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Furniture Store Performance Report

By Furniture Today Staff -- Furniture Today, December 29, 2002

Profile of respondents

Nearly 275 companies completed detailed questionnaires for Furniture/Today's 2002 Store Performance Report.

One-unit operations make up 65% of the responding companies. Respondents with two to five units represent 24%, and 11% have more than five units.

The four census regions were nearly evenly represented. Companies with stores in more than one region constitute 3% of the sample.

Of the more than 1,321 units operated by responding retailers:

82% are full-line furniture stores;
14% are specialty-by-style or product specialty stores;
4% are manufacturers' gallery stores.

Style specialists include contemporary, traditional and country. Product specialists include bedding, juvenile, bedroom and dinettes.

The smallest of the retailers has annual sales of $44,000; the largest, nearly $400 million. Median annual sales are $3.7 million. By sales volume, the responding retailers are characterized as:

Small stores, with annual sales of less than $5 million (69% of respondents).
Medium stores, with annual sales of $5 million up to $20 million (19% of respondents).
Large stores, with annual sales of more than $20 million (12% of respondents).

Profitability measures
Median response
4%	Net return on sales
	Net income divided by net sales
7%	Net return on assets
	Net income divided by total assets
17%	Return on net worth
	Net income divided by net worth
Gross margin percentage	43%
Net sales minus cost of goods sold divided by net sales

Efficiency measures
Median response
Hours open a week	55
Customer visits per week per sales employee	27
Close ratio	33%
Percentage of customer visits that result in a sale
Sales per salesperson	$481,667

Transaction types
Percentage of sales by payment type
Cash	38%
Bank Cards	38%
In-house credit	14%
Deferred payment plans offered by the store and managed by the store
Other financing	10%
Deferred payment plans offered by the store and managed by a third party

Employees by function
Percentage of staff
Administrative	31%
Sales, including interior designers	38%
Warehouse/delivery	26%
Repair/deluxing	3%
Other	2%

Payroll as a percentage of revenues

Includes all payroll costs, salaries, bonuses and commisions

17%

Space allocation
Percentage of gross space, by function
Selling space	55%
Warehouse	28%
Administration	5%
Other	12%

Benefits as a percentage of revenues

Includes all payroll taxes, workers' compensation, retirement, group health, disability, etc.

Sales performance for major product categories
	Percentage of sales	Percentage of space	Number of lines carried	Gross margin%	Stock turns
*Case goods*
Master bedroom	13%	13%	5	43%	3.0x
Youth bedroom	3%	3%	2	42%	3.5x
Formal dining	8%	9%	5	43%	2.7x
Casual dining	4%	5%	4	45%	3.9x
Entertainment centers	4%	4%	3	43%	3.0x
Desks	2%	2%	3	43%	3.0x
Other home office	1%	1%	5	44%	2.2x
Occasional tables	5%	5%	5	44%	3.1x
*Upholstery*
Stationary upholstery	23%	27%	5	45%	4.0x
Motion upholstery	4%	4%	2	43%	4.2x
Motion chairs	5%	6%	2	44%	4.2x
*Other*
Bedding	11%	8%	2	45%	6.0x
Area rugs	1%	1%	2	47%	1.9x

Delivery time
	Number of weeks
*Case goods*
Master bedroom	6
Youth bedroom	5
Dining room/casual dining	6
Entertainment centers	6
Desks/other home office	6
Occasional tables	5
*Upholstery*
Fabric-covered upholstery	6
Leather upholstery	7
Recliners	6
*Other*
Area rugs	3

Damaged goods
Percentage of manufacturer defects in:
Median responses
Case goods	10%
Upholstery	5%
Accessories	2%

Advertising as a percentage of sales

Median response

Special order
Percentage of sales that are special order
Median response
*Case goods*
Master bedroom	20%
Youth bedroom	15%
Dining room/casual dining	20%
Entertainment centers	20%
Desks/home office	20%
Occasional tables	15%
*Upholstery*
Fabric-covered upholstery	40%
Leather upholstery	22%
Recliners	20%

Media use
Percentage of advertising dollars allocated to each of the following media
Newspaper ads	36%
Radio ads	11%
TV ads	21%
Direct mail ads	13%
Other	19%
Other includes special events, Web site ads, Yellow Pages and billboards

Image vs. sales promotion
Image	25%
Sales promotion	75%

Source: Furniture/Today market research and BDO Seidman

Measuring your store's performance
	Large stores > $20 M	Medium stores $5–$20 M	Small stores LT$5 M	Your store 2002	Your store 2003 goal
Source: Fumiture/Today market research and BDO Seidman
Profitability measures
Median response
Net return on sales	3%	3%	6%
Net income divided by net sales
Net return on assets	7%	7%	7%
Net income divided by total assets
Return on net worth	17%	16%	19%
Net income divided by net worth
Gross margin percentage	43%	43%	43%
Net sales minus cost of goods sold divided by net sales
Efficiency measures
For the sales floor
Median response
Hours open a week	71	58	54
Customer visits per week per sales employee	21	20	31
Close ratio	26%	26%	35%
Percentage of customer visits that result in a sale
Sales per salesperson	$577,783	$500,000	$450,000
Median response
Transaction types
Percentage of sales by payment type
Cash	27%	29%	43%
Bank cards	39%	37%	38%
In-house credit	10%	15%	8%
Deferred payment plans offered by the store and managed by the store
Other financing	24%	20%	11%
Deferred payment plans offered by the store and managed by a third party
Merchandise returns
Percentage of merchandise returned by customer for any reason
Median response
Case goods	4%	2%	1%
Upholstery	4%	3%	1%
Accessories	2%	1%	1%
Special order
Percentage of sales that are special order
Median response
Master bedroom	15%	28%	25%
Youth bedroom	8%	10%	20%
Dining room/casual dining	18%	50%	20%
Entertainment centers	15%	30%	20%
Desks/home office	12%	30%	20%
Occasional tables	10%	34%	15%
Fabric-covered upholstery	30%	38%	40%
Leather upholstery	17%	30%	25%
Recliners	15%	30%	20%
Advertising and promotions
Advertising as a percentage of sales	5%	5%	5%
Median response
Image vs. sales promotion
Image	25%	28%	39%
Sales promotion	75%	72%	61%
Media use
Percentage of advertising dollars allocated to each of the following media
Newspaper ads	37%	30%	38%
Radio ads	8%	11%	12%
TV ads	33%	29%	17%
Direct mail ads	13%	12%	14%
Other	9%	18%	19%
Other includes special events, Web site ads, Yellow Pages and billboards
Wages and benefits
Median responses
Payroll as a percentage of revenues	17%	18%	15%
Includes all payroll costs, salaries, bonuses and commisions
Benefits as a percentage of revenues	3%	3%	3%
Includes all payroll taxes, workers' compensation, retirement, group health, disability, etc.

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