industry loves to talk about categories. Dining room, bedroom, upholstery, home theater, recliners, and the list goes on. Which categories are the workhorses on your sales floor? Do you know? Figure it out and it could be that the category you thought was the winner if floundering, at best. Maybe the upholstery selection needs to be winnowed and youth bedroom boosted.
Who knows? But, until you do the math, you could be missing out on a key merchandising element.
Divide your the category’s total net sales by your store’s total net sales. Analyze the numbers for each category and see if your floor is in line with the results.
3. Staff productivity
Folks get a bit antsy about this one, but let’s be honest. If your sales associates aren’t performing, you have a problem, and you need to fix it fast. Your business runs on sales—doh!—without them you are out of business. Most of your sales come from your floor associates. Be sure you have the most productive ones around.
Figure sales per employee by dividing net sales by the number of employees. Keep in mind that you’ll need to consider whether your sales asssociates are full-time or part-time employees.
4. Sales per transaction
Or sales per customer, this figure tells you your average ticket or transaction. Do the calculations and you may find that your sales team could do a bit better by selling consumers up. Decorative accessories and rugs, let’s say, add the spice needed to pull together the new sectional and swivel chairs Sally just ordered. AND, makes for a bigger ticket at the register.
Divide gross sales by the number of transactions. Figure out a way to encourage your sales team to upsell your customers and boost those tickets.
Those are a few of the very basic items you should track and measure. In today’s e-commerce and social media climate, you also need to take into account how your Web traffic and social media efforts are playing into your business.
Inside, we’ve shared expert opinions on math that matters for retailers. If you happen to be a math whiz, well, let’s hope the inside offers you a few tips and ideas that you can put to work in your business.