Net return on sales, Net income divided by net sales
4%
Net return on assets, Net income divided by total assets
8%
Return on net worth
43%
Gross margin percentage, Net sales minus cost of goods sold divided by net sales
Revenue sources
Merchandise sales
98%
Other income
&1%
Income from services
&1%
Finance/credit income
1%
Expense allocation
Merchandise costs
62%
Payroll
17%
Occupancy costs
6%
Advertising
5%
Other
10%
Efficiency measures
medians
Hours open a week
54
Close ratio, Percentage of customer visits that result in a sale
35
Sales per sales employee
$524,087
Sales per square feet of selling space
$156
Stock turns
3.2
Non-store activities
% of stores ...
Offering in-home design consultations, for a median of 10% of sales
54%
With a Web site, Of those with a Web site, 18% accept online orders, for a median of 2% of sales
58%
Also selling through a catalog, for a median of 20% of sales
12%
The sales floor
71% of gross space is allocated to selling
Fabric vs. leather
% of sales
Fabric
Leather
Stationary upholstery
77%
23%
Motion upholstery
72%
28%
Recliners
66%
34%
Best-selling price points
medians
Fabric covered sofa
$799
Leather covered sofa
$1,099
Recliner
$449
Casual dining
$699
Formal dining
$1,500
Master bedroom
$1,499
Youth bedroom
$499
Cocktail table
$269
Lamp
$99
Merchandise display mix for stores carrying the product
medians
Percentage of...
Number of ...
Sales
Selling space
Lines carried
SKUs on sales floor
% special order
BEDDING
Bedding
10%
8%
2
14
10%
CASE GOODS
Master bedroom
13
15
6
15
25
Youth bedroom
1
5
3
5
20
Cribs and other infant furniture
&1
1
1
2
20
Dining room
6
9
5
10
25
Dinette/casual dining
5
6
4
15
10
RTA
&1
4
3
18
15
Entertainment centers
3
5
4
15
15
Desks
1
3
3
8
10
Other home office
&1
2
3
5
32
Occasional tables
5
5
6
40
15
UPHOLSTERY
Stationary upholstery
20
25
6
40
40
Motion upholstery
3
5
2
10
29
Motion chairs
5
5
3
40
20
OTHER
Lamps
1
2
5
51
10
Area rugs
&1
2
2
40
15
Wall decor
&1
2
5
56
10
Other accessories
&1
2
10
175
10
Outdoor furniture
&1
4
2
11
20
% of stores carrying private label
% of stores carrying private label 18%
accounting for a median of 15% of their sales
Private-label products offered by retailers carrying private label
Bedding
60%
Bedroom
29%
Dining
19%
Leather upholstery
29%
Fabric upholstery
36%
Accessories
12%
Other
5%
Sales staff
Paying the sales staff takes of payroll allocation 43%
Pay methods for sales staff
% of retailers paying sales staff ...
Full-time sales managers
Full-time sales associates
Part-time sales associates
Hourly
14%
21%
40%
Salary only
47%
16%
7%
Salary plus commission
37%
38%
32%
Commission only
2%
30%
24%
Bonus for performance
29%
20%
21%
Pay rates for sales staff
medians
Lowest
Highest
Buyers
$42,000
$50,000
Store managers
$45,000
$60,000
Sales managers
$40,000
$51,000
Sales staff
$25,000
$50,000
Measuring your store's performance
Large stores >$20
Medium stores $5–$20 M
Small stores $2–$5 M
Smallest stores &$2 M
Your stores 2005
Your stores goal 2006
Source: Furniture/Today market research and Karen Haver, CPA
Revenue sources
Merchandise sales
98%
96%
99%
96%
Finance/credit income
1%
3%
&1
3%
Income from services
&1
1%
1%
1%
Other income
&1
&1
&1
&1
Expense allocation
Merchandise costs
63%
56%
58%
58%
Payroll
17%
20%
20%
20%
Occupancy costs
6%
9%
9%
11%
Advertising
5%
7%
6%
5%
Other
&1
8%
8%
6%
Efficiency measures
medians
Hours open a week
70
59
56
51
Sales per salesperson
$569,168
$508,905
$543,511
$400,000
Sales per square foot of selling space
$276
$165
$139
$101
Gross margin percentage
43%
45%
42%
43%
Return on sales
3%
2%
2%
4%
Return on assets
6%
1%
5%
6%
Return on net worth
12%
3%
9%
17%
Stock turns
3.7
3.1
2.9
3.2
Close ratio
40%
33%
30%
39%
Percentage of customer visits that result in a sale
Space allocation
Percentage of gross space
Selling
64%
62%
73%
74%
Administrative
4%
6%
5%
5%
Warehouse
32%
30%
20%
20%
Other
&1
2%
1%
&1
Non-store activities
Percentage of stores ...
Offering in-home design consultations
46%
63%
63%
47%
With a Web site
93%
78%
70%
37%
Also selling through a catalog
11%
5%
13%
15%
Payroll costs by funtion
Percentage of payroll dollars spent on ...
Administrative, office
26%
31%
32%
27%
Sales
41%
40%
44%
45%
Warehouse, delivery
26%
22%
21%
25%
Repair/deluxing
3%
3%
2%
1%
Janitorial/maintenance
1%
2%
1%
1%
Other
2%
3%
&1
2%
Advertising costs by media
Percentage of ad dollars spent on ...
TV
35%
37%
25%
16%
Newspaper
27%
26%
35%
42%
Radio
14%
5%
12%
13%
Direct mail
13%
19%
14%
9%
Other
11%
13%
14%
20%
Other includes local, state, national and regional magazines, Yellow Pages, sponsorships, in-store events and billboards
Frequency of marked-down sales
Percentage of stores taking mark-downs
Never
11%
5%
4%
10%
Annuallly
4%
3%
6%
7%
Twice a year
4%
15%
28%
32%
3–6 times a year
7%
18%
28%
25%
More than 6 times a year
14%
10%
10%
9%
Maintain a clearance area all year
61%
49%
24%
17%
Average mark-downmedian
20%
25%
23%
20%
Sourcing
Direct imports
34% of retailers imported directly in 2004
20% of their sales are accounted for by direct imports
% of direct importers importing each product ...
Master bedroom
76%
Dining room/casual dining
71%
Occasional tables
41%
Entertainment centers
39%
Desks/home office
27%
Youth bedroom
22%
Leather upholstery
54%
Fabric-covered upholstery
40%
Recliners
17%
Lamps
12%
Area rugs
9%
Other decorative accessories
18%
Outdoor furniture
6%
Other
5%
Importing form ...
China
73%
Canada
31%
Mexico
28%
Italy
28%
Vietnam
21%
Other Asian country
21%
Brazil
14%
Other Western European country
6%
India/Pakistan
4%
Middle East
4%
Other Latin American country
4%
Eastern European country
4%
Direct importers find sources by ...
Other includes trade advertising, buying group, travel to factories
Attending U.S. shows where sources exhibit
64%
Using a sourcing agent
22%
Referral by other retailer(s)
17%
Attending international shows where sources exhibit
14%
Other
14%
11% of retailers who did not import directly in 2004 will in 2005, while 4% who imported in 2004 will not in 2005
Behind the numbers
More detailed numbers on store performance are available in Furniture/Today's Furniture Store Performance Report, published in the Sept. 12, 2005, issue, and available online at www.furnituretoday.com.
Figures in the Furniture Store Performance Report are for fiscal years ending between Dec. 31, 2004, and May 31, 2005.
The Furniture Store Performance report gives retailers benchmarks to measure profitability, employment practices, merchandise performance and sourcing, buying and advertising. This year's full report shows both revenues and expense allocations for stores at various sales volume levels and by region.
Useful definitions
Return on assets = net profit (after tax) divided by total assets.
Return on net worth = net profit (after tax) divided by net worth (total assets minus total liabilities).
Gross margin = net sales minus cost of goods sold (including freight and shrinkage, excluding handling).
Gross margin percentage = gross margin divided by net sales.
Stock turns = cost of goods sold divided by annual average inventory (derived by adding the inventory at the beginning of the year to the inventory at the end of the year and dividing by 2).
Medians are the middle point for any range of figures. When medians are given, it means that one-half of the furniture stores reported figures above the median and one-half reported figures below the median. Unlike averages (means), the median is not distorted by unusually high or low figures that may be reported.
Sales per salesperson is calculated by dividing merchandise sales by the number of sales employees.
Sales per square foot is calculated by dividing merchandise sales by total square feet of selling space.
Close ratio is calculated by dividing the average number of customer visits per week that result in a purchase by the average number of customer visits per week.
Payroll expenses include commissions and fringe benefits.
Fringe benefits include all payroll taxes, workers' compensation, retirement plans, group health insurance, disability insurance, etc.
Occupancy costs include real estate taxes, utilities (heat, lights, water, sewer, power), building rent and depreciation, interest on mortgage indebtedness, personal property taxes, depreciation on furniture, fixtures and equipment, amortization of leasehold improvements, property and casualty insurance, building repairs, cleaning and maintenance supplies. Delivery vehicle costs are excluded.
Part-time employees are defined as those working less than 30 hours per week.
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