There are a range of different measurements of charity retail performance, but which is the best?

Profit vs Budget

For many charities this is the ultimate financial measure, but it is totally dependent on the quality of the budget, and it does not consider the real potential of individual shops and e-commerce.

Assessment of this measurement: This measure is useful, but unless the budget is based on profit potential it is only useful if nothing changes within the retail business which is not very progressive.

Profit percentage vs the market average

Whilst it is great to measure performance against the market, it can be deceptive as it is balanced towards cost control rather than profit development. For example: 33% profit of £1m sales is £330k and 30% profit of £1.2m is £360k. Therefore, a lower percentage profit can actually be better in some circumstances.

Assessment of this measurement: This measure can be misleading because it is cost driven and it can reduce the achievement of potential by reducing investment and total sterling profit is the ultimate measurement. 

Sales vs Last Year

Whilst sales vs last year is an important measure, charity retail is about generating profit to support the charity and costs also need to be controlled.

Assessment of this measure measurement: Measurement of sales vs last year is satisfactory, but it does not consider costs. The total sterling profit is the ultimate measurement. 

Profit Potential vs Profit Performance

If every shop and e-commerce had a profit potential, this can become the stretch profit budget.  The profit budget can be set slightly lower depending on how the current business is performing which allows the retail team a year to work towards achieving the full potential in every shop and e-commerce. Based upon the considerable amount of Skyline Health Checks carried out over the past 8 years, the profit potential has averaged 50% to 100% greater than the current performance and budgets. 

Assessment of this measurement: To obtain the accurate profit potential requires external advice, but the Skyline Health Check is the proven method of assessment, and the financial benefits have proved to be substantial.