3 Tips to Determine the Best Store Hours
While it might seem logical to stay open as many hours as possible, the truth is there is a diminishing return on the investment. I have counseled many retail store owners and even cafe or coffee shop owners who are so stressed about the one customer that might come in between 9am and 10am or the one who might come in early on Sunday morning. The truth is, planning for the one who "might" come in costs you more many than it is worth.
Here are 3 Tips to help you determine the best store hours for you business.
1. Check your POS Data.
If you are using a point of sale system, then it will generate reports for you that will help you make a wise decision. Print out your sales and transactions by hour report. This is a report that will list your total sales and total number of transactions by hour for your business. The transactions (or number of tickets) is the more important metric. Sales can be deceiving. It may appear like you need to be open earlier, but the reality is, it may be 1 large sale that skews the data. What you want to focus on is the number of tickets (which essentially is telling you the number of customers.)
Study the data and consider each day individually. It may show that 8am - 9am are busy times on the weekdays but not on the weekends. Look for patterns. It might show that business really dies off after 6pm every day except Thursday - Saturday in this case, you would stay open later these days - but only these days.
2. Calculate your Operating Costs
Here is the mistake retailers make, they only consider the payroll when extending hours. But the truth is, all of your expenses are impacted when you open the store longer. Get your P&L statement for the last three months and calculate your operating cost per hour. To do this, divide the total expenses by the total number of hours open.
Of course, you will need to figure your number of hours. Do it accurately. For example, don't just use a basic number for averages. The more accurate this number, the better it serves you.
Also consider the time of year you are examining. Pick three months that are your "normal" months. Which means not November and December. In fact, I use to do the math by season. There is a thought that you automatically have to open extended hours from Thanksgiving to Christmas. Not true. When I had my specialty shoes stores, the data showed that it was a waste of time to open early during this season. People went to the big stores for their "doorbuster" deals and then came to my store. Opening early just meant I had a lot of employees merchandising and cleaning shelves they already merchandised and cleaned.
The purpose of knowing your operating cost per hour is to show you how much sales you need to cover the expenses. In one analysis, we found that the store was actually loosing money in the hours it opened early. The operating cost per hour was more than the gross profit margin on the sales (which is how you pay the bills.)
3. Keep it Simple.
While the data may show different store hours for each day, the purpose of this exercise is not to match the data exactly.
In other words, do not open at 8am on Monday and then 9am on Tuesday and then 8am on Wednesday. Find the patterns. Customers hate being confused by too much variance in store hours.
The best practice is to have a schedule that is the same every day. This may or may not be possible, but customers are used to stores having different hours on weekends than weekdays. In my stores, the hours on the door were 9ish to 6ish. Our culture was a little kitschy for sure, but the flex let customers know that if they showed up before 10am, then we would let them in. It also meant that I did not have to "staff" the store for normal business during that time.