Outdoor Specialty Retailer Operational Report Realizing Growth And Profitability Part 2 January 28, 2007 Jay Townley The Gluskin Townley Group, LLC.

Outdoor Specialty Retailer Operational Report

Realizing Growth And ProfitabilityPart 2

January 28, 2007

Jay TownleyThe Gluskin Townley Group, LLC

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Realizing Growth And Profitability

• Introduction to the Outdoor Specialty Retailer Operational Report

• Nuggets from the Report• How to effectively use the benchmarks

contained in the Report• Summary and how to order the Report• Q&A

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• 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 and strategies to grow

your business

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• 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• The strategies and benchmarks of

yesterdays marketplace – don’t work or apply in the evolving consumer-centric marketplace.

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• Nugget: 81% of retailers reported revenue was up compared to 5 years ago – with an average growth of 32%!– What has your growth rate been over

the last 5 years?– Are you higher or lower than the 32%

average benchmark?

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• Nugget: Business expenses were lower, at 36% for retailers with under $1 million in revenue, compared to 41% for retailers with $2 million and over.– Your total operating expense is a key

benchmark!– What is your operating expense as a

percent of your total revenue?

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• Other Outdoor and Indoor active sports specialty retailers– Exercise/Fitness– Ski/Snowboard

Source: National Sporting Goods Association (NSGA)

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Typical Exercise/Fitness Equipment

Ski/Snowboard

Total RevenuePer Store

$1,781,764 $1,197,183

Operating Margin(As a % of revenue)

38.2% 44.3%

Total Operating Expenses

36.2% 38.7%

Net Operating Profit

2.0% 5.6%

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• Nugget: 85% of single stores and 93% of multi-store operations have a website– 46% of single stores and 73% of multi-

store operations have E-commerce sites– An average of 7% of annual revenue is

generated for stores with E-commerce sites!

– Your web site is your lowest cost and most effective marketing communications tool.

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• Nugget: 82% of all stores have POS systems and 85% of all retailers use accounting software. However…– Less than 30% have open-to-buy

systems– Less than 25% book orders via vendors

web sites! – Are you in the 30% and 25%? You

should be!

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• Nugget: Single store operations reported an average of 13 full-time equivalent employees,while multi-store operations reported an average of 54.– Sales per employee (all employees)

averaged $110,000.– Wages, not surprisingly, are the largest

expense at 31% of operating expense and 12% of gross sales! What are your ratios?

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• Nugget: 33% of retailers track sales by individual sales floor staff – but 71% operate an incentive scheme based on sales by individuals! – What is your close rate? How many

shoppers that walk into your store actually purchase something? An increase in close rate can be an incremental profit contribution!

– New employee compensation strategies demand benchmarks.

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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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• Select what you can control, and don’t but time and effort into what you can’t control. – Examples: Total operating expense

Sales per selling square footGross margin - key categories

Mark-on vs. Realized GMSales per employeeInventory turn by category

• Start with one, if that is what it takes to get started, and add one or two at a time until you have six to eight key benchmarks.

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• 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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• Weekly reporting (timely) is preferred because – it allows you to adjust and amend your plan with our managers and staff in time to really make a difference and positively impact the business.

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• Case Study:

The Bike ShackDubuque, Iowa

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• Case Study:

Bicycles, Fitness and Running/Walking/Hiking

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• Case Study:

Population: 57,686…and fallingMedian Income: $36,785Grown last 7-years = $1.2 millionClose rate = 80%97% of revenue from repeat clients

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• Case Study:

Part of success is – benchmarking• Goals set by half-day!• Operating system is geared to reporting against benchmarks + (2)&(3)• Managers and staff are plugged in.

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• Benchmarks and performance against them can be very important to staff and staff morale.– How much do you share?– How often do you hold staff meetings? – Customer satisfaction and benchmarks

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Summary

• Introduction to the Outdoor Specialty Retailer Operational Report

• Nuggets from the Report• How to effectively use the benchmarks

contained in the Report• Summary and how to order the Report

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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 Association

www.outdoorindustry.org

Phone: 303-444-3353

Booth 56000 at the Show• Drop your card to be part of the next report

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Q & A

Thank You!

Jay TownleyPartner

The Gluskin Townley Group, [email protected]

Outdoor Specialty Retailer Operational Report Realizing Growth And Profitability Part 2 January 28, 2007 Jay Townley The Gluskin Townley Group, LLC.

Documents

average growth

profitability nugget

growth rate

business slide

report qa slide

profitability introduction

multistore operations

single store operations