The big numbers behind back to school

Published 12th Sep 2019
Predictive AnalyticsRisk
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There are 75.5 million students – from kindergarten to college – in the US, each of them a potential shopper in the effort to look their best as they learn to be their best.

And that means back to school is big business.

We pulled financial data on department stores, five different categories of clothing retailers, book sellers, and electronics dealers to get a picture of the financial conditions under which back to school operates. The data represents more 343,845 businesses, from sole proprietorships and partnerships to small and large corporations. Together, they generated more than $608 billion in net sales in 2017.

What we found tells a deeper economic picture that may surprise you. Powerlytics maintains the most comprehensive database of detailed financial information for 30 million U.S. businesses, and can provide insight at extremely granular levels.

One of the more expensive aspects of back to school shopping for college students involves buying books. And, many of us are familiar, off-campus bookstore that stocks many titles chosen by professors at a discount. There’s a lot of fear, in these days of Amazon, that the independent book store may be a thing of the past.

Despite what you may have heard, independent bookstores appear to be doing fairly well, those that have survived, that is. The number of book stores operated as sole proprietorships declined from 9,445 in 2013 to 8,900 in 2017. Back then, average return on sales for these retailers hovered around 9%. In 2017, it had risen to nearly 15%. Additionally, there did not appear to be any regional variation in the profitability of book sellers. Book stores in the west, south, northeast, and midwest, all exhibited the same pattern.

On the other end of the shopping spectrum sits electronics distributors. Students need laptops, cell phones, headphones, and tablets. The 61,985 electronics stores had a combined revenue of $82.7 billion. Their Gross Margin, however, stood at just $19.4 billion. That amounts to margin of just 23.5%. With the hosts of expenses to staff and run these stores, that leaves only a little falling to the bottom line.

Selling electronics it seems, is a game of volume. Indeed, the typical electronics store operated with approximately 53 days of inventory in stock, roughly half that of clothing retailers. There happens to be remarkable consistency among clothing retailers in the amount of inventory they hold. Businesses categorized under NAICS codes as men’s clothing stores, women’s clothing stores, children’s clothing stores, shoe stores, or clothing accessory stores held between 111 and 115 days of inventory in stock.

There’s a lot more to a financial statement than the bottom line. And that data is used to calculate any number of important benchmarks, like liquidity ratios, debt ratios, and efficiency measures. Powerlytics can supply this information at an extremely granular level, from geography to industry to size, giving lenders the ability to benchmark and compare potential applicants and their creditworthiness.

But the information can be used for much more. Because it can provide details at the zip code level, lenders have used Powerlytics to prequalify small business loans, and verify the accuracy of customers’ submission. In the insurance industry, Powerlytics has been used to improve customer retention. In the financial services sector, it’s been used to perform market analyses that match potential customers with the right level of service, and it’s helped lenders predict defaults for consumers and businesses.

If you are interested in seeing what Powerlytics can do for your business, contact us.