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Casual Living Store Performance Survey Retailers upbeat for 2005

Almost two-thirds of retailers responding to Casual Living's exclusive store operations survey expect sales in 2005 to top 2004's performance. They expect a healthy increase, too, a median of 10%. That's compared with only 4% who expect to post lower sales this year. The nay-sayers are predicting a median 11% decline in sales.

As for 2004, half the retailers surveyed said sales for the year were better than in 2003, by a median of 10%. The 18% who had lower sales last year were down by a median of 15%.

The bottom line — net income as a percentage of sales — came in at a respectable 5.6%.

If planned capital expenditures are any indication, casual retailers are sprucing up existing stores to attract customers. More than one-fourth renovated an existing store last year and another one-fourth plan to do so this year. New stores are planned by 10% of retailers and 11% plan to expand an existing store.

In addition to adding, expanding and renovating stores, retailers will improve landscaping (24% have improved landscaping in their plans), add or expand warehouses, add delivery trucks and invest in hardware and software to automate operations.

When it comes to the merchandise mix, furniture still accounts for the bulk of sales. Within the furniture category, dining groups remain king, making up 60% of furniture sales.

Other comparisons presented in the 2005 Store Operations Report are designed to help retailers maintain and improve their bottom line. Using the benchmarks provided, store owners can compare what's happening in their store to industry norms and see what adjustments might improve their operations and profitability.

Revenue and Expense Allocation, 2004

Income

Merchandise 91%
Services 6%
Finance/credit 2%
Other 1%


Expenses

Merchandise 52%
Payroll 19%
Occupancy 15%
Advertising 8%
Other 6%


Sales Comparisons

Percent of retailers who say,
compared with 2003, 2004 was...

DOWN ABOUT THE SAME UP
18% 32% 50%
median median
15% 10%


Percent of retailers who say,
compared with 2004, 2005 will be...

DOWN ABOUT THE SAME UP
4% 33% 63%
median median
11% 10%


The Merchandise

91% OF REVENUES

Percent of Sales by Product, 2004

Casual furniture 66%
Umbrellas, hammocks, shade systems 8%
Grills 6%
Accessories 6%
Outdoor hearth, heaters 6%
Other casual products 6%
Lighting 2%


Price Points Sold

Percent of retailers selling each price point

High 50%
Upper middle 84%
Middle 54%
Lower middle 25%
Promotional 11%


Average Mark-up

COST X
&2 37%
2 44%
2.5 17%
3 2%


Casual furniture

66% of total sales

Percent of casual furniture sales Most sales are at
medians
Deep seating/conversation groups 20% $1,800
Chaise lounges 9% $365
Motion pieces 9% $488
Dining groups 60% $1,225


Share of dining group sales Most sales are at
medians
5-piece, dining height 52% $1,200
7-piece, dining height 31% $2,000
5-piece, bar height 13% $1,400
7-piece, bar height 2% $1,700
Other height 2% $999


Percent of retailers carrying

Aluminum, cast 72%
Aluminum, tabular 63%
Woven, all-weather 62%
Iron, cast, wrought 53%
Wood, other 40%
Wood, teak 40%
Wicker/rattan, indoor 34%
Resin, PVC, other plastic 26%
Mixed materials 24%
Stainless steel 7%


Umbrellas, hammocks, shade systems

8% of total sales

Percent of retailers carrying

Umbrellas 63%
Hammocks 43%
Shade systems 20%


Grill products

6% of total sales

Percent of retailers carrying

Gas grills 40%
Charcoal grills 30%
Tools 28%
Spices, marinades, rubs 23%
Cookbooks, aprons, mitts, etc. 21%
Other grills or grill-related 13%
Electric grills 11%


52% of EXPENSES

50% of Orders for Selling Season are Early Buy

Percent of retailers saying early buy is trending...

Higher 26%
About the same 55%
Lower 19%


Direct Importing

22% of retailers imported directly in 2004

importing a median of 20% of their product

In 2005, those not importing directly say they...

Have no plans to direct import 71%
Aren't sure 16%
Will try direct importing 13%


Accessories

6% of total sales

Percent of retailers carrying

other includes cushions and permanent botanicals
Tabletop 52%
Wall decor 46%
Rugs/mats 42%
Garden decoratives 41%
Holiday 26%
Other 6%


Outdoor hearth/heaters

6% of total sales

Percent of retailers carrying

Firepits 33%
Chimineas 24%
Fireplaces 24%
Heaters 21%


Lighting

2% of total sales

Percent of retailers carrying

other includes post lighting and candles
Umbrella lighting 33%
Torches 28%
Lamps 17%
Landscape 13%
Other lighting 6%


Space Allocation

Selling space 62%
Warehouse 28%
Administrative 8%
Other 2%


Capital Expenditures

Retailers spent a median of 4% of revenues on capital expenditures in 2004; they've budgeted a median of 5% for 2005

2004 2005 planned
Other includes new warehouse, distribution center, delivery trucks, computer hardware and software, POS system
renovate store 27% 26%
landscape improvement 15% 24%
new store 11% 10%
expand store 7% 11%
other 5% 5%


96% of Retailers Provide Delivery Service

No charge for local delivery but charge for delivery outside local area 41%
Charge for all delivery 50%
No delivery charges 9%


Delivery charges are based on

distance 62%
fixed fee 31%
other 7%


Sales by Transactions Type

cash check check card bank card credit card other financing in-house financing
MEDIAN SIZE OF SALE $686 $1000 $1,500 $900
PERCENTAGE OF SALES BY TRANSACTION TYPE 39% 56% 2% 3%


Percent of Sales That are Special Order

95% of retailers require a 50% deposit on special order

2004 2005 projected
casual furniture 35% 40%
all other casual products 18% 20%


The Payroll

19% OF EXPENSES GOES TO PAYROLL

Sales Staff Wages & Benefits

wages 77%
benefits 23%


Percent of Employees That are...

full-time 81%
part-time 19%


How the Sales Staff is Paid

hourly wage only 44%
hourly wage + commission 31%
salary only 12%
salary + commission 7%
commission only 3%


Benefits Offered Sales Staff

Part-time Full-time
Other includes buying trips, seminars, health club, lunches, uniforms, freeze pops, incentives, bonuses, paid holidays, training, profit-sharing and vehicles
Vacation with pay 20% 78%
Merchandise discounts 40% 75%
Health insurance 7% 69%
Sick leave with pay 6% 46%
Retirement/pension plan 6% 30%
Dental insurance 2% 26%
Other 1% 8%


Computerized Systems

Percent of retailers using

Other includes warehouse automation/management, report writing, inventory and drafting
Accounting 72%
Check or credit card authorization 59%
Customer address list/database 56%
Payroll 56%
Centralized price list/updates 49%
Vendor payments 49%
POS system 38%
Order placement/tracking 34%
Delivery routing/scheduling 17%
Other 4%


Paying for Health Insurance

Employee pays portion of all premiums 42%
median paid by employee 50%
Company pays 100% 36%
Employee pays family portion only 14%
Employee pays 100% 8%


Outsourced Functions

Percent of retailers outsourcing

Other includes incoming freight, fireplace installation and advertising
Payroll 34%
Web-site development/maintenance 34%
Employee benefits management 19%
Accounting/bookkeeping 19%
Delivery 6%
Other 3%


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