Benchmarking your business can make the difference between a tough season and a disastrous season. Every quarter, the North American Hardware and Paint Association (NHPA), in conjunction with The Farnsworth Group, fields the Independent Retailer Index. This survey asks retailers to share key performance indicators and performance data from the previous quarter to measure year-over-year changes. See some highlights here from Q3 2023, and head to YourNHPA.org/index to download the report from Q4 2023.
Transaction Count and Size
In Q3, over half of respondents reported transaction counts were down year-over-year. The same percentage of respondents (41%) said transaction size increased or stayed the same.
Encourage your staff to greet each customer within a few seconds upon entering and ask open-ended questions about their projects.
Over one-third of respondents say their inventory investment greatly decreased in Q3, while 44% said it increased somewhat. Respondents were evenly split between no additional investment and a small investment planned for Q1 2024.
You may still be working through a glut of inventory from the last few years of uncertainty in the supply chain. Staying on top of cycle counts and rotating high-impact merchandising displays can help move inventory more quickly.
Gross Profit Margin
In Q3, the same percentage (42%) of retailers reported gross profit margin staying the same or greatly increasing. About 20% of retailers attribute 50-75% of the increase to inflation, while another 40% say just about one-quarter is due to inflation. The final 20% say none of their gross profit margin increase is attributable to inflation.
Now that we’re in a new year, take the time to price-shop your competitors—both locally and online—and revisit your price-matching policy. Don’t let margin opportunities pass you by.