ARA Conference Highlights: Presenters showcase top ideas
During this breakout session, Summers and Farrell demonstrated benchmarking by examining the financials of two fictitious retail companies. The two companies represented a high market share company where customers paid a premium and a low market share company that had an aggressive broker competitor.
Key takeaways Summer and Farrell shared included: a company can have low margins but still be very profitable, profit depends on how you spend gross margin dollars and the real value is looking at trends over a number of years. In addition, interpreting the data is key because generalizing often does not provide a clear picture of comparison between companies and the industry.
During the session, attendees were asked to determine what costs they might be able to manage better. Answers shared included the cost of interest paid, advertising, compliance, fixed assets, consulting fees and commercial insurance, among others.
In wrapping up their session, Summer and Farrell said storm clouds would remain on the ag retail industry’s horizon. Volatility will remain, interest rates will eventually have to increase, inflation is probably going to rise eventually and planning will be essential to ag retailers’ success.