nursery matters JOHN BARKER
Barking
Mad
john@pramland.co.uk
This month Pramland’s John Barker is focussing on margins and how after compiling data and analysing his own margins, found some very interesting results.
H
ello one and all. I trust the recent bout of sunny weather has you skipping to work in the morning ready for another fun day in the nursery industry. Before I get to the crux of my article this month, I want to mention someone that recently announced they are leaving the industry – Julie Shaw of Simply Baby Lancaster. I would like to take this opportunity to wish Julie every success for the future and hope that the decision she has made leads to happiness and a stress-free life. Julie is a remarkable lady and has shown me nothing but kindness and I will be very sorry to see her leave the industry. When an industry loses fabulous retailers like Julie due to pricing and an inability to maintain margin you really must question who’ll be next. Good luck Julie, we’ll all miss you x This leads me on nicely to my article this month – I want to address margins and just to set the cat amongst the pigeons share with you some research I have been conducting right here in my laboratory (aka my office). Those of you that know me well will know I’m a real numbers guy. I have a spreadsheet for everything and really enjoy drilling 34
down into the nitty, gritty of margins and costings etc. I honestly believe that a business has to have a very firm grasp on its numbers if it’s to drive forward, or more importantly, stay relevant. Without teaching your grandmother how to suck eggs there’s two sides to margins. One is a percentage and the cold hard money in your till. We all talk about good margins and “idiots online giving it away” but what we are talking about is percentage points. Percentage points don’t directly keep the lights on, and the wages paid – money in the till does. In its simplest terms it’s better to earn a 20% margin on a £1000 sale than a 40% margin on a £200 sale. In an ideal world we’d all earn a 40% on a £1000 sale but that is just pie in the sky and it’s very unlikely it would ever happen. Recently I have been compiling data and analysing my margins, and I have found some very interesting results. Working on a period of 3 months (which included Black Friday and the January Sales) I looked at the goods we’d sold and calculated my top 10 products. I then calculated what the margins are on these products when sold at full RRP.
I have a spre ads heet for everyth ing and really enjoy drilling dow n into the nitty, gritty of ma rgin s and cost ings etc. I hon estly beli eve tha t a bus ines s has to have a very firm grasp on its num ber s if it’s to drive forw ard , or more imp ortantly, stay relevant . So here goes, my average margin for my top 10 products sold at RRP is 33.2%. This is a number that surprised me. I honestly thought it would have been slightly lower, but I guess we are supporting the products and brands that earn us money which is fabulous news. This, however, is only half the news. I then sat and worked out the actual sale price for these top 10 items during this time period. This takes into account promotions, price matches and even staff working out the bill incorrectly. You won’t be surprised to read that the actual achieved margin is lower – however you’ll be amazed to read that it wasn’t lower by much. The actual margin we achieved on my top 10 selling products for the 3 month period I analysed was 31.3%.
Now this could mean one of many things such as us supporting the correct brands in store (brands like BabyStyle that offer strong margins and who do a great shop of ensuring prices are kept at RRP - without telling us to keep them at RRP)), buying items at the correct time and holding stock until promotional periods end in order to increase margins. . .just dumb luck or us being in an area less financially capable of shopping online and needing simpler instore payment options. The fact remains that my numbers suggest margins in our industry (although lower than many other retail sectors) are actually sustainable. So why is cashflow so difficult? Why do I have to sell more to stay ahead? The answer to this question comes down to cash margin.
nursery today
Barking Mad.indd 1
14/03/2025 18:50