Here is a graph of the past few years of the percentage growth of revenue with forecast figures for the next few years of the Confectionery industry in Australia from Statista.
As you can see confectionery industry has been enjoying reasonably healthy growth and this is expected to continue in the next few years.
A few of my clients gave me from their pos software information to do benchmarking. I decided to see what their confectionery sales were. I thought it would show something like this, but sometimes one is surprised with what one finds, this is one such case.
Here are average figures for the number of sales of confectionery over the past five (5) years on a normalised scale
As you can see, the number of sales is a bit down but is approximately stable. This is not a good result if you consider that Australia's population is up and in business you always want to do a bit better all the time.
I then decided to look at the average unit price of the confectionery sold.
There is a definite drop here. The average confectionery price for my clients is going down by almost a third. Here, I was feeling that this is not looking good.
So I was not surprised when I looked at turnover
And saw that it was down, this is undoubtedly due to the lower unit sale price.
So I then checked margins and was pleased that it was going up.
However, this sort of margin price increase with a drop in price never looks right as wholesalers rarely increase margins and drop the sale price without good reason.
So then I looked at the profit.
The increase in margin by the wholesalers was not enough to make up the loss of the unit sale price.
It is one thing to say that your sales are down because the market is down but what is the excuse in a growing market for such a decline. Is it that my clients are trying other products and dropping confectionery possibly. What I suspect too that they are handling the wrong product mix in this market. I am sure that most of the increase in confectionery is in the premium category and many of my clients are chasing the lower end and competing in the lower end where one needs to cut price and increase margins in an attempt to keep it going.
Ome point is clear that many of my clients have to look at this department and if they want to continue in it need to shape up, or they will be shipped out.Tweet