High Point Market KPI Presentation
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Transcript of High Point Market KPI Presentation
Key Performance Indicators:Knowing What Counts
Spreadsheets vs. analysis– Are you staring at lists?– Can you truly ‘analyze the columns’?
What should be measured? What should we analyze? What’s the difference?
Key Performance Indicators
Break Even Point
GMROI
Turn Rate
Delivered Sales Per Square Foot
Percent of Repeat Customers per Date Range
Net Delivery Cost Percentage
Change in Cash
BREAK EVEN POINT
What is a Break Even Point? (BEP)
Revenue and expenses are equal Calculating BEP
– BEP = fixed cost / contribution margin » Or
– BEP = fixed cost / sales – variable cost
Why Should You Care About Your Break Even Point
Black Friday – – That point in the year where retailers
traditionally make a profit. Every month has a Black Friday. Are you seeing financials once a year?
– Once a quarter?– Do you know your best month?– Why is it so great?
Why not break even info on-demand?
Do You Know Your Actual Monthly Break Even?
Long Term Planning
Taking on Debt
Marketing Considerations
Break Even Point Example:
TURN RATE
What is Your Turn Rate?
Low Turn Rate Could Indicate: Over stock on inventory Inventory obsolescence Deficiencies in line up Slow vendor shipping Container purchases
High Turn Rate Could Indicate: Inadequate inventory Too low margin Excellent vendor shipping Focused spiff program Advertising success
Low VS. High Turn Rate
Retailer A:
$200,000 in inventory $400,000 in cost of sales Results: 2.0 turn rate But what is my true inventory
performance?
Retailer B:
$133,300 in inventory $400,000 in cost of sales Results: 3.0 turn rate Is my margin included?
– No - turns will give me velocity, nothing more
Example:
Turn Rate Example:
BDG
LRU
BRM
LRL
DRC
DRF
ACC
RUG
0 1 2 3 4 5 6 7 8
7
4.6
3
2.3
2.1
1.4
0.85
0.73
Turn Rate
Annual TurnsCa
tego
ry
GROSS MARGIN RETURN ON INVESTMENT (GMROI)
Gross margin $$ for one yearAverage inventory $$ on hand
=GMROI ($)
Determine your store average as a benchmark– Then find the winners and losers and act
on them
GRMOI
GMROI takes into account all of the following variables:– Landed cost– Gross margin– Packaging (2 packs, 6 packs, etc.)– Shipping time– Rate of sale– Selling price– Markdowns
GRMOI
What is the true impact of GMROI?– Sales of $1,000,000 at 45% GP = $450,000 GM @
2.5 turns = $220,000 average cost: $2.05 GMROI– Sales of $1,000,000 at 45% GP = $450,000 GM @
3.5 turns = $157,000 average cost: $2.87 GMROI• Oh, and we freed up $63,000 of cash!!!
– Sales of $1,000,000 at 50% GP = $500,000 GM @ 2.5 turns = $200,000 average cost: $2.50 GMROI
– Sales of $1,000,000 at 50% GP = $500,000 GM @ 3.5 turns = $142,900 average cost: $3.50 GMROI• And, we’ve now freed up over $77,000 in cash!!!
– So isn’t it easier to concentrate on the item / category / vendor GMROI and let the dollars flow to the bank?
GMROI
GMROI Example:
ACC
LMP
BRM
LRO
DRF
DRC
LRU
BDG
$- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00
GMROI
Avg GMROI
DELIVERED SALES PER SQUARE FOOT
Is each category performing? Where will I put this new collection? Which departments can be trimmed? Which can be expanded? Which vendors are over/under
performing?
Why Does Delivered Sales per Square Foot Matter?
Dollars per square foot– By category– By vendor
Benchmarks – – Vendor help (display departments)– Franchise company figures
Query trade publications Benchmark your store
– Compare your departments to the store What is a good store average?
What Should I measure?
Delivered Sales Per Square Foot Example:
DRC BRM BDG DRF LRU STR AVG
LRO LMP ACC $-
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
$450.00 $435.00
$385.00
$300.00 $275.00 $275.00 $265.00
$150.00
$27.00 $12.00
Sls/Sq Ft
categorySA
les
PERCENT OF REPEAT CUSTOMER PER DATE RANGE
Isn’t Having Customers Good Enough?
Effectiveness of marketing Service levels Success at building loyalty
Why Monitor Percent of Repeat Customer?
Selling Mostly New Customers Low customer loyalty Could indicate that you are
lacking in service levels Product not the quality
expected Effective public marketing Demographic of the area
Selling Mostly Repeat Customers Poor public marketing Excellent service levels Message is old Product only addresses current
aging customer base Extremely effective private
marketing
Repeat Business Concerns
What is New vs. Repeat Ratio?
Why is this important? 20% of your customers leave the
market– Move– Die
How do I measure this? Marketing tools?
– Is this a trap?? What is easy to get – first time
Percent of Repeat Customers Example:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
8
1315
1922 21
23
9 8
2224
6
% Of Repeat Customers
NET DELIVERY COST PERCENTAGE
What does it include?– Percentage of wages/benefits
• Drivers• Prep/deluxe• Service• Scheduler
– All delivery vehicle costs Delivery cost = number of
stops/delivery expense
Do You Know What Your Net Delivery Cost is?
Delivery Cost Example:
6.0%
7.5%8.4%
9.0%
10.7%
13.0%
8.4%
12.0%
10.0%9.0%
8.0%7.0%
7.5%
Delivery % of Sales
CHANGE IN CASH
Why Should You Care?
Why Should You Care?
Ever write a check to cover payroll? Do you know what your inbound
accounts payable expenses are? Do you wish you could forecast cash
on hand? Are you tracking the trend?
Change in Cash Example:
0
50000
100000
150000
200000
250000
Cash On Hand
End of Qtr CashCA
SH
Key Performance Indicators Analysis vs. Spreadsheets
Knowing What Counts!
800.888.5565www.profitsystems.com