| Figure it out: Keeping an eye on the right numbers is essential to a glowing future |
By: David Little, MD of Poplars Garden Centre
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Posted: Friday, January 7, 2011 2:56 pm
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David Little (below right) has been the managing director of Poplars Garden Centre in Toddington, Bedfordshire since 1999 and is the fourth generation of the Little family to control the company, whose horticultural roots go back to the 1890s. Poplars receives visits from around a quarter of a million customers a year and turnover is in excess of £4 million. It is also a proud member of the both the HTA and GCA, of which David is an executive committee member and area chairman of the North Thames branch. Here David continues his contribution to our ‘view from the shop floor’ series.
We owe a huge debt of gratitude to the founders of the garden centre industry; from the very beginning there has been an enormous exchange of information. Trade associations have been born and continue to prosper because of that desire to share successes and failures, measure performance and pass on advice and words of wisdom gathered from years of experience.
This exchange of information has developed out of respect for one another, where rival companies see each other as friends and allies first and business competitors last. I’m delighted that those values still hold true today and the desire to exchange ideas and information is as strong as ever. Comparing financial and business performance is now called ‘benchmarking’ and retail horticulture is one of the last places in which this practice is not only surviving, but positively flourishing thanks to technology, which has given us an even greater ability to analyse performance.
I thought I would share with you some of the things we measure at Poplars, what we benchmark and what we might be looking at in years to come.
Like every business we measure and record sales, both including and excluding VAT. For our internal reporting we analyse 20 main departments and measure sales day by day, week by week as well as monthly and annual reporting. We measure transaction numbers in just as much detail and produce average sales values. The value of goods in our customers’ baskets and trolleys has steadily risen over the last few years. In our restaurant each transaction yields £8.25 excluding VAT. Through our garden centre tills we take on average £22.20 ex VAT. Therefore a typical customer who uses our restaurant and makes a purchase elsewhere is spending over £30 every time they visit. Of course this is just an average, which comprises some exceptional days when average spend across the store rises to nearly £50 per visit as well as some of our poorest days where figures are nearer £15 per visitor.
Our monthly sales are compacted into 12 categories for industry analysis and shared with around 60 other companies using the GCA’s Barometer of Trade. This gives us access to very accurate data that is just a few days old. In months of tremendous growth we can see how we have performed – our aim is to always be above the average. This way we will be taking market share at a faster rate and growing more rapidly. Conversely when the weather and the economy conspire against us and our monthly figures are disappointing we can turn again to the barometer to see how the rest of the market is doing. A good friend once described the barometer as a comfort blanket in times of little or no growth. Whenever there is a yardstick to measure ourselves against we must make the most of the opportunity. So when we see our friendly rivals outperforming us in certain areas we are compelled to find out why. Have they found new products that we haven’t introduced yet? Or maybe they’ve put together some great promotions or a fantastic marketing campaign. Perhaps they have simply put their prices up or changed their layout. Whatever our competitors have done we know that they are experiencing success and we can benefit from that success too by asking them how they did it and learn from their experience. Building those friendships, exchanging information and sharing best practice is vital to our business.
Analysing turnover and profit per square metre helps us set store layout and allocate space accordingly. By looking at profit per product per square metre we know which areas of the store are the most profitable and which areas may need more attention. Margin control is vital to every business. I’m sure we can improve in this area judging by figures quoted from other garden retailers. As always we have to find the right balance between margin and volume to maximise profits.
We don’t just exchange data with other garden retailers; we talk to suppliers and manufacturers too. We monitor our purchasing and compare ourselves year on year. This helps us focus our time and our display space. Suppliers who are increasing their level of business with us clearly have products and promotions that our customers respond to. We want more of the same from those suppliers.
So what else do we measure? We continually monitor our staff budget and actual spend. As wages are so closely linked to sales we have to manage the wage bill throughout the year. We aim for 19 per cent of sales as our total wage cost. This includes our catering department, which traditionally works on a higher percentage of wages to sales. We monitor and record till variances and investigate all instances of till shortfalls and excesses over £5. A typical year will see our tills short by around £400 overall. It’s vital that our till operators know we check these variances and investigate when required. We also monitor the value of goods returned as either unwanted, faulty or in the case of plants have failed to establish. Typically we exchange around £700 of goods each month, although December’s figure is much higher due to the Christmas electrical goods and illuminations.
There are many other facts and figures that we measure and compare, however some of the most important things in our business are difficult to put values to: staff morale, customer satisfaction, product quality, level of service, ambience and atmosphere are all vital for continued success. As technology develops further we’ll soon have every bit of information we could ever desire at our fingertips; we’ll know who buys what, from where and when. We’ll know an enormous amount about each and every customer, their buying habits and their gardens. We’ll know who to target with specific offers and when to do it. We’ll share even more data with each other and we’ll use that data to buy better, sell better and improve our profitability.
Whilst we may measure many things we don’t let the accountants and the number crunchers run the business. The facts and the figures may guide us in the right direction and show us what is possible, but there is no substitute for a little gut feeling and a lot of experience. |
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