March 13, 2003 – Looking over the fence at the Big Boys.
March 31, 2003
Filed under Features
Supermarkets sell $482 for every square foot devoted to sales. Convenience stores do $446 per square foot, department stores are around $250, and the warehouse clubs come in at $429 .
So where do motorcycle dealers come in? Are we efficient sellers? How do we rank with other retailers when it comes to revenue generated per square foot of retail space?
We have never known. But now, a new study by ProQuest Powersports finally puts a finger on these numbers, and the results are both surprising and reassuring.
This is a preliminary study. Only 28 dealers have been surveyed to date, but the information is of sufficient interest that we have chosen to present it now, with a follow-up study later in the year.
Even with only 28 dealers, the numbers are impressive. Here is a summary of the total sales involved (January – December, 2002), together with the amount of square footage for all stores combined:
Smaller dealers tend to do more business per foot than larger dealers with the break occurring around 4,000 to 4,500 feet. In the parts department, the average for dealers at or under 4,000 feet is $482 per foot, while the average for those over 4,000 feet is $346.
It appears that smaller dealers are packing more punch into their displays, sales effort, proximity to their customers, and whatever else they are doing. Whatever that is, it adds up to $136 more per foot when the year is over, and they land in the same pond as the supermarkets while the big boys are more in line with the department stores.
In the service department, we again see that the smaller dealers are getting a significantly larger bang for their brick and mortar buck. The break again comes in at 4,500 ft., and we see the smaller shops grossing $176 while the larger shops average just $93.
The pattern continues in the sales department. We see that in the new and used departments, those under 4,500 feet average $1,783 per foot, while the bigger guys get just $803.
It is clear that smaller dealers are more efficient in their selling, and get more revenue out of each 12” tile on the floor. But the end goal is not high per foot volume, but rather bottom line profit, and that comes only after many other factors have been involved. What we see here is a definite difference in the way we sell: Those under 4,500 in a department do it one way, and those with room to spare do it another.
The big boys have got to be thinking “…if I could only keep my square feet, and sell at the rate those little guys do…”.
Now, we are talking dollars.
Harold D. “Hal” Ethington has been associated with the powersports industry for more than 30 years,and he brings to the industry his experience as owner, accountant, financial analyst, and computer program developer. For the past 10 years he has been a ProQuest classroom instructor. His experience provides a view of the industry that is knowledgeable, informative, educational, and always entertaining.