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NARDA Releases Dealer Cost Study

4/06/2010 04:38:39 PM Eastern
Chicago - The North American Retail Dealers Association (NARDA) has released a report that can help dealers gauge the health of their businesses by comparing key financial metrics against industry benchmarks.

The trade group's Cost of Doing Business Study surveyed a sample of U.S. retailers and servicers in the appliance, consumer electronics and mixed sales categories on key income statement and balance-sheet metrics. The results, said NARDA, provide a clear picture of dealer profitability, liquidity, operations expenses and balance-sheet management, which dealers can compare against their own results.

Among the findings:

  • The average participant reported a gross profit margin of nearly 34 percent, reflecting the use of volume rebates to reduce the cost of goods sold, thus lowering the basis for calculating gross profit.

  • Inventory turns were down from the industry benchmark of 6 annual turns.

  • Gross margins helped offset these decreases with an all dealer average of $1.80 return on inventory (ROI), which is very close to the industry bench mark of $2.

"In today's highly competitive marketplace, education and information are essential elements for business success," said NARDA chairman Leon Barbachano of Allen & Petersen Cooking & Appliance Center in Anchorage, Alaska. "The Cost of Doing Business Study provides comparative information that dealers can use to assess the relative financial health of their businesses, to identify their strengths, and work on areas that need improvement in order to develop strategies for growth."

The report, prepared with assistance from Management Advisors president Sandy Cloud, is available to NARDA members for $150, to non-members for $200, and is free to survey participants. For more information, contact NARDA at (800) 621-0298, or nardasvc@narda.com.

NARDA is a not-for-profit trade association established in 1943 to provide "the power of knowledge to independent retailers and servicers through progressive education, information and services."

Its members, located across North and South America, sell and service consumer electronics, kitchen and laundry appliances, furniture and computers through more than 3,000 storefronts and account for more than $10 billion in annual sales.
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