How’s business? You did $1,250,000 in sales last year. Good job! . . . or is it?
Anytime you can knock out $1,250,000 in sales for a sporting goods/tackle store, that’s commendable, unless of course, your sales should have been much higher.
Let’s suppose your store is 10,000 square feet. Doing $1,250,000 in sales equates to $125 per square foot, which is pretty paltry. Sporting goods/tackle stores should be producing at around $150 to $250 per square foot in sales. Thus, if you have 10,000 square feet in sales space, you should be generating around $1,500,000 to 2,500,000 in sales.
Remember, space costs money to build or rent, light, heat, maintain and provide sales coverage. If you can increase your sales per square foot, you will yield a concurrent profit.
The most successful retailers are those that yield large profits relative to their sales space utilization. This is commonly referred to as sales per square foot (sales divided by square footage) and that number is a quick guide to your selling success or otherwise. There is almost always a correlation between sales per square foot and net profits.
That said, how does a retailer increase their sales per square foot and therefore their annual profit? Dietitians say you are what you eat and I say you are what you stock! Here’s the game plan.
Increasing your sales per square foot
Merchandising— Your merchandise selection is the key to hearty sales. If your store is primarily stocked with hooks, line, sinkers and other terminal tackle, and even if your unit sales are large, the dollar sales will be fairly low. Your store needs to be filled with in demand items, in popular sizes and colors, at higher price points and that yield maintained margins well north of 40%. Stock deeply in items that sell well and have supple margins.
When it comes to merchandising, keep your inventory selection and presentation current and creative. If an item(s) are not selling, change the signage, location, price or the display. In other words, the retailer must keep the inventory rolling in and out equally fast. Be willing to take deep markdowns if necessary.
Fresh inventory— Always keep fresh new inventory arriving. The public wants to see what’s new and not just the same old stuff. If the “old stuff” sells consistently, then stay in stock.
Not all store space has equal value. Areas like end caps, front of store displays, main aisles presentation and bulk stack areas produce the greatest sales. Keep these areas filled with hot sellers at hot prices. Think in and out with goods and keep the selections fresh and changing.
Key items— Sales will always drop if you are out of stock on key, in demand items. Maintaining a positive stock position on the prime items is vitally basic to sustaining healthy sales. Solution: quarterly run ABC sales analysis versus stock position analysis. Identify the 20% of the items that generate 80% of your sales. Implement automated stock replenishment. Get educated, run the reports and learn the prescribed actions based upon the report data.
Strong online presence—Maintain a strong internet presence with a first class website and online selling. Also promote your store and sales through the use of social media. If you do not know how to do this, then seek the help of those who design websites and who know how to effective promote using social media platforms.
Stay aggressive on your merchandise mix and your pricing. Meet all advertised and internet prices. To hide from internet competitors is a prescription for failure. Openly advertise that you meet all competitors’ prices, internet or brick and mortar. In doing so, your sales, reputation and profits will increase substantially.
Business by the numbers— Conduct your business by the numbers: If you fail to gather operational data (sales, margins, expenses turns, stock outs, etc.) and understand what the numbers mean and/or take appropriate action as dictated by the numbers, then sales and/or profits will definitely head south. Solution: find out what reports are required and set about to produce same. Get educated on how to interpret and act upon the data.
Your company might be stuck in the past, i.e. you continue to do things as practiced in the past. The judicious retailer is always striving to embrace a better way of operating and therefore they expose themselves to new concepts and practices. Try new products and practices. Many will flop but many will succeed and propel your sales.
Make a plan, get aggressive and strive to produce $250 per square or more. Others do it and so can you! Make it so.