Profitable Times Newsletter

Comparative Data

Many of the presentations at the annual Museum Store Association meetings, messages on ShopTalk, a significant segment of Boot Camp and all of the MSA Retail Industry Report focuses on using accurate information to measure museum store performance and establish benchmarks. There are a wide variety of statistics collected and the formulas used but one thread through all of the activity is the need for consistently accurate input. Otherwise, the effort becomes a prime example of garbage in, garbage out, or at least unreliable data out.

Unfortunately, in my experience, one source of relevant data that is frequently a challenge to standardize is the input from host museum sources. This includes financial data from the accounting department, transaction information from the point of sale and visitor counts from visitor services.

Rather than expect all this information to be delivered to the manager of retail in an ideal form, it is recommended you establish the format you want to consistently maintain and then gather the information you need from the information made available. Initially, this may seem like a lot of work but I think you'll realize that once you know where to find the information and establish a routine for gathering it, the process becomes quick and easy and you will be rewarded with results that are accurate and consistent measurements and benchmarks.

Two documents may help you establish your ideal data-gathering template. The first is the MSA Retail Industry Report. (In the spirit of full disclosure, Andoniadis Retail Services sponsored the 2018 report but did not participate in any aspect of the data gathering or reporting of results.) By using the same data collected for the report and adhering to the formulas used to calculate results, you immediately have benchmarks and can more easily compare your results to all the other stores that similarly collected, calculated and reported results.

A second helpful document for establishing consistency can be the Sample Profit & Loss Statement (P&L). I am not an accountant and through my consulting I have been presented with a wide variety of P&L formats. You are encouraged to create a customized P&L so that the line items reflect your store and inform consistent relevant data comparisons. Please note, to make the sample P&L as holistic as possible, some line items are included in the sample that are then recommended to be eliminated in your template comparative document.

I am confident that by taking parts of these two documents you will create a template for the consistent collection and calculation of Key Performance Indicators (KPI) and other comparative data.

Some observations regarding the collection document:

  • Allocation of shared expenses. These expenses may include security, telephone, maintenance, heating, ventilation and air conditioning (HVAC) and a host of other expenses. Sometimes the allocation is its own line item (making it easy to identify) and other times the expenses are included in other line items or not included at all.
    This situation allows me to make a general comment about the comparative process. Since you will be using information from multiple sources, it is critical that you stay true to the objective and consistently use data that is honestly reflective of your operation.
  • Charging the store rent is a very infrequent occurrence, but if your institution does it, you should eliminate the charge from your comparative document because so few other institutions include it.
  • Distributed salaries is another expense that needs some massaging. Over the last decade museum store managers have taken on more and more responsibilities. Sometimes the salaries associated with these responsibilities are automatically distributed among the other departments in which case you need to make sure the allocation is appropriate. In other cases, the store or another department is charged for all the salaries and you have to fairly allocate them and assume responsibility for what belongs to retail.
  • "Payroll" should be inclusive of wages, benefits, taxes and any other closely related expenses. Although not part of the preparation of comparative documents, these expenses need to be compared to the effectiveness of the sales staff segment of the expense.
  • Cost of Goods Sold (COGS) should include the actual cost of goods and Freight ‘In'- the cost of getting products delivered to your store. COGS combined with freight charges should be a separate expense category not included as line items under Operating and Other Expenses.

The above comments and allocation recommendations are focused on trying to make your data as similar as possible to other stores and the MSA Industry Report so you can make apples-to-apples comparisons.

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