Basics of Benchmarking

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WHY benchmark?

Any improvement process needs a baseline. You have to know where you are starting in order to improve. A baseline is simply a starting point.
After establishing the baseline, the benchmarking process tracks the progress towards the desired goal(s). Without it, there is no way to show progress.
 
WHEN do you benchmark?
Perform benchmarking at anytime, although it is usually easier to perform at the completion of a fiscal year.
 
WHAT do you benchmark?
Benchmarking compares any measurable facet of the college store, and can go into as much depth as necessary. Choose a specific area to benchmark and ask these questions:
  • What process should we benchmark?
  • How do we currently do the process?
  • Who is doing the process better?
  • How do they do the process?
 
WHOM do you benchmark?
Whom you compare your benchmark against depends on what level of benchmarking you undertake. There are four basic benchmarking types. You may choose any level for any given benchmark.
1. Internal benchmarking - looks within a store, a group of stores within the same operation, or branch locations.
2. Competitive benchmarking - enables stores to look specifically at comparative stores in the industry. Stores with similar endowments, student demographics, or “sister schools” as deemed by the administration.
3. Industry benchmarking - extends beyond one-to-one comparison to look at trends at a national or industry level.
4. Best-in-class benchmarking - looks across industries, such as mainstream retailing, in search of new, innovative, and successful practices.
Note: Do not attempt to benchmark all ratios against the best-in-class level, as no one store can be the “best” in every function. Analyze the first three levels prior to using benchmarking against best-in-class.
 
WHERE do you get benchmarking information?
The College Store Industry Financial Report is the leading resource that provides data for the collegiate retail industry. The primary purpose of this survey and industry report is to provide information that can help you operate your business more efficiently. Refer to the Benchmarking Resources for additional sources of information.
 
HOW do you benchmark?
Benchmarking is an ongoing process, not an end it itself. Benchmarking should lead to successful practices, not mere “number crunching.” The first attempt at benchmarking may seem overwhelming and intimidating. It does not have to be. It is more important to adopt or develop a benchmarking process that fits your store’s culture and improvement objectives.
Knowing your store’s mission and goals is most important to assessing performance and benchmarking. What are your goals to achieve for the year? What are the priorities for the year? These questions help separate areas and numbers that need attention from those that are nice to know, but not critical to your organization.
While the process is similar to any other industry benchmarks, the details, data, and reporting of benchmark analysis should be an accurate reflection of your store.
Use the College Store Industry Financial Report to compare your benchmarking results. What you are benchmarking will help in determining which tables and data to use.
For a simple example, let’s benchmark against two-year institution sales per square foot of selling space. The purpose of this benchmark is to determine if “Campus Store A” is using its sales floor to the best advantage.

 

(From 2009 College Store Industry Financial Report)
Mean (Average)
25th Percentile
Median (Mid-Point)
75th Percentile
Example Store
Sales per Sq Ft of Selling Space
$ 1126
$ 597
$ 844
$ 1243
$974

 

This example shows “Campus Store A” is below the average but higher than the median benchmarks. This suggests that the store is using the available space on the sales well but there is room for improvement.

When using the industry tables, don’t just compare averages. You are not benchmarking to be average. Look at the median and the range in the numbers between the 25th and 75th percentiles.
The following year, “Campus Store A” benchmark looked like this:

(From 2010 College Store Industry Financial Report)
Mean (Average)
25th Percentile
Median (Mid-Point)
75th Percentile
Example Store
Sales per Sq Ft of Selling Space
$ 1054
$ 698
$ 912
$ 1341
$1389

 

This benchmark shows “Campus Store A” made significant improvements to use the sale floor; being over the 75th percentile, this means the store is higher then 75% of its peers.

Other notes on using the College Store Industry Financial Report:
  • A wider range between the 25th and 75th percentiles means greater differences in store responses; a small range indicates more limited answers from stores in that group.
  • To decide between tables based on campus type or sales volume, compare the average sales for each table to your sales volume. You should compare the number of registered students and FTE (full-time equivalent) number of students at the campus to the average of stores in each table.
  • Consider the physical size of your store and the percentage of course book sales compared to the average for stores in the tables. The closer these figures are to your store’s figures, the better the comparison for benchmarking other data points in the table.

 

 

 

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