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(information
provide in cooperation with BizStats.com)
Overview
Retail is the second-largest industry in the United States both
in number of establishments and number of employees. The U.S. retail
industry generates $3.8 trillion in retail sales annually, approximately
$11,690 per capita. The retail sector is also one of the largest
worldwide. As many of us know Wal-Mart is the world's largest retailer
and the world's largest company with more than $256 billion (USD)
in sales annually. Wal-Mart employs more than 1 million associates
in the United States and more than 300,000 internationally.
Retail trade accounts for about 12.9 percent of all business establishments
in the United States. Of that number single-store businesses account
for over 95 percent, but they generate less than 50 percent of all
retail sales.
Gross margins in the industry are generally between 31 and 33 percent
of gross revenue but this varies widely by segment. It is important
therefore to look into the specifics of each sector before you decide
where to invest.
For more detailed Retail Industry News and Features visit: www.retailnet.com
Retail Employment
The retail industry accounts for just under 12 percent of all U.S.
employment or approximately 15 million people. Of this 15 million
many work part time or short hours. On average retail workers in
non management positions work 31 hours per week with average hourly
earnings of approximately $12.
Owning A Retail Business
For many people owning a retail business is their dream and it can
make an ideal investment, but for others the nature of the business
does not suit either their life style or their personality. Only
you and your close advisors can determine if Retail is right for
you but here are a few thought starters.
- Hours of Operation – Retail stores often
attract customers at times when other businesses are closed: evening
and weekends especially. So if you treasure your personal time
at the weekends or have other commitments that make it hard to
envision working those hours think hard before investing in this
sector.
- Customer Interface – Retailing is the
classic “in your face” interface with your customers.
Especially in specialist retail situations or in “community”
locations your customers will want to know who the owner is and
be able to converse with him/her. There is little escape. This
can tie you to the store and, if this form of close contact with
customers is not your ideal then again think carefully before
you invest. If on the other hand your business is more generic
in nature (e.g. a C Store, or Ice Cream Parlor) then the key to
your success is often more related to how you manage and select
your staff.
- Staff Management – In a retail environment
your staff can make or break the business, and while theft and
dishonesty can be a problem the bigger issue is the way they interface
with your customers. You must be able to set an example for them
to follow and you must have a very disciplined approach to dealing
with issues with your staff. If your management style or character
makes it difficult for you to handle the rigors of staff management
this might not be the industry for you.
- Location, Competition and Survivability –
Each of these issues needs to be examined against the specifics
of the retail business you are interested in acquiring. Is the
location suitable to the type of business, is there sufficient
parking, is there good road access, do you have signage rights.
How close is the nearest competition, does your store have advantages
over theirs. Will the sector your business is in survive new challenges
from the big box stores, the internet or other new entrants. Again
carefully consider these aspects and more when making your decision.
- Franchises – The retail industry has
many Franchise businesses that can provide the perfect entry point
in to the industry. It is important if you are thinking of entering
the Retail space to consider if a franchise, either new or existing
would be a better investment than a stand alone business. A franchise
comes with support, systems, marketing and brand recognition,
on the other hand there are set up costs, license fees and possibly
royalties to the paid which can reduce your margins considerably.
But don’t dismiss franchises before you take a good look
at them, in many ways they are the future of retailing.
| Retail
Financial Statistics From BizStats.com |
| S-Corporations - Profitability &
Expense Ratios: Retailing Industries |
| S-Corporations
with Net Income
(as % of Sales) |
Motor Vehicle & Parts dealers |
Furniture & Home Furnishings |
Electronics & Appliances |
Building Materials & Garden Supplies |
Food & Beverages |
| |
|
|
|
|
|
| Total Sales |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
| Total Expenses |
98.4% |
95.2% |
95.2% |
95.7% |
97.0% |
| Net Income |
1.6% |
4.8% |
4.8% |
4.3% |
3.0% |
| Detail of Expenses: |
|
|
|
|
|
| Cost
of goods sold |
86.2% |
61.7% |
70.7% |
71.1% |
73.2% |
| Officers
compensation |
0.9% |
3.1% |
2.7% |
2.7% |
1.5% |
| Salaries
& wages |
4.7% |
10.7% |
9.8% |
9.1% |
8.8% |
| Repairs |
0.2% |
0.5% |
0.2% |
0.5% |
0.7% |
| Bad
debts |
0.1% |
0.2% |
0.2% |
0.3% |
0.1% |
| Rent |
0.8% |
3.9% |
1.8% |
1.7% |
2.4% |
| Taxes |
0.8% |
2.0% |
1.6% |
1.8% |
1.7% |
| Interest |
0.6% |
0.5% |
0.4% |
0.9% |
0.5% |
| Amortization |
0.0% |
0.0% |
0.1% |
0.0% |
0.1% |
| Depreciation |
0.4% |
0.7% |
0.6% |
1.0% |
1.1% |
| Advertising |
0.9% |
3.7% |
1.2% |
0.8% |
0.9% |
| Retirement
Plans |
0.1% |
0.2% |
0.2% |
0.3% |
0.2% |
| Employee
benefits |
0.3% |
0.5% |
0.4% |
0.5% |
0.6% |
| Other
Expenses |
2.3% |
7.3% |
5.2% |
5.0% |
5.2% |
| Total Expenses |
98.4% |
95.2% |
95.2% |
95.7% |
97.0% |
|
| S-Corporations
with Net Income
(as % of Sales) |
Health & Personal Care Products |
Gasoline Stations |
Clothing & Accessories |
Sporting goods, hobbies, books &
music |
General merchandise |
| |
|
|
|
|
|
| Total Sales |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
| Total Expenses |
94.7% |
98.0% |
94.3% |
95.2% |
95.1% |
| Net Income |
5.3% |
2.0% |
5.7% |
4.8% |
4.9% |
| Detail of Expenses: |
|
|
|
|
|
| Cost
of goods sold |
66.5% |
83.0% |
59.1% |
62.7% |
64.5% |
| Officers
compensation |
3.6% |
0.8% |
3.7% |
2.7% |
2.0% |
| Salaries
& wages |
10.8% |
5.3% |
10.9% |
9.5% |
11.4% |
| Repairs |
0.3% |
0.5% |
0.4% |
0.4% |
0.5% |
| Bad
debts |
0.3% |
0.0% |
0.2% |
0.2% |
0.1% |
| Rent |
2.6% |
1.4% |
5.5% |
4.6% |
3.4% |
| Taxes |
1.5% |
1.3% |
2.0% |
1.8% |
1.8% |
| Interest |
0.4% |
0.6% |
0.7% |
0.9% |
0.8% |
| Amortization |
0.1% |
0.1% |
0.0% |
0.0% |
0.1% |
| Depreciation |
0.6% |
1.2% |
0.7% |
1.0% |
1.0% |
| Advertising |
1.6% |
0.2% |
2.4% |
1.7% |
2.6% |
| Retirement
Plans |
0.2% |
0.1% |
0.3% |
0.2% |
0.2% |
| Employee
benefits |
0.5% |
0.2% |
0.3% |
0.4% |
0.4% |
| Other
Expenses |
5.7% |
3.3% |
8.1% |
9.1% |
6.4% |
| Total Expenses |
94.7% |
98.0% |
94.3% |
95.2% |
95.1% |
|
| S-Corporations
with Net Income
(as % of Sales) |
Miscellaneous
in-store retailers |
Non-store
retailers |
All
S-Corp retailers |
Wholesale
- durable goods |
Wholesale
- non-durable goods |
| |
|
|
|
|
|
| Total Sales |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
| Total Expenses |
94.3% |
93.3% |
97.1% |
95.2% |
97.2% |
| Net Income |
5.7% |
6.7% |
2.9% |
4.8% |
2.8% |
| Detail of Expenses: |
|
|
|
|
|
| Cost
of goods sold |
64.4% |
58.7% |
78.3% |
75.7% |
81.3% |
| Officers
compensation |
3.3% |
2.5% |
1.6% |
2.5% |
1.8% |
| Salaries
& wages |
9.5% |
9.9% |
6.8% |
6.9% |
5.3% |
| Repairs |
0.5% |
0.5% |
0.4% |
0.3% |
0.3% |
| Bad
debts |
0.1% |
0.6% |
0.1% |
0.2% |
0.1% |
| Rent |
3.6% |
1.4% |
1.7% |
1.1% |
0.9% |
| Taxes |
1.8% |
1.8% |
1.2% |
1.1% |
1.4% |
| Interest |
0.8% |
0.7% |
0.6% |
0.8% |
0.6% |
| Amortization |
0.1% |
0.2% |
0.0% |
0.0% |
0.1% |
| Depreciation |
1.0% |
1.5% |
0.7% |
0.8% |
0.6% |
| Advertising |
1.1% |
4.9% |
1.2% |
0.5% |
0.4% |
| Retirement
Plans |
0.2% |
0.3% |
0.1% |
0.3% |
0.2% |
| Employee
benefits |
0.4% |
0.6% |
0.4% |
0.5% |
0.3% |
| Other
Expenses |
7.6% |
10.0% |
4.1% |
4.4% |
3.8% |
| Total Expenses |
94.3% |
93.3% |
97.1% |
95.2% |
97.2% |
|
© 2003 BizStats.com |
