Ian's Bits & Bobs: The Blog

t5np21Oct18

T5NP*: Second Number – Customer Count

(We say “Customer Count”- aka Register Rings, Tickets, Baskets or Checkouts)

I am always a little surprised at the number of owners and managers who DON’T track or even think about this metric. Surely just from a Return on Investment in marketing aspect it should be one to watch. Savvy operators are currently using this metric trend to see what effect the switch from traditional media marketing to social media marketing is having on the number of shoppers coming in the door.

The number of customers who volunteer to spend their precious time and money at your store is first and foremost a reaction to the company’s value proposition. It’s the public’s response to your marketing, promotions, reputation, drive-by appeal or their previous shopping experience. It’s the public’s “secret shopper” report – every day.

Just for starters, a history of customer count by the hour is very useful for team scheduling so you don’t have 5 employees gathered round the register at 8.00am, but only two out selling in the after-school rush at 4pm!

Context Is Necessary

Customer count is influenced by outside events or circumstances and any record of it must also have a note of the business conditions in that time period. If it rained heavily this week last year or there was a major ball game on TV that weekend last year, managers should know before they react to the number.

We are always cautious about comparing one day, week or even a months’ data in this metric so we look for trends in the customer count more than specifics. I’ve seen too many owners stress out on a couple of lower-than-expected days or weeks. The sky is probably not about to fall if customer count is down 10% in a specific spring. That’s why we will be building anonymous regional groups in The 5 Numbers Project so you can see if your customer Count IS 10% down when your local peers are all up. (Then there’s a reason for a ‘hmmmm’….!)

Interesting, But Now What?

If customer count is going down, it might mean a marketing challenge to recapture lost traffic or stimulate new shoppers to try your offer. In that case budgets should be geared to boosting external messages, marketing, image, exterior remodeling, building community relations and so on.

If customer count is going up, you may have a sales and merchandising challenge serving and inspiring all those extra people to spend while in your store. In this case, budgets should invest in more internal resources for improved hiring, training, buying, merchandising, silent selling and just generally helping customers spend more.

Just think, so many significant management decisions from one little number! (That’s another Hmmm….!)

Next week, we’ll tackle the third of The 5 Numbers as we gear up to open subscriptions in the Project (*T5NP) … stay tuned!

 

Oct 31, 2018 0 Comments
t5np

T5NP*: The First Number is Sales Volume… (and that’s just the start!)

In conversations with owners and managers about the year or business conditions, the topic sooner or later turns to sales volume. There is always a reluctance among strangers to avoid “the number” –  so we tiptoe around with questions about the number of employees or registers or parking spaces instead. Sometimes you’ll hear phrases like “north of $2 million” (but never “south of $500 mil”!)

This traditional reluctance should be a thing of the past. In today’s tough retail environment, networking and sharing are welcomed by more and more operators as a competitive advantage. The more we know, the more likely we are to make better decisions.

So there’s no problem with owning a retail store that sells $850,000 a year, unless and until you dig deeper to see what the other metrics show about today’s operation and what sales have been in the past! Current sales volume is just a number documenting a step on the ladder that many other companies have occupied at some point in their development. Similarly, there’s nothing fabulous about “doing $25 million,” unless and until you look under the hood. There are many famous retail brand names which once boasted billions in sales, but are no longer around.

It’s just ‘a place on the ladder’ … and the important denominator

Sales volume is just a marker of size – a place on the graph or ladder to higher volumes. Sales on its own has little merit with few, if any, lessons to be learned on its own, except maybe local bragging rights. But if that’s all there is to work with I can at least look at the growth (or lack of) in sales over the years and ask the question, “Are the sales going up as least as quickly as the rise in the costs of doing business?” That’s our first Hmmmm….

As we will see in future blogs, that sales volume number is crucial when comparing margin dollars earned from those sales, or labor costs to drive that volume and so on. In fact sales volume is the denominator for several of our standards and comparisons on the retail dashboard from Gross Margin dollars to Labor Productivity. And you want to be able to see improvement in those numbers for your own company over time.

(But we know you still like to compare). 

One of the features of The 5 Numbers Project within Your MarketMetrics is that it will be filterable by business size or geographic region … so you can compare yourself to “others like you” more readily. When there are at LEAST 5 businesses in each category, layered filtering (size AND region) can be ‘turned on’ – our primary objective is maintaining anonymity.

For now though, the first of our five numbers is a really just a marker, which on its own and without “lifting the lid” on the other performance metrics, has limited value. But it’s an essential starting point to our project – oh and useful for local bragging rights too!

So, are you all “south of $500 million” out there? We are!

Next week, we’ll dive into learning more about number 2 in T5NP: Customer Count/Register Rings/Tickets – stay tuned!

*T5NP – this post is the first in a series as we begin to launch The Five Numbers Project

Oct 27, 2018 0 Comments
Youre-invited16Oct18v2

The 5 Numbers Winning Garden Centers Use (and still have a life!)

Traveling the country working with independent garden retailers, I know that owners and managers constantly wonder how their year compares with that of their peers 300 or even 3000 miles away. The fear of falling behind industry standards is understandable when you are working hard in your own trenches! It’s easy to feel isolated. I get asked, “what are you hearing this year, how are others doing?” a LOT.

As I mentioned in my last post (9-2-18): the good are getting better and winning market share from the less successful. For many years we have focused our business on helping our clients use the numbers that really matter. While there’s a lot more to success than just a few data points, most of the winners do in fact use just a few data points to make the good decisions that keep them winning. That’s their “secret sauce”!

TMI!!

Now that almost everyone has POS, too much info can be the problem, not too little. Data is available on every aspect of the company, from buying strategies to performance reviews. Owners and managers simply don’t have the time to clarify what is crucial from what is just interesting! So they either don’t use the data although they have it, or they get buried in the wrong data. Unless you are going to invest in extra staff to track and analyze all the data, it just puts more work on the same few people.

So how do owners and managers decide which data points matter most?

It’s Just 5 Numbers

Simply, they let us help: we have narrowed the answers down to just 5 Numbers each month. These, together with a few simple but crucial “offspring” calculations, allow retailers to make the right decisions without more office time and endless reports. Some of our clients have been using this approach for over 10 years and are absolutely “beating the street” when compared against the industry in general.

We focus on what matters most in retail. With 60% – 80% of sales revenue being spent on just two costs, inventory and labor, we keep the “numbers” where they matter for time-crunched owners and managers.

From just 5 Numbers our clients can track sales and/or customer growth, margin management, customer spend, labor efficiency and retail profitability.

But unlike traditional industry reporting, which focuses on the topline of Sales Volume, we go down much deeper to see what’s left after inventory and labor costs, or “Gap Dollars” for those in the know.

Gap Dollars, (accountants might refer to it as ‘Margin after Labor’) is like an operating profit. By subtracting the costs that you have quick and relatively easy control over (like Costs of Goods and Labor) from sales, you can see what’s left to pay those expenses which are hard to reduce such as rent, admin, energy, debt repayment and so on.

If that particular number, Gap Dollars, is not increasing faster than the cost of being in business, you’re going backwards no matter what the topline sales numbers tell you!

Share and Compare – Finally!

You may be aware that Dr. Charlie Hall (Texas A&M) has recently launched a national key performance indicators sharing network for growers. We are using the same platform (yourmarketmetrics.com) to create “The 5 Numbers Project” (T5NP) for garden retailers: secure, online, anonymous business comparisons, available at your desktop 24-7.

What’s the goal here? We believe there is a strong desire to have credible national industry data to compare with to see how the industry is doing as a whole, and to track your OWN business’ performance in a visually compelling way that speaks to people beyond the beancounters. We want you to have a confident answer when your loan officer says, “How do you compare with the industry?” or when you are trying to value your company for sale or generational transition.

Best of all, the dashboarding format will give you an easy way to visually SHOW your team the metrics you want them to focus on … so they can help you move the needle where it matters most.

All are welcome!  

Importantly:  ALL independent garden retailers are welcome to join this new industry-wide benchmarking project, regardless of what peer group, buying group or networking group you already belong to. All are welcome … as long as you’re a retailer. (We love our vendors, but unless you have your own garden retail numbers to share (ANONYMOUSLY, of course), then this isn’t the project for you.

The first round of subscriptions will be open only from November 1 – December 23, so you can be onboarded and up to speed before Spring 2019 hits. Every Tuesday for the next 6 weeks here on Bits & Bobs, we will feature one of the 5 Numbers and what it can do for you, and share more about how the platform will work:  stay tuned!

Oct 15, 2018 2 Comments