Stacy from the Pinky Scout Boutique in Ohio recently wrote in to ask what her labor expenses should be as a percent of sales.
Currently Stacy is running at 20% of sales as a labor expense.
Retailers should aim to have a maximum of 15% of sales allocated to labor.
THE REAL WORLD RETAILING TAKEAWAY
You have to get control of your payroll in order to maximize profitability.
Payroll is usually the largest expense line any retailer has. So maximizing payroll can lead to higher profits simply through better management of your employee’s time spent working.
You have to be diligent about it, constantly monitoring the expense to ensure your new game plan is working.
Start managing your payroll today, especially given the economic situation in order to maximize profits.