Author: Mark Fletcher

I track average sale value for my stores when assessing business performance monthly, by day of week, quarterly and annually. It is a valuable metric and a useful target to best over time.

In one of my stores, the average sale value for January was $12.35. This is in a  business without lotteries, tobacco and convenience lines, where magazines and papers represent under 20% of revenue.

The $12.25 result is up 11% from the previous year for the same location. This increase is excellent as it records valuable growth before even considering transaction count growth.

Three key metrics to focus on in any retail business are:

1. Transaction count.
2. Average sale value.
3. Overall gross profit percentage – a factor of buying and / or mark-up.

Focus on these and other metrics important to you will be strong.

I like the focus on average sale value as it is a simple metric, easily understood by all in the business and easily targeted for growth.

Product placement, customer service and the sales counter experience all play into maximising the average sale value  achieved.

Thoughtful adjacency placement can drive impulse purchases on the shop floor.

Helpful but not intrusive shop floor engagement can guide purchases to a deeper basket, which lists purchase value.

A cleverly structured range of counter offers backed by helpful over the counter engagement can see items easily and valuably added to the basket at point of purchase.

This is why I like the average sale value metric. It is easy to articulate these things to staff, easy to get them on board and working with you.

Track the value. Note it in a common place. Make it the focus of team meetings. Ensure people are as focussed on growing this as you. Share the goal and rejoice in growth. Work to understand any decline.

Also, know that it will vary by season. This is why year on year comparisons for the same period in the calendar year are important.

One way any business can among cash flow is to delay paying creditors. Suppliers often factor the average collection time into their business cost model. A challenge arises when the average collection time extends beyond the anticipated.

Two suppliers I spoke this week mentioned seeing significant increases in average collection time. Each saw it grow by close to 20% in the last year.

One supplier was now at close to sixty days for accounts with small business newsagents. Their response is expected to be an increase in the benefit for ‘early’ settlement, by 30 days.

The other supplier is looking at a price increase to reflect this growing cost of doing business.

Thee challenge is some of these suppliers, especially the smaller ones, are squeezed at both ends – on price and on settlement time.

I’d like to see suppliers give benefits to those who pay on time or early and penalties to those who pay late as it the late payers who impose greater costs on businesses. Those who pay early or on time should not suffer because of the late payers.

I get that small business retailers don’t always have the money to pay on time. However, making that the problem of a supplier is an unreasonable joist on the supplier, which they have to cover somewhere.

Tough as it is, if you think you may not be able to honour the payment terms of a supplier, don’t purchase or make other arrangements so that you can pay on time. To say to a supplier who has supplied that you can’t pay is unfair. You may think you have won when they agree to extended terms. The reality is there is a cost somewhere, to someone. It may not be obvious right away but there will be a cost.

I expect more suppliers will take a tougher stance on payment terms with more benefits flowing to those paying early or on time. This would empower these businesses, enable them to be more competitive in retail. This is competition at play. Smart suppliers will seek out these early / on-time payers as they will be more valuable to them.

The Treasurer was on TV last night saying that passing a tax cut for businesses, including small businesses, would see the businesses increase wages. Maybe I am missing something for I don’t see the two as connected in this way. Wages are a pre tax cost of business.

If the government succeeds in reducing tax paid by business do you expect wages to increase?

Yes, all employees, casual, part time and permanent, are to be paid to attend team meetings. Fair Work is clear on this.

A newsagency employee contacted me last week to ask whether they are supposed to be paid to attend team meetings at the business. They had been with the business for three years and had always not been paid or team meetings. A friend at university told them they should be paid. This is what got them asking me.

The situation is exacerbated by the need for them to travel 45 minutes to and from the shop. This makes it a three hour commitment to attend a meeting.

I suggested they contact Fair Work if their employer said no when they asked them, explaining what I understood but advising that it is best is FairWork advised them.

The challenge for the person who contacted me is they feared losing their job if they asked their employer to be paid. This led to a deeper discussion about the workplace and their situation. The discussion revealed other challenges: no regular payslip, being paid at the wrong level for the work allocated to them and the requirement they pay for uniforms.

I explained the law as I understood it and again suggested they contact Fair Work. If what I was told was true, there are too many problems I think to navigate this by talking to the employer.

After the call I did a quick calculation and figured the employer could be entitled to thousands of dollars.

Next time you host a team meeting, ensure people are paid or compensated in a way that is 100% acceptable to them, without any pressure from you.