THIS THURSDAY... our next GROUPtalk LIVE session, will feature Tim Quebedeaux presenting the results of The Group's Annual P&L Study for 2023!
It's a BIG DEAL!
It's only the 3rd week of January but still a busy time of the year with a lot going on. Group Centers are well underway with spring preparations. At the same time, several important programs are getting underway within The Group. The first two are included with your annual retainer.
Weekly Department Review for 2024
While the WDR is now more than 20 years in the making, last year was the very first year it became an online, live system. Group Centers accepted and embraced the new experience by uploading 5,506 weekly reports! That represented an amazing 97.3% reporting rate! The 5,506 uploads created a tremendous amount of data that is now available for comparison in 2024 and beyond. Tim Quebedeaux has been working on formatting the reporting so that the 100% reporting Centers don't even need to include any of their 2023 data this year... we already have it, saving them more time each week. We encourage you to report every week and save time the following year!
Last week, we shared a photo of our 2022-2023 100% Club Award Centers that were with us at The Fall Event 2023. It was an amazingly large group. Keep in mind there were 20 more that will receive their plaques by mail this month! The 100% Club recognizes Centers that report every week in The Weekly Department Review (WDR) over a full 52-week period (July 1-June 30). This calendar year we now have over 4,200 weekly reports as of Week 40, ending October 8th!
This week we spotlight awards from the 2022 Annual P&L Study, recognizing performance levels based on profit! Over the years it is so gratifying to see Centers progress from one level to the next. Doing so takes time and great effort and creates pride in a business that reaches these heights.
Part C – “Best Practices Standards” – Inventory Turns, GMROII, and Balance Sheet
The last parts of the Study: Turns, GMROII & Balance Sheet, are only available to the participants who report through parts 4 and 5 of the P&L Study. They can compare how they performed as compared to their different sectors – Region, Mode of Operation, Sales Levels, and then Total Group and Best of the Best. They get to compare these metrics down to the category level! The level of detail here is where they have the information to win the game!
After recognizing the Winners of the Game – in P&L Study 2022 – Part A, we begin to look at what standards they set. Besides the big KPI’s reported in the first part of the study, we now look into the next few KPI’s measured in the study.
Your Physical Facility is an important part of your business and ultimately your profitability. Besides being a leading factor in which products you prominently present to your customers, it also gives you an allowance to charge what you need to so that you are profitable. Let’s dive into some Physical Facility Standards or benchmarks. We measure 3 major ratios: Revenues per Parking Space, Revenues per Acre, and Revenues per POS Terminal. By measuring these key ratios, we compare against the benchmarks as an alarm bell. If you are generating more than the standard in any of these metrics, you should be alarmed not into action but into investigation. For example, if you are generating more than one million per POS terminal, then you want to look at your busiest weekend to determine if you need to increase the number of terminals to handle peak business. From there take action as needed.
Congrats to all the Garden Group Centers that reported in the 2022 P&L Study! To be able to even think about changing your business for the better, you need to be able to measure what you are going to change. Being able to report to The Garden Center Group Annual P&L Study is a great start! Once you have that accountability in the numbers, the all-important Key Performance Indicators (KPIs), you can begin to hold your business accountable for its profitability!
The P&L Study measures many different KPI0s. It starts with the big one, Revenue by category or department. Then it measures the next three as a percentage of those revenues, Cost of Goods Sold (and the reciprocal, Margin), Operating Expenses, Wage & Wage Benefits. Leaving us with the most important measurement that we all depend on, Profitability.
If you were with us last Thursday for our March edition of the GROUPtalk LIVE Series, you experienced Tim Quebedeaux revealing the results from The Group's 2022 Annual P&L Study. We had a large crowd assembled for the presentation and Group Centers can see the details in the recording, now available on the 2023 GROUPtalk LIVE Series Resource page from their landing page following login.
As Tim presented each area of this year's study, I was amazed. We knew from the Weekly Department Review (WDR) that sales were down in 2022 compared to the previous year. The BIG question in most of our minds was... how much would this affect profit?
Last time we finished talking about Average Inventory and how it is key to inventory management which is graded by two KPI’s: Turns and GMROIIs. Historically The Group has not done well with these two metrics.
Last time we left off with the premise that we can avoid the wearing of the red if we manage our inventory better. Inventory management can be “graded” by two important KPI’s: Turns and GMROII (Gross Margin Return on Inventory Management). Those two KPI’s are driven by three metrics, COGS, Margin Dollars, and Average Inventory. Average Inventory is a key component when analyzing these KPI’s.
Let’s start with reviewing what happened with Cost of Goods Sold and how that is related to Margin.
Commitment... It's a word that depicts The Garden Center Group experience in a number of ways. At the foundation of The Group, every Center joins with a commitment to sharing at some level. In the beginning, there may be some hesitation to jump right in but as they see others sharing they quickly see the benefits of having such an open-sharing platform. Certainly, the level of sincere helpful sharing that exists in The Group is a unique experience.
While there are a number of ways a commitment to sharing is exemplified in The Group, one of the strongest levels of commitment is sharing through our Weekly Department Review (WDR). And the Centers that receive our 100% Club Awards annually have made a firm commitment to share. This year, there are 115 Centers participating in the WDR Program, and 58 of these centers reported EVERY WEEK and received our 100% Club Award. Now that is Commitment!
Last time we left off, seeing that it took 5 years to go from 0.7% profitability to 5.3%, high achiever status, while in one year we went from 5.3% to an amazing 14.9%. Let’s dig into the three KPI’s in the Simple Income Statement to try to gain clarity on how we accomplished both feats.
The smallest piece of the pie is Operating Expenses. These expenses can be described as the other expenses section of the P&L Statement. Any expenses that are spent on things OTHER than people (W&WB) and product (COGS). This section is the lowest as a percentage of revenues, but the largest listing of accounts. Let’s look at the historical trend of our target centers in the P&L Study.
The Annual Profit & Loss Study has been an industry exclusive since 2004 and is the most comprehensive P&L study of its kind. It started with 40 centers reporting in 2004 and has grown to a high of 78 centers in 2018 and 2021. The Study made a big step in 2006 when it started measuring Average Inventory, allowing us to measure Turns and Gross Margin Return On Inventory Investment (GMROII). After only 9 centers started reporting the new metrics in 2006, it quickly gained in popularity as it ramped up to 40 centers in 2009 and increased to 60 by 2021!
From Raising the Bar to Pushing the Boundaries! In the 2019 P&L Study the top line comparison was changed from the High Achiever and Best Practices group, to only the Best Practices Group. Well, that changed in 2020, in creating the Best of the Best Group, which in 2021’s P&L Study, took the place of the Best Practices group as the lop line in the Study to compare against.
Like in marksmanship, we want everyone to aim small, miss small. This small group of Best of the Best (BOTB) had 9 of the 10 Garden Centers repeat in 2021. We wanted to show a standard above what had been presented in the past. Not only did this give everyone a higher standard to aim for, it gives the Best Practices Group (largest number ever at 48) a chance to raise their own standards.
To unlock the door to profitability, two Key Performance Indicators are needed to hit their goals, Inventory Turns and GMROII. The largest Best Practices group in the P&L Study history (with 44 Garden Centers in 2020) was surpassed in 2021 with 47! Below is a list of 37 of these Centers with the remaining 10 (Best of the Best) to follow.
2021 P&L Study Best Practices Group
Today we will reveal who is in the High Achievers Group defined as attaining between 5% & 10% Adjusted Profit in 2021. Eighteen Garden Centers were able to navigate through all the challenges of last year to achieve an average of 8% profitability.
The High Achievers of the 2021 P&L Study:
For the second year in a row, the Best of the Best group is needed for comparisons for this year’s P&L Study. The difference this year is that they replaced Best Practices in the far-right column as the top numbers for comparison. Remember, they are the top ten in profitability among those who filled out all 5 parts of the P&L Study. This year they increased profitability from 18-25% to 19-31%. Nine of the ten Garden Centers in 2020 repeated this level of profitability in 2021… Perennially Profitable Garden Centers!
In 2021 we had 78 Garden Centers report to the study, and 47 filled in all 5 parts. If you didn’t fill in all parts, please reach out to us, we can help you improve your accountability to be able to report to all 5 parts of this remarkable Study.
Gold has been a highly-valued precious metal throughout recorded history. Gold hallmarks originated to show the purity of gold in a piece of gold jewelry and included the mark of the certifying office that guaranteed the purity as well as the fineness or caratage of the gold. Later, trademarks that showed which goldsmith had manufactured the product were added.
Hallmarking gold jewelry was Europe's earliest form of consumer protection, dating back to King Louis IX of France and Edward I of England in the 1200s. As craft guilds sprung up in these two dominant markets during the Middle Ages in Europe, state-appointed assayers examined precious metal goods. Their prescribed mark, and subsequently marks for individual goldsmiths and production dates, became a pre-requisite for gold items offered for public sale.
P&L Study 2021, after the WOW year of 2020, we were prepared… and the results showed it. But how did the pandemic and the eventual supply chain issues eventually affect our readiness for 2022? The numbers show the story.
Let’s start with the number of High Achievers (5-10% Adjusted Profit) and Best Practices (10% plus Adjusted Profit). Both of those percentages are adjusted if you are a Retail Grower based on the amount of grown product sold. With a record-tying 78 participating garden centers, the total number of High Achievers and Best Practices also set a new record, with a total of 65, outreaching 61 in 2020. And even more Best Practices – 47 in 2021, three more than 2020.
We are in a world of Growing Numbers. This beautiful spring photo from Longwood Gardens exemplifies where we are in Garden Retailing today. Each beautiful flower in this photo could easily represent your guests (customers). If we take a minute to think back over the last two years it will reveal this title.
In 2020 Group Centers recorded their largest single-year gains in Total Sales with over +20%, created by a 60/40 split of Transaction Counts and Average Sale. Centers reported seeing upwards of +25% new guests with many or most being young, first-timers to gardening. Overall, the 2020 Annual P&L Study results posted new levels of performance in almost all areas of benchmarking since the P&L Study began in 2004.
You may have first seen this image last year as I shared some expectations of the Annual P&L Study from 2020 only a week away at the time. If you were there for the March GROUPtalk LIVE session when Steve Bailey and Tim Quebedeaux shared the results, you know the numbers from 2020 P&L Study were pretty incredible and set a new bar for our total Group as well as our Best Practices Centers.
