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NOW UPDATED FOR 2006!
The most recent benchmarking data for Fruit & Vegetable Retailers is now available, both in print and in downloadable PDF format, with your purchase of the Fruit & Vegetable Retailers Business Benchmarking Guide. (NOTE: 2006 updates not yet available in online HTML subscription version of this guide - please call MAUS Sales Centre on 1 300 300 586 for further info.)
This Small Business Profile presents the results of a survey of Fruit & Vegetable Retailers for the financial years up to June 30, 2004. The survey was based on 21 businesses.
How will small business operators fare against the supermarket chains? How can they set themselves apart? Quality, freshness and service seem to be the keys. The most profitable firms earned higher margins, and had lower overhead structures. They had higher personnel productivity levels and better sales per square metre, all traditional improvements that are expected of the better businesses.
But surprisingly, the high profit firms' results were not the highest averages. So the high profit firms have aimed for better productivity but without compromising on some of the service aspects, perhaps the carrying of groceries to customers cars or creating salad packs and soup packs of vegetables to meet customer needs. Focusing on these areas is therefore a marketing strategy and the high profit firms have achieved good financial returns as a result.
Survey Results
These are the results of a survey of fruit and vegetable retailers. These results should not be considered to be representative of all fruit and vegetable retailers in Australia. However, they will allow business owners to identify strengths and weaknesses in the ability of their business to generate revenue, control expenses and earn sufficient profits. This is done by identifying these elements of business performance and comparing them with benchmark performance levels currently being achieved by the sample of businesses in this survey.
Most of the fruit and vegetable retailers in our survey were from the eastern states of Australia. New South Wales was the most heavily represented area, while there were no firms located in Victoria, South Australia or the Northern Territory in our sample.
Businesses from regional cities and towns (population over 20,000) and from rural areas (population under 20,000) represented around 77% of the entire group. The rest were city-based businesses.
Around 92% of businesses rented their premises and approximately 64% of those that rented were located in premises with street frontage.
The following table will give you a snapshot of the variance in results found in your industry for various Key Performance Indicators (KPIs). Each KPI (shown in rows) should be considered independently of each other. For example, a business with a high percentage gross profit would not normally also have a high relative percentage of their income spent on wages.
For each KPI, the table shows the average, high and low results found in the business surveyed. The KPIs should not be 'added together' under the high and low columns as they do not necessarily relate to the same business.
The KPIs show the 2nd highest and 2nd lowest actual result for each performance indicator. The range of values shown therefore covers the middle 80% of reported results.
| Indicator | Average | Low | High |
|---|
| Total Income (thousands) | $516.1 | $175.5 | $1,184.7 | | Gross Profit | 28.03% | 21.84% | 36.13% | | Wages & Salaries (staff only, not
owners) | 3.89% | 0.00% | 7.93% | | Rent of Premises# | 4.26% | 2.37% | 6.23% | | Vehicle Operating Costs | 2.79% | 0.91% | 4.29% | | Net Profit (bos)* | 10.35% | 5.09% | 17.22% | | Stock Turnover Rate | 60 | 35 | 74 | | Trading Hours per Week | 56 | 43 | 70 | | Total Income per Square Metre of Floor Area | $2,681 | $1,754 | $4,302 |
# calculation
excludes those firms in freehold premises *(bos) before
owners' salaries and benefits
So, how does your firm 'stack up' against these averages? These results will give you an idea of where your business falls in relation to the sample and give you a better understanding of your relative strengths and weaknesses.
The remaining expense items each represented less than 2% of total income on average; however some businesses reported some larger results for such items as:
- Interest, Bank Charges, etc of up to 3.05%;
- Other Depreciation, Lease and Hire Purchase of up to 3.56%;
- Repairs and Maintenance of up to 2.04%.
To summarise this, larger businesses had:
- Higher net profit per working owner;
- Higher gross and net profit margins;
- Higher staff costs, which were kept as low as possible due to better personnel productivity;
- More efficient use of premises;
- Higher levels of ownersapos; equity and a lower asset base;
- Higher rates of stock turnover.
The more profitable businesses:
- Were larger;
- Had higher staff costs, but these were kept in check by higher overall personnel productivity;
- Had higher gross profit margins and lower non-salary overheads, to deliver a much higher net profit margin;
- Used their premises more efficiently;
- Had higher levels of ownersapos; equity relative to total assets;
- Used relatively less assets within the business.
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