Ian's Bits & Bobs: The Blog

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5 “hmmms” from 5 Numbers!

As some readers may know, we launched our new online project (The 5 Numbers Project at Your MarketMetrics) to build a national database for independent garden retailers this year, and have been amazed at the response in just a few months. We already have 56 garden center companies (and counting!), representing total retail sales of more than $330 million reporting their five monthly metrics. (Enrollment window is open now so new participants still have time to enter their historical data before spring 2020 hits!)

The detailed resulting trends data is only available for participating companies, but … to pique your interest, we CAN share some observations that might just make you go “Hmmm…”. We know that just a few months’ data doesn’t make a national take-it-to-your-loan-officer trend, but we can still point to a few aspects of the industry that you might like to chew on with your team!

Hmmm #1.  Most regions of the country had a decent year according to Sales $s or “topline” … but is that topline growing faster than the total costs of being in business – i.e. the cost of just opening the door every day? Do you know your daily cost of being in business and are your sales rising faster?  Hmmm…

Hmmm… #2.  Customer Count (register rings/tickets) has increased for most GCs in 2019, but did yours rise a) faster than sales or b) slower than sales? The remedy for a) is very different to the one for b) and it’s very hard to attack both at once! Which is your priority? Do you have the resources to address it for 2020?  Hmmm…

Hmmm… #3. Average Sale Per Customer (including increased retail prices) is NOT keeping up with consumer spending, despite full employment and rising personal debt. Ultimately, we’re losing “wallet share”. Many GCs are selling LESS units or products, are you? If so, are your Gross Margin $s increasing fast enough to compensate? Hmmm…

Hmmm… #4. Growth in Gross Margin $s is a mixed bag this year; GM “leakage” is a thing! If GM$s decrease, can you cut other costs accordingly? Good luck with that! Inventory and labor take 65% to 75% of Sales $s, so what really matters is what’s left after you’ve bought your stuff and paid your people – what we call “Gap $s” (Gross Margin after Labor). If your Gap $s are less than last year, you’re going backwards, I don’t care what the topline sales tell you! Hmmm…

Hmmm… #5. The “Secret Sauce” in The 5 Numbers Project is measuring Labor Hours as well as Labor $s so we can track trends in your Labor Productivity, and the range is HUGE. Some GCs are twice as productive as their neighbors! What is a “GREAT” productivity number? How does yours compare? Is your Labor Productivity rising faster than the cost of Labor? It better be! Hmmm…

We’ve been using these metrics for over 20 years with clients, but it always amazes me how many crucial business decisions and follow-up strategies can be arrived at from just 5 monthly numbers: Sales $s, Customer Count, G Margin $s, Labor $s and Labor Hours.

Would you like to join us, making 2020 the year that you focus on improving your business’ productivity and profitability? The 5 Numbers Project (T5NP) allows you to see in simple-at-a-glance charts how your business is doing monthly and YTD and then compares your performance with your anonymous industry peers both by region and company size. These simple visuals empower your TEAM to make improvements and really “move the needle” as you measure what matters. Many of the GC industry’s “A List” are already onboard, and we’d love you to you join us for the T5NP journey!

(** The fine print: You can learn more about pricing at the T5NP link, but onboarding is a one-time fee of $895 to get your own personal dashboards built (and $149/month thereafter.) We also have some partnerships with buying co-ops, like Master Nursery Garden Centers, that can get you some price discounts!)

Nov 4, 2019 2 Comments
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We’re Measuring what Matters…

and now, with 2 years of data, we can share some “hmmmmm” questions!

You may have noticed that I was offline here for a bit, while you all were off having Spring! We were working on The 5 Numbers Project (T5NP), a new national platform for anonymous online sharing and comparing of garden retail performance numbers.

In the first enrollment period (pre-Spring ’19), we had 51 GC companies in 22 states and 3 Canadian provinces, with total retail sales over $310 million, join the program. On the Grower side of the industry, Dr Charlie Hall has now been operating a similar program (with different metrics) for two years, so our retail participants can also get his key takeaways in our online “Insights Library”. Finally, the garden business is getting a national independent retail database – long overdue! This represents REAL DATA on which to make profitability comparisons, investment or borrowing decisions, goal setting or even to “sell up and relax”!

How Does it Work?

T5NP participants submit just the 5 numbers that matter, every month, through a secure online portal and the “magic software” does the rest. It’s almost two programs in one: At any time GC owners and key team players such as managers or buyers can view the company’s own Private dashboard comparing this year’s profitability performance with last year’s. Secondly they can use the group Comparison or Trend dashboards to see how their business is trending YTD or through all last year with the other GCs.

It’s all totally anonymous and participants can compare their 5 Key Performance Indicators, Sales Volume, Customer Count, Gross Margin, Labor Costs and Labor Hours with trends across the industry as a whole. They can also judge where they stand against others in such key profitability datapoints: Average Sale, “Gap” Dollars (Gross Margin less Labor Costs) and the all-important productivity number, Sales Dollars Per Labor Hour. Anonymous comparisons can be made with others in the same region, those with same retail sales volume, or with all participants in N. America. Each participating company also gets my personal analysis notes/suggestions as well as a host of extras such as webinars and takeaways for “Ten Minute Trainings”, team-goal setting and so on.

*sample Private Company view dashboard*

Interested in joining The 5 Numbers Project? The next subscription window is open now until Sept 21st.

So, What Have We Learned So Far – How IS The Industry

2019 is looking like a “half-decent year” for many west
coast and mountain region Garden Centers with a so-so rating in the east and
south. There’s always “weather” in one area or another but shoppers were out in
droves this spring. I heard many “best day ever”, “biggest Friday sales ever”
or “weekdays were like weekends” type of comments, though again they tend to
refer to top-line sales not bottom-line profits. The biggest “I wish” I heard was
about getting (and keeping!) labor. There seems little or no consumer pushback
on increased prices (I hope you did raise prices!) this year.

Just as I can’t tell you which GC companies have joined the T5NP project, I hope you understand that it’s not fair to share the numbers with people or companies not (yet) in the program. However, with data from all of 2018 and most of 2019 now in the system I can share some very interesting questions arising, or things that might make you go Hmm….

Three BIG Hmms… From Just 5 numbers!

First up: At the Fall shows people will be asking each other “How did you do this year?” and they almost always reply with their top-line sales compared with last year. But our T5NP data shows that’s only a start: we look at the growth in G. Margin Dollars after the Labor costs are subtracted (that’s what we call “Gap” dollars). You can have a 10% rise in sales yet still be behind last year in the growth of “Gap” dollars (which is really the operational profit). So was your increase in Gross Margin dollars eaten up by the rise in overheads? All that spring activity and excitement but no increase in bottom line – that’s one BIG HMMM…!

Secondly: Average Sale Per Customer is not really a national number – it’s much more dependent on your inventory mix, big ticket departments, seasonality, etc – but if it is not increasing each year faster than the cost of doing business, you are dependent on finding new customers or tempting regulars to shop more often. And we all know how expensive and time-consuming that can be, Hmmm….

Third: Labor costs, people frequently ask me “What should my Labor % be, what are others doing?” but my answer has always been “It depends on your Gross Margin %”. Gross Margin dollars pay for everything after inventory (aka Cost of Goods) so your Gross Margin dollars (not GM %!) should be growing quicker than your Labor dollars – are they? Hmm….

So many questions from just 5 numbers … and now, The 5 Numbers Project is proud to be empowering companies with PERSONALIZED TOOLS to find answers: for only $1788 / year ($149 / month after onboarding), we are empowering teams to take action and drive REAL profitability to the bottom line.

New subscriptions to The 5 Numbers Project are now open through September 21. More details and a downloadable brochure on the project can be found at that link. We’d love for you to join us! What questions do you have that we can help answer?

Aug 13, 2019 Comments Off on We’re Measuring what Matters…
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Before You Spend It All at the Next Trade Show….

Ah, ‘tis the season of trade shows, long days, hotel food
and spending your hard-won money from 2018 on inventory for 2019. But sometimes
that need to fill the shelves and tables can cloud your judgement … I recall a
client who just assumed that he and his buyers would spend $250K at a few
winter trade shows and then agonized over a $25K parking upgrade for years!

Just sweat the big

Don’t get me wrong, inventory is the ONLY investment that
actually creates cash, everything else from wages to facilities just support
that investment. But the fact is that 70%-80% (hope it’s not that high!) of all
the sales dollars goes out within weeks or months on just two items. Inventory
and labor. So that’s where we start.

Asking the right questions

What didn’t sell last year despite the fact that we all
loved it? Which SKU can we do without? Which category had the worst Gross
Margin? Is that supplier the really on our side? Do we have information on
which to negotiate? Which items took up too much space to justify the margin
dollars? That new product looks great… but what’s the labor cost to set it up? Do
we have the skill set to make money in that category?

For years we have been asking these questions to clients and helping them come up with answers driven by real hard, cold facts and figures, rather than emotions. These facts and figures come from just 5 simple numbers we have tracked for over 12 years and this best-practice is now available to all independent garden retailers through our new “5 Numbers Project”. (Click here to see some sample dashboards).

The numbers to drive
your numbers!

It’s easy-peasy. Simply submit these five numbers each month
online and see the comparisons both in-house with your same stats last year AND
compare trends (totally anonymously) with your peers across the country. No
extra days in the office or hours on your tablet, no expensive accountancy or
extra software, just 5 numbers and you’re done.

Subscriptions for first round of The 5 Numbers Project – to compare with other retailers (anonymously) across the US are available ONLY until Monday January 7 … so it’s time to ACT NOW!  For the price of a few racks of perennials or a couple of pallets of fertilizer, we will give you critical profitability and productivity information personalized to YOUR business. “Measuring What Matters” and comparing with others might be your best January investment, but you need to click here to subscribe today!

Jan 4, 2019 Comments Off on Before You Spend It All at the Next Trade Show….

T5NP – Subscription Deadline extended to Jan 3, 2019

Ho, ho, ho!! We’re thrilled with the uptake so far on subscriptions to The 5 Numbers Project, both in number and in caliber of companies. It’s a great mix of businesses large and small from all across the country.

We’ve heard from some of our favorite elves out there that this season has been so busy … that you’re only just now having a moment to breathe and focus on the coming year. While our original (today) December 23 deadline for new subscriptions to The 5 Numbers Project was set up so you wouldn’t have to think about it over the holiday, it turns out some of you really LIKE using the quiet weeks after Christmas to think about ‘big picture’ things like this! So by popular request, as a gift to ALL OF YOU who have made the holiday so merry for others this year, we’re happy to extend the subscription deadline until January 3, 2019.

(Early January is important though, so we can get all new subscribers onboarded and your personal dashboards built so you can effectively be tracking by the time first numbers are due in – Feb 15-21, 2019).

So if you haven’t yet had a moment to take a look at the SAMPLE DASHBOARDS and get yourself subscribed into the system (if you’re a GCU Alumni firm, check your email for a discount code!) – there’s still 2 weeks to make that magic happen, giving yourself the gift of BETTER PROFITABILITY in 2019!

For today, Lisa and I, together with Kellee and the entire Your MarketMetrics – 5 Numbers Project Team wish you a Merry Christmas and a wonderful end of 2018! We are excited to launch this landmark industry benchmarking initiative with all of you in 2019.

Dec 23, 2018 Comments Off on T5NP – Subscription Deadline extended to Jan 3, 2019

T5NP*: The Fifth Number – Labor Hours

This is one of those numbers that gets overlooked in the multi-tasking world that is garden retail, where selling products is the main goal. It’s just one more thing to think about and not one that appears to have an “A List” priority, there’s only so much time in a day….

But if you look at companies in construction, health care or other service industries where selling labor is their main goal, those labor hours are front and center in performance metrics.

In garden retail the labor topic usually focuses at the cost of that labor (our Fourth Number) … but now we extend the analysis and comparisons to the amount of that labor, which opens up a whole new business discussion: Productivity.

Happiness is… Rising Productivity

So far in this blog series, and in The 5 Numbers Project (or ‘T5NP‘ for short) we have been focused on Profitability (seeing if we are making more money than other companies, or more than we were making last year.) With this Fifth number, we are looking to see if we are making more money with LESS labor, the biggest single cost of running a retail store. If net profit (aka “bottom line”) rises at the same rate as the cost of doing business, owners and bankers should all be happy, correct?

Well actually no, not happy at all. You’ll hear the word “productivity” a lot from economists and stock analysts as they look for those companies doing more from less. This is often (but not always!) a sign of a progressive company or an economy that is investing in efficiency for the future, rather than living on the current methods or market. The efficiency of a garden retail company is no different. Unless the owners can be sure of being able to constantly raise prices to cover rising costs and make the same bottom line as previous years, they have to make more with less.

Hail to the “Offspring”!

I’m getting ahead of myself here, but the most basic measurement of productivity is one of our “offspring” calculations, called Sales per Labor Hour. (Subscribers to The 5 Numbers Project will spend a lot of time learning more about, working with, and comparing these offspring calculations.) This has nothing to do with the cost of those hours (see Labor Costs post) and has everything to do with the end product of all those hours used, the sales volume.

(Yes – The answers in general retail companies will be all over the map depending on the type of store and business model. Obviously, a warehouse club will have a huge Sales per Labor Hour metric compared to an urban boutique nursery. Even within full-service garden retail, a company that sells a lot of big ticket items like patio or specimen trees will have a much higher number than one that sells mostly small items like annuals or veggies.)

And while it’s fascinating to think about how you compare to others … the most important thing is how YOU are doing compared to yourself over time. Not just “May 2019 vs. May 2018” — but YTD 2019 vs. 2018. I firmly believe that measuring The 5 Numbers — and their “offspring” calculations – will help you have a better picture of your profitability.

What’s the POINT of all of this “T5NP”?

If you can MEASURE it, you can IMPROVE it.

That’s it, in a nutshell. Over the past 5 weeks, this blog has offered a (not-so) brief overview into the philosophy behind each of The 5 Numbers that our successful clients have been using for years to “beat the street.”

As you’ve already guessed — it’s these 5 Numbers:  Sales Volume, Customer Count, Gross Margin Dollars, Labor Dollars, and now Labor Hours form the foundation of our new national online benchmarking initiative for garden retail, launching this month.

A few quick details on the Project (you can learn more by clicking here too):

  • Subscriptions are available ONLY to garden retailers – but any retailer can join, regardless of any other peer/buying group affiliation. All welcome!
  • The data will be dynamically filterable by business size and geographic region – though your business NAME remains completely anonymous.
  • There’s an onboarding fee ($849) to build your private company dashboard with a year of historical data as your baseline) and then a monthly subscription fee ($149) to enable you to see your live comparisons – to yourself in the previous year, and to your peers.
  • This isn’t “just us” — this project is being managed by Your MarketMetrics (a team led by a familiar name to some from the old ANLA days – Kellee (Magee) O’Reilly.)  Your MarketMetrics launched a companion benchmarking initiative for nursery & greenhouse earlier this year, which is managed by Dr. Charlie Hall.

SO:  If you’re intrigued about how it works … and what you get when you subscribe, register to join us for a free preview webinar on FRIDAY December 7 at 3pm Eastern time (noon Pacific). The webinar will be recorded if you can’t join live, but you need to register to be able to view it.  CLICK HERE  to RSVP to attend the webinar, and take the first step toward more profitability with less stress … by tracking just 5 Numbers!

Nov 20, 2018 Comments Off on T5NP*: The Fifth Number – Labor Hours