Hardware and building supplies retailing - issued 2010

Industry overview

The main activity for businesses in this industry is the supply of a wide range of hardware products such as general hand held and power driven tools, bathroom and kitchen accessories, paint and garden supplies to household consumers and tradespersons.

Competition in this industry becomes harder as new players are entering the market to compete with the existing large players in the industry.

Recently, increasing costs for tradespersons and declining hardware prices has caused a growth of the do-it-yourself (DIY) market. Some hardware and building suppliers provide DIY courses and home improvement demonstrations in their stores.

Performance benchmarks

These performance benchmarks have been developed using information on income tax returns and activity statements lodged for the 2007-08 income year.

The main expenses for these businesses are the cost of goods sold, labour and rent.

The key benchmark ratio for this industry is the cost of goods sold to turnover.

	Annual turnover range
Benchmark ratio	Low $75,000 - $400,000	Medium $400,000 - $1,000,000	High More than $1,000,000
Cost of goods sold/turnover	57% - 67%	62% - 70%	64% - 70%
Labour*/turnover	6% - 16%	8% - 14%	10% - 16%
Rent*/turnover	5% - 9%	3% - 7%	2% - 6%

*Notes

• Labour - salary and wage payments, including contractor payments but excluding payments to associated parties, amounts exclude GST.
• Rent - for businesses that have rent expenses. Businesses with no rent expenses will generally have a higher profit or interest expenses to cover the return or cost of owning the premises.

Cash sales benchmarks

Cash sales benchmarks show the ratio of cash sales to total sales. Benchmarks are published for different turnover ranges and different average sales values.

The cash sales benchmarks developed for the 2008-09 income year have been withdrawn. For more information, refer to Small business benchmarks.

More information

For more information about small business benchmarks, refer to Small business benchmarks. For more information about your tax obligations as a small business operator, refer to: Record keeping for small business (NAT 3029) GST for small business (NAT 3014) Tax basics for small business (NAT 1908).