Ian Baldwin: The Five Numbers Garden Retailers Should Be Using
October 22, 2018 
Note: The following is the latest blog posting by garden retail industry consultant Ian Baldwin. It was originally posted on Oct. 15, 2018.
Traveling the country working with independent garden retailers, I know that owners and managers constantly wonder how their year compares with that of their peers 300 or even 3,000 miles away. The fear of falling behind industry standards is understandable when you are working hard in your own trenches. It’s easy to feel isolated. I get asked a lot, “what are you hearing this year, how are others doing?”
As I mentioned in my last post, the good are getting better and winning market share from the less successful. For many years, we have focused our business on helping our clients use the numbers that really matter. While there’s a lot more to success than just a few data points, most of the winners do in fact use just a few data points to make the good decisions that keep them winning. That’s their secret sauce.
Now that almost everyone has a point-of-sale (POS) system, too much information can be the problem, not too little. Data is available on every aspect of the company, from buying strategies to performance reviews. Owners and managers simply don’t have the time to clarify what is crucial from what is just interesting. So they either don’t use the data even if they have it, or they get buried in the wrong data. Unless you are going to invest in extra staff to track and analyze all the data, it just puts more work on the same few people.
So how do owners and managers decide which data points matter most?
It’s Just 5 Numbers
Simply, they let us help. We have narrowed the answers down to just five numbers each month. These, together with a few simple but crucial calculations, allow retailers to make the right decisions without more office time and endless reports. Some of our clients have been using this approach for more than 10 years and are absolutely beating the street when compared against the industry in general.
We focus on what matters most in retail. With 60% to 80% of sales revenue being spent on just two costs — inventory and labor — we keep the numbers where they matter for time-crunched owners and managers.
From these numbers, our clients can track sales and/or customer growth, margin management, customer spend, labor efficiency, and retail profitability. But unlike traditional industry reporting, which focuses on the topline of sales volume, we go down much deeper to see what’s left after inventory and labor costs, or gap dollars for those in the know.
Gap dollars, (accountants might refer to it as margin after labor) is like an operating profit. By subtracting the costs that you have quick and relatively easy control over (like costs of goods and labor) from sales, you can see what’s left to pay those expenses which are hard to reduce such as rent, admin, energy, debt repayment, and so on.
If your gap dollars are not increasing faster than the cost of being in business, you’re going backwards, no matter what the topline sales numbers tell you.
Share and Compare — Finally!
You may be aware that Dr. Charlie Hall at Texas A&M has recently launched a national key performance indicators sharing network for growers. We are using the same platform to create “The 5 Numbers Project” (T5NP) for garden retailers: secure, online, anonymous business comparisons, available at your desktop 24-7.
What’s the goal here? We believe there is a strong desire to have credible national industry data to compare with to see how the industry is doing as a whole, and to track your own business’s performance in a visually compelling way. We want you to have a confident answer when your loan officer says, “How do you compare with the industry?” or when you are trying to value your company for sale or generational transition.
Best of all, the dashboarding format will give you an easy way to visually show your team the metrics you want them to focus on, so they can help you move the needle where it matters most.
All Are Welcome!
All independent garden retailers are welcome to join this new industry-wide benchmarking project, regardless of what peer group, buying group, or networking group you already belong to. All are welcome, as long as you’re a retailer. We love our vendors, but unless you have your own garden retail numbers to share (anonymously, of course), then this isn’t the project for you.
The first round of subscriptions will be open only from Nov. 1-Dec. 23, so you can be onboarded and up to speed before Spring 2019 hits. Every Tuesday for the next six weeks, we will feature one of the 5 Numbers and what it can do for you, and share more about how the platform will work, Stay tuned!
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