Canadian Retailer - Fall 2013 - 21

CONSUMER RESEARCH

MEASURING UP
New benchmarking survey helps retailers gauge
performance and growth potential
BY SEAN C. TARRY
ACCORDING to the Retail Benchmarking Survey, Canadian

retailers enjoy higher sales and gross margin per square foot
than US retailers. However, this is eroded by high labour and
occupancy costs.
PwC Canada has partnered with the Retail Council of Canada (RCC) to conduct a high level retail benchmarking survey
with Canadian retailers. The report enables retailers to determine where their performance ranks against their competitors
in sales, general and administrative costs (SG&A), as well as
several key performance indicators (KPIs).
"In conversation with RCC, we decided that there were about
30 key KPIs that retailers like to measure," explains Ilya Bahar,
national leader for PwC retail and consumer consulting practice.
"We started the survey by asking retailers about their average
sales per square foot and other common indicators, but quickly
realized we wanted to dig deeper than that."

Apparel leads grocery and specialty with significantly higher gross margins on sales. This is
a result of apparel's unique and high priced fashion, and grocery's highly competitive environment of low price, replenishment goods.
Cost items analysed included store labour and
store occupancy, as well as spend in functional
areas like finance, IT, HR and supply chain, providing a deep look into the performance of retailers.

Looking forward

The report also draws the conclusion that as
omni-channel retailing continues to emerge,
the impacts are evident in costs across the organization-something that retailers will want
to pay attention to as they continue to evolve
their operations.

NET SALES VS. G&A % - APPAREL <$300M
25
20
G&A (%)

Gross margin

to matter when it comes to overall performance.
Many retailers are going through acquisitions,
ending up with multiple banners. To a large extent they leave these banners to operate as they
had before, missing an opportunity.
"When retailers acquire and don't assimilate
these acquisitions, they're not taking advantage
of synergies that may exist between them."

15
10
5

100

150

200

250

300

SALES ($Millions)

Key findings-cost management, size and omni-channel

According to Bahar, there are a number of findings within the
report that will interest retailers. Data suggests cost control is
a stronger contributor to profitability than high gross margins,
while there's a strong correlation between cost management
and performance. There's a large gap in performance between
top performing retailers and those registering on the low end.
And size doesn't matter on G&A costs.
"What we found most interesting was the wide differences
between retailers in virtually everything we measured," says
Bahar. "Even when we narrowed it down to a single sector, like
apparel or grocery, there were significant gaps in performance
between retailers."
One reason that may help explain this difference, explains
Bahar, is retailers' focus on cost management.
"It's evident in our findings that retailers who are more focused on cost management are producing a better bottom line
than retailers who are focusing on prices and gross margins."
Bahar also points out that the size of the retailer doesn't seem

"As retailers move online, two items are
changing dramatically-marketing costs and
supply chain," explains Bahar. "Retailers will
watch those costs so they're in balance with increased revenues."
The partnership between PwC Canada and
RCC in conducting this survey is a real advantage to Canadian retailers. Bahar says, "It represents an opportunity for Canadian retailers
to gauge their performance, to see where they
can improve and to grow their business. Participants received individual reports that compare their performance to their peers and have
found the insights very valuable."
For more information about PwC's Retail
Benchmarking Survey and to download the
full report, visit www.retailcouncil.org or
www.pwc.com/ca/retail.

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Canadian Retailer - Fall 2013

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