Many estimate that there are 6-8,000 tennis specialty shops in the United States. Some are large, some are small, most are in between. All have one thing in common: The need to evaluate their gross annual sales by the square foot.
How many of these shops make this calculation and determine use of space based on those numbers? From my observations, too few.
The purpose of this article is to give some guidelines and advice on how to evaluate your own business and also how to best utilize space, even if you are on a tight budget or have more space than you can fill with merchandise.
Scenario One: Busy shop and space is precious
The first scenario is for those of you who have shops that are viable stand-alone businesses. Space is always a premium. The challenges you face are usually based on having too little space. If you fall into this category, you need to evaluate and then prioritize how you use your usable space. Perform this evaluation based simply on your sales per square foot. Here's how it goes.
Say your shop is 1,400 square feet. Of that area, 200 square feet is for offices and your sales counter. Subtract non-product footage and you end up with 1,200 square feet of merchandisable space. Your gross annual retail shop sales are $180,000 per year. This makes your annual gross retail sales at $150 per square foot for your entire shop. Note that it is important not to include offices and management area in this calculation. Since this includes a racquet stringing business within the shop, and you have to pay shop staff, utilities, and all other related expenses, this constitutes a shop of average profitability. (As a reference, Home Depot stores have a published goal of $400 gross sales volume per year per square foot.)
The next step is to divide your pro shop business into categories. Here is an example:
1. Racquets
2. Woman's Clothes
3. Men's Clothes
4. Children's Clothes
5. Stringing
6. Women's Shoes
7. Men's Shoes
8. Children's Shoes
9. Accessories
Now calculate your gross annual sales in each of these categories. The final step of your evaluation is easy. Take out your tape measure and calculate how much space (how many square feet) you have allocated to each of these categories. In an ideally prioritized pro shop, your square footage and gross sales for each category are 100% in line. Of course, this would never happen, but your goal to optimize your space is to get as close as possible.
Scenario Two: Slow retail business and plenty of space
The other scenario we will discuss is the dream of those who have too little space: The store with too much space and too little business. The result? A shop that looks under-stocked and therefore ill managed. You fall into this category if you answer "yes" to any of the following five questions.
· Do you have a couch and coffee table in your shop?
· Do you keep your teaching balls in plain view inside your pro shop?
· Do you have extra chairs where people sit and "hang out"?
· Do you have tennis magazines on a counter for people to read?
· Do you have more than minimal bulletin board space inside your pro shop for announcements?
If you answered "yes" to any of these questions, here are four suggestions to build your business by improving how your extra space is used.
1. Stringing Machine - Put it in the middle of the shop and place your racquet and stringing accessories around that area.
2. Video or DVD Player - Create a viewing area with instructional tapes, including videos showing ball machine drills to promote more rental income from your machine.
3. Fitness Equipment - Exercise bicycles are very affordable and everyone knows that a brief warm-up significantly reduces the risk of injury. Your customers will see this as a real "plus" to playing at your facility.
4. Stroke Development - If you have a really large area and, in particular, operate a stand-alone store (i.e. no adjacent courts), consider creating a place for racquet testing. Options include a full hitting lane with a ball machine, or a stroke development device (visit www.oncourtoffcourt.com for several choices).
Summary
The concept of "Selling by the Square Foot" is the foundation of all retail chains, from supermarkets to home improvement centers. Try it in your specialty store and you will be satisfied that you're doing exactly what highly paid retail sales consultants would tell you to do first.