3 Key Strategies to Increase Retail Revenue- Lisa Langas

8/4/2019 3 Key Strategies to Increase Retail Revenue- Lisa Langas

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3 Key Strategies to Increase

Retail Revenue and ReduceCosts

Presented byLisa Langas

Golf Retail Consultant

GIS February 4, 2009


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AGM Survey Results 2008

Private Public Resort Off-Course

# of round played 30,606 42,631 50,329 N/A

Shop Sq Footage 1,239 1,293 1,766 5,036

Gross Merch Sales (000) $484 $487 $1,207 $2,875Dollar Per Round 15.82$ 11.43$ 23.98$ N/A

Dollar Per Sq Foot 390.90$ 376.77$ 683.50$ 580.95$

Gross Profit % 30.9% 34.2% 45.4% 38.9%

Cost of Sales % 69.1% 65.8% 54.6% 61.1%Turnover Soft Goods 2.5 2.4 3 3

Turnover Hard Goods 2.2 2.2 2.6 2.7


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3 Key Retail Strategies

Agenda:

Provide simple tips and solutions toimplement now to increase retail sales while

reducing costs Right Product/Merchandise selection

Right Price/Pricing Strategies

Staff Utilization


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Right Product

Who is your customer? Survey

Visual

Written

POS analysis

Data collection

Results Merchandise selection relevant to customer?

Brand

Pricing

Type


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Right Product

Control Merchandise Purchasing Open to buy plan

Purchase Orders

On Order logs

Sourcing for Merchandise: Regional and National PGA shows

Off-Price retail show Las Vegas Regional and local merchandise mart shows

Internet offerings


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Right Product

Merchandise Performance:

Stock to Sales performance

Vendor analysis

Average retail selling price point

Markdown analysis

Make changes immediately


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Right Price

Initial Markup

High enough to meet profitability goals?

What is eroding initial markup daily?

Monitor via POS system

How to increase without major impact on retailprice


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What is Initial Markup? It is the difference between the wholesale cost and

the original retail price.

Retail Price $100

Wholesale Cost - $ 48

Initial Dollar Markup Up =$ 52

It needs to be large enough to cover operationalexpenses and discounts like markdowns and stillprovide a profit.

Right Price


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Key factors you need to know to establishthe correct amount of Markup: What is your net profit goal? Is this the same as

your Gross Margin goal?

What are your operating expenses as a percent toyour retail income? Are shipping costs included inyour golf shop expenses?

What is your actual Markdown Rate? Do you pre-plan markdowns to take in season and use anestimated markdown percentage to calculate?

Right Price


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Profit Goals The net profit goal is the amount of income as a

percent to retail sales after paying all expenses for

operating the business:Net Profit Goal $ 70,000

Retail Sales Goal $ 350,000

Net Profit % = 20%

For this shop, the goal is to make $70,000 (beforetaxes) which is 20% of the total income derivedfrom Retail Sales

Right Price


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Operating Expenses Operating expenses like payroll, utilities, office

supplies, etc. also need to be accounted for in your

initial markup as a percent of the total retail income:Operating Expenses Budget $ 52,500

Retail Sales Goal $ 350,000

Operating Expenses % = 15%

For this shop, the operating expense budget is $52,500which is 15% of the total income derived from RetailSales

Right Price


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Markdown Goal Markdowns are a normal expense in conducting

any retail business! Markdowns should be pre-

planned and the total dollar amount is representedas a percent to total income.

Markdown Budget $ 87,500

Retail Sales Goal $350,000

Markdown Rate % = 25%

For this shop, the markdown budget is $87,500which is 25% of the total income derived from

Retail Sales

Right Price


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Golf Shop 2009 Retail Goals for$350,000 in Net Retail Sales:

Dollars %

Net Profit $ 70,000 20%

Operating Expenses $ 52,500 15%

Markdown Rate $ 87,500 25%

Right Price


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Profit +Expenses+ Reductions = Initial Markup%Retail Sales + Reductions

% method: 20% + 15 + 25% = 60% = 48.0%

100% + 25% 125%

$ method: $70,000 + $52,500 + $87,500 = $210,000 = 48.0%$350,000 + $87,500 $437,500

Right Price


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Putting it all together:

Net Profit $70,000 + 20%Operational Expenses +$52,500 + 15%

Markdown/Reductions +$87,500 + 25%

= $210,000 = 60%Cost of Inventory + $140,000 + 40%

Total retail sales = $350,000 = 100%

Right Price


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How do I use my initial markup percent todetermine the correct retail selling price?Divide the known cost price of themerchandise by the costcomplementofthe markup goal.

100%Markup Goal - 52%*Cost Complement = 48%

*Soft goods markup after reviewing business

Right Price


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Correct way to use initial markup percent: Calculation using our quick tip:

Wholesale Price $33.00

Cost Compliment .48Original Retail Price = $68.75

Round this figure up to an even $69.00 or $70.00 for

pricing purposes.

Right Price


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Incorrect way to use initial markuppercent:

Why cant I simply take the wholesale price and

multiply times 1.52? (100 plus the markup?)

Wholesale Price $33.00

100 plus markup x 1.52

Original Retail Price =$50.16Round this figure up to an even $51.00 for pricingpurposes.

Right Price


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Retail MarkupBy using the compliment of yourmarkup you are determining the dollar amount of markupneeded based upon the retail price

$69.00 - $33.00 = $36.00 markup

$36.00 $69.00 = 52% markup as a percentage of theretail price

Cost MarkupWhen you use the markup plus 100,

this is determining the dollar amount of markup neededbased upon the wholesale cost.

$50.00 $33.00 = $17.00 markup

$17.00 $33.00 = 52% markup as a percentage of the cost

Right Price


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Right Price

Pricing Programs

Multiple tiered pricing

Low

Mid

High

MSRP

Value pricing Loss leaders

Impluse products


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Pre-plan your Markdowns! Establish a markdown budget per month as discussed

in our initial markup section!

Can spend each month as necessary to move slow

sellers, or save to use for larger sales. Controls the amount of dollars you spend on

markdowns and helps you to implement yourmarkdown strategy.

Right Price


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What does a markdown strategy or plan looklike?Step 1. First start with frequent/smaller deliveries of

inventory! If the golf shop doesnt get overstocked bycontrolling flow of goods into the store, you donthave to take as many markdowns.

Work deliveries for softgoods back to previous

months color stories or basics so that you cancontinue to sell product at your retail price.

If purchasing off price goods, factor into your salespromotions to help pay for markdowns oninventory with less markup.

Right Price


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Markdown Strategy cont:Step 2. Develop plan to I.D. slow selling

merchandise. This is done by determining howmuch product you want to sell in a given time periodand than determining your plan of action to make itsell:

Time: 4.0 turnover goal = 90 days selling model

Amount sold: Plan to sell 50% of inventory in 45

days. Action: Merchandise not meeting this goal subject

to markdown immediately.

Right Price


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Markdown Strategy cont:Step 3. Set markdown plan of action:

a. Rotate/Focus/Signage = 50% sell thrub. 1st markdown soft sale most profitable

c. 2nd markdown more aggressive

d. 3rd markdown final clearance

Right Price


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Calculating your Markdown Rate:Wholesale cost $34.75

Our Retail price $73.00

Sold for price $54.75

Original Retail Sale Price

Markdown Dollars $18.25 $18.25

Retail Price $73.00 $54.75

Markdown % = 25% = 33%

Right Price


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Staff Utilization Is everybody on the same page?

Top down approach to operation

Are you investing in them? AGM/PGA programs

Do they know/understand the retail business? Utilizing pos system to improve sales via staffing

Are they empowered to generate sales

Rewards and incentives Team atmosphere

Staff Utilization


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Staff Utilization

Training programs Sales training Customer service standards Product knowledge

Visual merchandising standards Daily/weekly/monthly

Creative displays Rotating merchandise housekeeping

Mini face lift every year

Paint Stain Clean carpets Replace fixtures


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Resources

Lisa LangasGolf Retail Consultant

www.lisalangas.com

[email protected]

303-470-3406

Association of GolfMerchandisers AGM

Desane Blaney ExecutiveDirector

www.agmgolf.org

Tom Hoch [email protected]

405-524-0505

www.tomhoch.com

Off Price show Las VegasFebruary/August

www.offpriceshow.com

Magic apparel show

www.magic.com

National Retail Federation

Smartbrief daily e-mails

Retail trends and informationwww.nrf.com
http://www.lisalangas.com/mailto:[email protected]://www.agmgolf.org/mailto:[email protected]://www.tomhoch.com/http://www.offpriceshow.com/http://www.magic.com/http://www.nrf.com/http://www.nrf.com/http://www.magic.com/http://www.offpriceshow.com/http://www.tomhoch.com/mailto:[email protected]://www.agmgolf.org/mailto:[email protected]://www.lisalangas.com/

3 Key Strategies to Increase Retail Revenue- Lisa Langas

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