Casual Living Store Performance Survey Retailers upbeat for 2005

Staff -- Casual Living, 6/1/2005 12:00:00 AM

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%