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David Brown

By the Numbers: Big Vs. Small

Are big stores more profitable simply because of their size?

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By the Numbers: Big Vs. Small

BASED ON THE FINDINGS of the Edge Retail Academy, the typical big store in America (over $1 million in annual sales) enjoys an average sale value excluding repairs of $189. That is 23 percent better than the $161 average sale value of a small store (less than $1 million in annual sales). This significant difference begs the question: Are bigger stores more profitable simply because they are big and can carry a wider range of inventory or is it because they are better-run operations? One of the most common explanations for the difference is diamonds. And it is clear by looking at the chart above that big stores have a particular advantage here. But in most of the other areas it’s very close, and the share of sales from diamonds doesn’t fully account for the disparity in sales value. Our conclusion: The difference is due to the sales being achieved with each customer and each item. In silver, for example, big stores achieve an average sale value of $53 versus $51 for their peers. Two dollars is nothing. But multiply that across 16 percent of your sales and it becomes more significant. Multiply a $29 difference in gold ($186 versus $157) across every gold item sold and it begins to add up. Yes, it means big stores got big because they are good at what they do.

This story is from the July 2010 edition of INSTORE.

David Brown is the President of The Edge Retail Academy (sister company of The Edge), who provide expert consulting services to help with all facets of your business including inventory management, staffing, sales techniques, financial growth and retirement planning...All custom-tailored to your store’s needs. By utilizing the power of The Edge, we analyze major Key Performance Indicators that point to your store’s current challenges and future opportunities. Edge Pulse is the ideal add-on to the Edge, to better understand critical sales and inventory data to improve business profitability. It benchmarks your store against 1100+ other Edge Users and ensures you stay on top of market trends. 877-569-8657, Ext. 001 or [email protected] or www.EdgeRetailAcademy.com

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