Q3 2023 Retail Benchmarks
Published: October 15, 2023 | Author: IFC Research Team
The third quarter of 2023 presented a challenging landscape for independent retailers, characterized by persistent margin compression despite stabilization in supply chain costs. Based on our aggregation of POS data from 400 participating merchants (averaging $1.2M - $5M annual revenue), the focus has decisively shifted from revenue acquisition to operational efficiency.
Key Findings
- GMROI Decline: Average Gross Margin Return on Investment fell to 2.4x, down from 2.5x in Q2.
- Discounting Pressure: Markdown cadence accelerated by 14 days on average to clear aging seasonal inventory.
- Labor Costs: Wage inflation leveled, but true labor cost as a percentage of gross sales increased to 18.5% due to decreased foot traffic conversion.
Table: Sector Specific Inventory Turns
| Sector | Avg Turns (Annualized) | YoY Change |
|---|---|---|
| Apparel & Footwear | 3.2 | -0.4 |
| Home Goods | 2.8 | -0.2 |
| Sporting Goods | 4.1 | +0.1 |
Calculate Your Position
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Methodology
Data was collected via direct API integrations with participating merchants' POS systems (primarily Shopify, Lightspeed, and Square) between July 1 and Sept 30, 2023. Financials are anonymized and aggregated. Extreme outliers (> 3 standard deviations) were removed prior to median calculations.
FAQ
Why are turns annualized?
To provide a standard comparative metric regardless of the specific quarter measured, assuming the quarterly pace is maintained.
Are e-commerce sales included?
Only for omnichannel merchants where e-commerce represents less than 40% of total gross revenue.