How does your store stack up?

For nearly two decades, Furniture/Today has been tracking furniture stores’ operations and merchandise mix to create a yardstick that furniture stores can use to measure their own store’s performance up against. This year we’ve divided the data into two separate reports, the first on store operations printed in this week’s issue, and the second on merchandise mix, is slated for the September 14 issue.

Among the many statistics featured in the report are efficiency measures, many of which are calculated from store revenues and expenses. While we’d like to think all the statistics are important, some are more valuable than others. One critical measure is stock turns, a key indicator of your overall sales picture. Stock turns reported in the FSPR have inched up to three, 15% higher than the 2.6 reported the year before. How does your store stack up against that number? If your stock turns have dropped, have you had a drop in sales or is your inventory becoming obsolete?

Another critical statistic is the close ratio - how many customers visited your store in an average week and then how many of them actually made a purchase. Generally speaking, high-end stores will see fewer visitors than will low-end to mid-priced stores. The close ratio for furniture stores has hovered around 30% for a number of years. By way of comparison, the close ratio for gift and decorative accessories stores was 70% in 2008.

Impact Consulting Services described some additional statistics worthy of concern including the average ticket and the sales volume for sales employees. These stats can give you a gauge of how your store is doing with your customers as you track them over time. If the average ticket and sales volume for sales employees have slipped, do you have the products consumers are looking for? Are you communicating the best you can with your customers? Are your sales employees connecting with the customer?

This year is the first year we’ve asked about the average ticket in the FSPR; it came in at $1,000. We will be tracking it as we move forward in the future. This year’s sales per sales employee has indeed skidded lower, a median of $521,219 compared to last year’s results of $544,372. And we know that the number of buyers per sales employee took a nose-dive too, dropping to 10 from 27.

Advertising costs are important too. We know that the amount furniture stores are spending on advertising has risen slightly, going above the five percent of annual sales that’s held steady for many years, to seven percent this year. However, we all know the number of visitors dropped during 2008 so the advertising cost per visitor and per buyer has increased. How do your store’s advertising costs match up?

Furniture/Today trusts that furniture stores can use the information in this week’s FSPR to target areas where they can improve their stores’ profitability. If there’s something we’re not asking as we survey furniture stores, let us know. We’re always delighted to hear your opinions.