David Brown

By the Numbers: Big Vs. Small

Are big stores more profitable simply because of their size?

Published

14 years ago

July 2, 2010

David Brown Instore July 2010 Issue

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.

Related Topics: David Brown

David Brown

David Brown is the president of Edge Retail Academy, a leading jewelry business consulting and data aggregation firm that provides expert business improvement plans to help with all facets of your business, including improved financials, healthier inventory, sales growth, increased staff performance, recruiting and retirement/succession planning, all custom-tailored to your store’s needs. They offer Edge Pulse to better understand critical sales and inventory data, to improve business profitability, benchmark your store against 1,200-plus other Edge Users, and ensure you stay on top of market trends with their $3 billion-plus of industry sales data. Contact (877) 569.8657, ext. 001, Inquiries@EdgeRetailAcademy.com or EdgeRetailAcademy.com.

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