Numbers, Numbers, Thrifty Numbers
It's all about understanding how well stuff is turned into money
The fun thing about thrift is the constantly changing mix of goods. Figuring out how to turn bags and boxes of random stuff into an organized and shoppable store draws great merchants. Thrift merchants get to be a lot more creative than their traditional counterparts.
At its core, all retail is about merchandise, merchandising, and appropriate pricing. Selling tires or used tee shirts, the idea is the same. The benchmarks vary, the metrics work about anywhere.
Consider these:
Sales per square foot - Sales divided by square feet.
Average transaction - On average the total of each sale.
Average pieces per customer - How many items customers buy.
Average price per item - Total sales divided by the number of items sold.
Average sell-through rate- inventory received versus sold
Revenue per employee hour - A key measure of productivity
Sales last year versus this year - comparison of progress in sales
Gross profit - money before the bills are paid.
Net profit - money after the bills are paid.
Sales per square foot - how much each foot of a facility, on average generates.
The benchmarks may vary between industries. They are just various ways to measure how well we turn stuff into money.
The creativity that attracts great merchants to thrift can also be a handicap. All that interesting and unexpected stuff can hamper business retail decisions.
There is old and valuable, and there is just old.
One thrift merchant I know loves old furniture. He prices these items based on his love of sometimes outdated styles. They end up sitting around, taking up space for months. When that happens those square feet are not producing revenue. Granted, thrift pricing is a balance between art and science.
Never fall in love with your inventory.
Another was proud of how fast a batch of unusual items sold. I’m thinking, not so great. Basically, he sold through a hundred similar items in two days. Great, top-line sales were up for a couple of days. What if he had charged more and it had taken a week or even two to sell through. Which would have been better from a business perspective?
I would argue selling through slower would have been a better business decision.
One of my favorites is average transaction, how much each person spends each time. It only has two components, number of pieces sold and the price per piece. Moving either or both of those up over time is a secret to success.
My other favorite is revenue per labor hour. Where average transaction measures top line success, revenue per labor hour is a big measure of bottom line success.
Whatever you focus on, knowing where you are will help you know where you are going.
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