Outdoor Specialty Retailer Operational Report
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Transcript of Outdoor Specialty Retailer Operational Report
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Outdoor Specialty Retailer Operational Report
Realizing Growth And ProfitabilityPart 1
January 27, 2007Jay Townley
The Gluskin Townley Group, LLC
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Realizing Growth And Profitability
• Introduction to the Outdoor Specialty Retailer Operational Report
• Nuggets from the Report – different tomorrow
• How to effectively use the benchmarks contained in the Report – different case studies today and tomorrow
• 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 to grow your business– Tomorrow…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• Top-line growth cannot be taken for
granted & does not guarantee profitability!
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Realizing Growth And Profitability
• Nugget: Average revenue growth was 8.5% over a year period. 75% of retailers reported revenue growth.– What has your growth rate been
compared to a year ago?– Are you higher or lower than the 8.5%
average benchmark?
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Realizing Growth And Profitability
• Nugget: Business expenses averaged 39% of total revenue, with a gross operating margin of 44%.– Retailers averaged a 5% net operating
profit• These three ratios are key benchmarks!
– What are your key ratios?
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Realizing Growth And Profitability
• Other Outdoor and Indoor active sports specialty retailers– Bike Shops– Backpacking/Camping
Source: Outdoor Industry Association SROR Report National Bicycle Dealers
Association (NBDA)Note: NSGA conducts NBDA
Cost Of Doing Business Survey =
uniform reporting
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Realizing Growth And ProfitabilityTypical Backpacking/
CampingSpecialty Bicycle
Retailer
Total RevenuePer Store
$1,240,010 $549,000
Gross Margin(As a % of revenue)
44% 45.3%
Total Operating Expenses
39% 43.3%
Net Operating Profit
5.0% 2.1%
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Realizing Growth And Profitability
• Nugget: Apparel accounts for an average of 32% or revenue – but contributes 35% of margin share. – Equipment categories tend to under
perform their space allocation in terms of share of gross margin
– What are your apparel ratios?
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Realizing Growth And Profitability
• Nugget: Inventory turns vary across product categories – – Accessories 4.3 x– Footwear 3.4 x– Apparel 3.2 x– Equipment categories tend to have
lower levels of inventory turns.– What are your inventory turns?
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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 four to eight key benchmarks that can make the biggest positive impact on your business.– Examples: Total operating expense
Operating gross marginGross margin - key categoriesMark-on vs. Realized GMNet operating profitInventory turn by category
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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 for the most important ratios, foot-lines and benchmarks because – weekly allows you to adjust and amend your plan with your managers and staff in time, during a month, to really make a difference and positively impact the business.
• Some ratios are better reported monthly – so you will have a mix of frequency.
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How To Effectively Use Benchmarks
• Case Study:
B & L Bike ShopDavis, California
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How To Effectively Use Benchmarks
• Case Study:
Bicycles, Accessories,Clothing, Shoes, Service
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How To Effectively Use Benchmarks
• Case Study:
Population: 64,259 and stableMedian Income: $74,948 (above US)Seven bike shops within short walkGrown last 4-years = $940,00048.5% average gross marginNo top-tier bike brands
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How To Effectively Use Benchmarks
• Case Study:
Part of success is – benchmarking• Goals set for year: Operating Expenses, Realized Gross Margin • Operating system is geared to reporting against benchmarks• Consistent staff training and education
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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? As much as
you are comfortable with, but benchmarks are most effective when established as achievable goals for the whole business, and identified with individual performance where ever possible.
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Summary
• Introduction to the Outdoor Specialty Retailer Operational Ratio Report
• Nuggets from the Report• How to effectively use the benchmarks
contained in the Report• Summary and how to order the Report• Part 2 tomorrow covering Retailing
Strategy
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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 Associationwww.outdoorindustry.org
Phone: 303-444-3353
Booth 56000 at the Show• Drop your card to be part of the next report