Benchmarks are vital in every retail business. They provide the business performance goals to aim for, target of aspiration.
In our work with small business retailers beyond our smart POS software we often help with benchmark suggestions. We offer the as a starting point, to guide.
While the data points are common, the numbers can vary by retail channel.
Here are benchmark data points and the values we have suggested to transforming newsagency business owners – these are hybrid businesses that are part newsagency, part toy shop, part gift shop. See what you think:
I am often asked for benchmark goals newsagents ought to aim for. Here are some benchmarks I have developed in my work with newsXpress and through Tower Systems:
- Gross profit: this is the goal gross profit for all product sales not taking into account any revenue or costs related to any agency business. The traditional newsagency average sits at 28% to 32%. For a newsagency focused on the future, the goal has to be at least 45%.
- Ratio of Gift revenue to Card revenue: 50% minimum. The goal ought to be 100% or more. If you do $100K a year in cards, target to do $100K in gifts, or more.
- Revenue per employee – $250 an hour minimum not including agency revenue.
- Revenue PSQM $4,500 – $8,500 depending on country vs. city / high street to shopping centre and depending of product mix. Higher GP lower revenue required.
- Overall revenue mix percentage targets: Cards: 25%; Gifts/toys/plush: 25%; Stat: 10%; magazines/newspapers: 20%; other: 15%.
- FLOORSPACE ALLOCATION: Cards: 25%; Gifts/toys/plush: 25%; Stat: 8%; magazines/newspapers: 15%; other products: 15%; office/back room / counter: 12%. It’s rare you make money from an office or store room.
- Mark-up goals: Stationery: 125%; Gifts 110%; plush: 110%.
- Occupancy cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Location and situation are a big factor in this benchmark. For example, a large shopping centre business will have a higher cost than a high street situation.
- Labour cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Labour cost should include fair market costs for all who work in the business. (See above).
We are sharing these benchmark goals here as a guide for other retailers to contemplate appropriate numbers for the measurement points for their businesses.
Tower Systems is not your average POS software company. We engage beyond the software, to help our small business retail partners to run more successful and enjoyable businesses.