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Close ratios and stock turns decrease; gross margin increases

Furniture store efficiency measures are a mixed bag this year. The customer close ratio inched downward from 25% last year to 22% in 2016, and stock turns decreased from a median of 4.3 times to a median of 4 times this year. Meanwhile, the gross margin increased from 46% in 2015 to 46.5% in 2016, and the sales per square feet of selling space remained flat at $200.

Price points are also all over the board at retail. Median best-selling price points for 11 of the 27 furniture and accessory products tracked over the last two years remained the same, while nine decreased and seven increased.

The best-selling price for a leather motion sofa increased 16.1% from a median of $1,549 to $1,799; prices for casual dining increased 5.6% to a median of $949; and the best-selling leather sectional sofa, the most expensive item on the floor, rose 2.7% to a median of $3,799.

Best-selling prices for a queen-sized mattress decreased 10.5% to a median of $849, while a formal dining table and six chairs slipped 12.5% to a median of $2,099.

The majority of paying customers this year, at 56%, used personal credit cards for their furniture purchases, while 20% of buyers paid by cash, checks or checks cards.

Private-label financing is offered by three-fourths of responding furniture stores, and nearly half offer second-look options. As far as sales transactions, 21% are through private-label financing, and 3% are on in-house credit.

With full-time furniture store salespeople, nearly half are compensated by commission only, while 21% are paid an hourly rate, plus a commission, and 17% are paid through a salary, plus a commission percentage.

Efficiency measures

Medians

Gross margin percentage 46.5%
Stock turns 4.0 X
Close ratio 22%
Customer buyers per sales employee per week 10
Percentage of customer returned goods 2%
Total number of hours store is open per week 64 hrs.
Average square feet of selling space 30,000
Sales per square foot of selling space $200

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