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. Many retail store owners and even cafe or coffee shop owners worry about the one customer that might come in between 9 am and 10 am 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 three tips to help you determine the best store hours for your business.
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 the 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 8 am–9 am are busy times on the weekdays but not on the weekends. Look for patterns. It might show that business really dies off after 6 pm every day except Thursday–Saturday in this case, you would stay open later these days—but only these days.
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. You could also do the math by season. There is a school of thought that believes you automatically have to open extended hours from Thanksgiving to Christmas, but this might not be true. When you run your numbers, the data might show that opening early was a waste of time and that people are going to the big stores for their doorbuster deals and coming to your store later.
Opening early just means you have 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 losing 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).
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 8 am on Monday and then 9 am on Tuesday and then 8 am 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.