For over 100 years, the North American Hardware and Paint Association (NHPA) has surveyed home improvement operators throughout the U.S. to develop the benchmark report known as the Cost of Doing Business Study. Retailers have continually relied on the industry data in this benchmark tool to measure their own performance against industry averages and to establish financial plans to improve profitability.
The study assesses the financial performance of home improvement retailers who graciously submit confidential financial reports from the prior fiscal year to NHPA. The study presents composite income statements and balance sheets plus averages for key financial performance ratios.
Dalton Meny, head of operations for Meny’s True Value in southern Indiana, says his company participates in the study because it is the best way in the industry to see how their store compares with peer stores.
“You don’t often have a chance to do these types of comparisons, and it can provide tremendous value,” Meny says. “We’ve only been participating in the study for the last few years, but we wish it was something we were doing for much longer. The sooner you participate, the sooner you can take this data back to your store and change it for the better.”
Meny says they use the data from Cost of Doing Business Study in two ways.
“First, we use it to pinpoint areas where we might be weaker compared to other stores and then focus on those specific metrics and find ways to improve our standing,” Meny says. “The other way we use the data is to see what areas we excel in compared to others and how we should avoid disrupting those data points.”
The data is segmented for hardware stores, home centers, LBM outlets and paint and decorating outlets. In each segment, data is presented for the typical store, for high-profit stores, for single-unit and multiple-unit companies and for sales volume categories. In addition, there is a five-year historical trend for typical stores in each segment except paint.
Key performance metrics are separated by store type so you can gauge your operation’s performance against industry standards. Metrics included in the study include: average sales per customer, annual customer count, sales per employee, inventory turns and more.
For Ryan Flaherty, owner of Balsam Lake Ace Hardware in Balsam Lake, Wisconsin, the Cost of Doing Business Study is key to help him set goals and identify problems within the operation.
“The study allows my team and I to set better goals and identify areas of improvement in our business based on the benchmarking data in the study,” Flaherty says. “I also believe the more we as independent retailers can collaborate, the better off we all will be.”
Submitting information for the study can be easily done in four ways: filling in the online form, emailing the data, completing the downloadable survey or mailing the information.
“The process is easy, most of your information should already be compiled,” Flaherty says. “There is no risk—only reward—and at a minimum you will gain more knowledge on the current landscape and condition of our industry. More than that, it may give you information to make decisions in your business to both grow sales and become more profitable.”
Submit your information today to receive a free copy of the study and use the data to become better and more profitable. The deadline for submitting financials has been extended to July 15th.
“Our company participates in the Cost of Doing Business Study every year and makes it a point not to miss it. We couldn’t go without the study to benchmark ourselves against the top performers in the industry and to see where we can make improvements. It’s one thing to be profitable (or not); it’s another thing entirely to be a top performer and really hone in on each metric. Doing so allows you to define a clear path for incremental improvements. These types of improvements are what lead to long-term success.”
—Christian Herrick, CEO/ Co-owner, Randy’s Hardware, Inc.
