January 13, 1921 



The Florists^ Review 



23 



RETAIL STORE MANAGEMENT 



WHAT THE LEADERS IN THE TRADE ARE DOING 



OPEBATING EXPENSES. 



Investigation Affords Comparison. 



While there is some difference be- 

 tween the operation of a drug store and 

 that of a flower store, chiefly in delivery 

 of goods by the latter and not by the 

 former, the result of an investigation 

 of the operating costs of 187 drug 

 .stores, made by the bureau of business 

 research of Harvard University, will 

 afford the many retail florists who are 

 studying this phase of expense an oppor- 

 tunity for checking up some of their 

 items. The investigation covers the 

 year 1919 and included 187 retail drug 

 stores, with capitalization which ranged 

 from the smallest to the largest of 

 stores. The table following shows in 

 detail the result of this study, giving 

 in jicrcentages of the total sales the 

 various charges which must be borne by 

 the retail druggist in dispensing his 

 wares. 



Net sales equal 100 per cent. 



Per cent 



Low High Com. 



Wages of sales force 7.0 20.8 12.0 



Advertising 0.04 4.0 0.7 



Boxes, wrapping and other sell- 

 ing expense 0.1 2.4 0.8 



Total selling expense 8.5 22.5 13.3 



Delivery expense 3.8 0.1 



Buying, management and office 



salaries 0.0 10.9 3.6 



Office supplies, postage and 



other management expense. . . 0.1 1.5 0.3 

 Total buying and management 



expense 0.7 10.9 3.9 



Rent 0.8 11.0 2.8 



Heat, light and power 0.2 2.4 0.8 



Taxes (except on buildings, in- 

 come and profits) 0.03 2.2 0.4 



Insurance (except on buildings) 0.1 1.4 0.4 

 Repairs of store equipment... 0.03 4.1 0.2 

 Depreciation of store equipment 0.1 2.7 0.8 



Total interest 1.1 11.8 3.1 



Total fixed charges and upkeep 



expense 4.3 Ifi 5 8.5 



Miscellaneous expense 0.1 3.7 1.5 



Losses from bad debts 2.4 0.3 



Total expense 17.7 42.9 27.6 



As shown in the table, the item of 

 wages for the sales force was by far 

 the greatest single expense entering into 

 the total cost, while the total of selling 

 expenses comprised nearly half of the 

 total operating expense. This selling 

 expense included the cost of advertis- 

 ing and of boxes and wrapping. Follow- 

 ing this in order of importance came 

 the costs of management, which are 

 made to include purchasing costs. This 

 amounted to slightly less than twenty- 

 five per cent of the total, while rental, 

 which was the next largest item, was ap- 

 proximately ten per cent of the total. 

 An analysis of these costs which was 

 contained in the bulletin gave poor man- 

 agement as the principal reason for 

 high costs in the majority of instances. 



Other items touched upon in the bul- 

 letin were the profits of the various es- 

 tablishments. Gross profits averaged 

 thirty-four per cent, while net profits 

 stood at six and three-tenths per cent, 

 while one store showed a net loss of six 

 and three-tenths per cent. Stock turn 

 varied from one and one-tenth to seven 

 and four-tenths times per year, and the 

 investigation showed that the costs 

 were in inverse ratio to the number of 

 times the stock was turned over. In- 



ventories of merchandise increased dur- 

 ing the year by five and six-tenths per 

 cent on the average, a condition which 

 was in some respects traceable to lack 

 of expected buying along certain lines. 



In a Jewelry Store. 



The same investigation was made in 

 jewelry stores, which, though also dif- 

 ferent in their mode of operation from 

 florists ' shops, have points of simi- 

 larity. Figuring net sales at 100 per 

 cent, the average operating expenses of 

 100 retail jewelry stores in the United 

 States during 1919, according to the 

 bureau of business research of Harvard 

 University, amounted to 32.3 per cent. 

 The lowest total exjjense shown by the 

 investigation was 17.9 per cent, while 

 the highest was 50.5 per cent. The 

 following table sets forth the details 

 of the operating expenses reported (net 

 sales equal 100 per cent) : 



Corn- 

 Low. High. mon. 



Wages of sales force 4.3 14.6 8.5 



Advertising 12.3 2.0 



Boxes, wrappings and other 



selling expense 0.2 2.9 0.9 



Total selling expense (i.« 20.8 11.0 



Delivery expense 1.0 0.3 



Buying, management and office 



salaries 2.3 17.4 4.9 



Office supplies. iHJStagc and 



other management expense. 0.1 1.9 0.0 



Low. Higli. 

 Total buying and management 



expense 2.C 17.4 



Rent O.S 10.7 



Heat, light and power 0.1 1.6 



Taxes (excepting on buildings, 



income and profits) 0.02 2.1 



Insurance (except on buildings) 0.(H 1.4 



Repairs of store equipment.... 0.02 1.8 



Depreciation of store equipment 0.0.5 2.0 



Total interest 0.9 12.1 



Total fixed cliarges and upkeep 



expense 4.2 22.2 



Miscellaneous expense 0.2 4.0 



Losses from bad debts 2.4 



Total expense 17.9 50.5 



Com- 

 mon, 



5.6 

 4.0 

 0.8 



0.6 

 0.6 

 0.5 

 0,5 

 4.6 



11.6 

 1.9 

 0.3 



32.3 



ROSES AND GOLF BALLS. 



Golfing florists will immediately be- 

 gin to estimate the cost of the materials 

 that entered into the making of the 

 basket illustrated on this page. Let us 

 say at once, to help them, that there are 

 sixty-three altogether. The brand, 

 however, will not be named. It would 

 not be of assistance to the golfers 

 among the trade's members, for these 

 balls were not representative of any- 

 thing more than the years of a man's 

 life. Friends of J. L. Richards, a promi- 

 nent citizen of Boston, wished, at the 

 dinner on his sixty-third birthday, to 

 remember his attachment to the game. 

 So Penn the Florist, in designing the 



Golf Balls and CrtJsader Roses Chiefly Compose this Basket. 



