Margin, margin, margin…definitely more important now than ever!
Gross margin is a key differentiator between sustained profitability and
business failure for most retailers, especially independents and small
regional chains that can’t achieve the economies of scale available to
large chains.
Rapid turnover retailers who cluster stores in metro areas and are able
to dominate various advertising and marketing channels can afford to
operate on low gross margins. Most home furnishings retailers cannot.
With both in‐store and online shopper traffic anticipated to decline
after the Covid sales boost inevitably cools off, gross margin will be
more important than ever.
With fewer selling opportunities expected in the months ahead it is
critical that you make sure each sale is a profitable one. We all accept
the fact that the average bottom line for furniture retailers is between
4‐6% of sales at the end of the year. The difference between operating
at a 48% margin and a 42% margin speaks for itself. It can be the
difference between an acceptable profit or a devastating loss.
Right now, you need to analyze your margins, by category, vendor and
SKU. Adjust your pricing if necessary. Drop low margin items that don’t
serve a specific purpose such as a promotional SKU used for
advertising. And be careful when purchasing for your store. If you can’t
make money on an item, don’t buy it.
Margin is mental. The challenge is in the mirror.
PCG has always preached margin, margin, margin…now more than ever. Need help? We specialize in making your business work for you.
Contact us for details and a free consultation. 404-432-2137
