By Brian Moyer
One of the most common issues I hear from retail farm markets is, “can my market sales support hiring another employee?" To determine whether we can or can't, we need to know how our market is performing and what analytics we can use to improve market performance and profitability to make informed decisions.
There are many different analytics we can use, but I'm going to focus on sales per square foot.
This is a great way of knowing how your market is performing. It can help you identify the strong and weak departments of your market. Sales per square foot are calculated by taking your total gross sales for the year and dividing it by the total square footage of the sales space. Don't include space used for office, storage, prep, etc., just space where the product is displayed and sold.
Total annual gross sales/Total square footage = sales per square foot.
How do the sales per square foot measure against other farm stores as an industry? This figure is hard to find for our industry, but the figure to shoot for is $500 per square foot for small grocery retail.
To improve the sales per square foot number, we can focus on a few things.
1. Market layout
Take a critical look at your market from entry to checkout. Are you using your displays and lighting to highlight the products to their full potential? Unclutter the store. Messy or cluttered areas will confuse customers and not encourage sales.
Do you need to revisit your floor plan? Your floor plan should guide how your customers move through the space and guide your product placement. Is the signage consistent and attractive? Remember, signage is your “secret salesperson." Place staple and popular items strategically so customers must move through most of the sales floor to get to them, exposing them to most of your offerings. Where is milk usually located in a grocery store? In the back of the store.
2. Cross-selling
Create packages or bundles of products that go together, which can increase the number of transactions or “basket value." Good signage can also help with cross-selling. One of the best ones I’ve seen was a sign for green beans. Yes, green beans. The sign said, “Greens Beans .99. It goes well with our new potatoes and smoked country ham." The sign takes you from thinking about purchasing beans to thinking about a ham supper!
3. Encourage customers to stick around.
Our customers aren't always in a hurry. Your market is a destination. There are reasons why they come to the market. Do we know what those reasons are? Use that information to create more reasons for them to hang around. Research shows that the longer customers stay in our markets, the more they tend to purchase.
Let's not forget the appearance of our market on the outside. Create inviting displays outside of the market can help increase the number of people who visit your market each day.
Of course, most of the information is in your point of sale (POS) system. How often are you reviewing that data, and what are you doing with it to improve your market performance?
Lastly, a good rule-of-thumb to determine how many employees your business can support, look at your annual gross sales. For retail farm markets, 20 – 23% of gross sales is a common method for supporting employees.
Source : psu.edu