Habitat Research Paper (2-26-14)

KANSAS
IMPACT
PROJECT
3/6/14 Habitat for Humanity - ReStore
Jordan Ashley
Jon Farchmin
Michael Fischer
Munmun Manna

EXECUTIVE SUMMARY
Objective:
“To improve sales per square foot through a cost analysis of whether the
ReStore should stay, expand, or move to a new location.” – Michele Johnson
(Lawrence Habitat for Humanity ReStore manager)
Research Conducted:
Primary:
 Customer Surveys (paper and electronic)
Secondary:
 Sales data analysis
 Real estate inventory and pricing analysis
 Marketing opportunities
Recommendations:
 Remain at current location due to considerations listed below and
enumerated further in detail within our recommendations section:
o Actual costs of moving (transport / storage / material).
o Lost sales revenues (time dependent on move… min. 1 week).
o Difference in rent (current $8.78/ft2/yr. vs. average for Lawrence
area of $14.91/ft2/yr.).
o Cost to rehabilitate new space to needs (shelving, office, storage).
o Recommended by Habitat organization to be started 3-4 months in
advance of actual move date.
 Reallocate floor space (square footage) to top earning categories by
historical sales revenues.

 Improve back storage building and utilize as receiving/sorting area
(increase retail area by ≈ 1000 ft2 by opening up floor space in main
building).
 Increase marketing to clientele in under-achieved demographic
categories (i.e. 50 and younger) through advertisement, trade groups and
media.
 Implement a basic inventory tracking and turnover system to allow for
better management of donations to include markdowns for slow moving
items.
 Review operating hours and adjust to accommodate peak customer traffic
periods.
Conclusion:
Implementation of any, or all of the above recommendations will result in
accomplishment of the stated objective, to increase sales per square foot.
Specifically our recommendations are tailored to providing viable options for
increasing sales without the requirement of moving to a new, possibly larger
location.

Table of Contents
Executive summary............................................................................iii
Analysis...........................................................................................1
Situational....................................................................................... 1
Strengths, Weaknesses, Opportunities and Threats ....................................... 2
Primary Research ...............................................................................4
Customer Surveys.............................................................................. 5
Secondary Research............................................................................8
Sales Figure Analysis .......................................................................... 9
Local Real Estate Analysis................................................................... 11
Recommendations............................................................................13
Maintain Current Location .................................................................. 14
Optimization of Existing Space for Top Sellers........................................... 17
Inventory Management...................................................................... 21
Marketing to Demographics................................................................ 22
Adjustment of Current Hours............................................................... 24
APPENDICES....................................................................................26
A-1: SURVEY - Have you taken this survey before?..................................... 27
A-2: SURVEY - Profession.................................................................. 29
A-3: SURVEY - What is your age? ......................................................... 31
A-4: SURVEY - How often do you visit ReStore?......................................... 32
A-5: SURVEY - How did you learn about ReStore? ...................................... 34
A-6: SURVEY - Have you ever donated to ReStore?..................................... 35
A-7: SURVEY - What do you shop for at ReStore?....................................... 37
A-8: SURVEY - Have you ever made a purchase at ReStore?........................... 38
A-9: SURVEY - Why do you shop at ReStore?............................................ 39
A-10: SURVEY - How far do you travel to the Lawrence ReStore?..................... 41
A-11: SURVEY - How accessible/convenient do you find ReStore? ................... 43
A-12: Analysis of Sales Data by Year ..................................................... 45

A-13: Habitat ReStore Dimensioned Floor Plan ......................................... 46
A-14: Regression Analysis of Sales Data................................................. 48
A-15: 2010 Demographic Profile (U.S. Census Bureau Data).......................... 51
A-16: Moving Costs Comparison ......................................................... 55
A-17: Sales per Square Foot Analysis .................................................... 56

Kansas impact Project
Page 1
ANALYSIS
Situational
Our focus was set by the initial description of the situation as presented by our client,
Michele Johnson, the Lawrence Habitat for Humanity ReStore manager:
“To improve sales per square foot through a cost analysis of
whether the ReStore should stay, expand, or move to a new
location.”
Not only was our research concerned with meeting these stated objectives, but we
also attempted to seek and recommend specific process improvements that will aide
in the operation of the ReStore outlet.
To further evaluate the goal set by the ReStore manager, the Habitat ReStore KIP
group has organized into three main areas of focus for analysis:
 Review of existing sales data for trends
 Current real estate market valuation
 Opportunities within the current location

Page 2
Strengths, Weaknesses, Opportunities and Threats
Below reflects our initial analysis of the ReStore operation in terms of observed
strengths, weaknesses, opportunities and threats (SWOT). This analysis allowed the
focusing of efforts with regards to formulating and conducting research in order to
make recommendations suitable to achieving the goals set forth of increasing the
sales per square foot for the Lawrence Habitat for Humanity ReStore.
STRENGTHS WEAKNESSES

Page 3
• Michele Johnson (Manager)
• Enthusiasm
• Customer relations
• Brand name “Habitat for Humanity”
• Donor Base
• Property
• Parking
• Inventory space
• Inventory Flow/Layout
• Inventory Composition
OPPORTUNITIES THREATS
• Growth
• Donations
• Customer base
• Focus on Inventory
• Organization
• Testing area
• Increase Revenues
• Sales/ft2
• Marketing
• Inventory Space (sq. ft.)
• Lease Ends on April 1
• Early deadline
• Donor fatigue

Page 4
PRIMARY RESEARCH

Page 5
Customer Surveys
Abstract:
The research team endeavored to learn more about the current ReStore customers.
Basic information collected from this group could lead us to finding trends in the
current purchasing habits of existing customers while also introducing areas for
potential growth in sales.
Methodology:
The survey exhibited below was created in order to gather information from
customers of the ReStore utilizing eleven questions focused primarily on collecting
information on the customers individual demographic data as well as purchasing
habits. This survey was distributed to customers in the store (in a paper format) and
also through the Lawrence Habitat for Humanity e-newsletter as a link to an online
version of the survey. A total of 179 respondents completed the survey during the
period of 21 November 2013 through 28 January 2014. For purpose of analysis all
survey data was entered into Survey Monkey©, an online survey analytical tool,
allowing us to quickly quantify the data.
Findings:
The results of the survey are presented in the appendix section of this report, parts
A-1 through A-11. The following key insights were noted from the survey and used
in formulating our recommendations below:
 The largest percentage of respondents identified themselves as retirees (24.6%)
 63.5% of respondents were aged 51 or older (only 11.2% were aged 18-20)
 68% of respondents say they heard about the ReStore via word of mouth
 Respondents frequently entered ReStore to “just browse” (57%) or to purchase
building materials (lumber and hardware – 41.2%)
 Price was a clear motivator for shopping at ReStore, with 81% choosing this as a
reason
 91.5% find the current location convenient and/or accessible, or are neutral in
thought

Page 6
Pleasetaketwominutesofyourprecioustimeand f ll out theform below.
Ifyou havetaken thesurveybefore, weaskyou totakeit again, but pleasecheckthisbox.
Profession (i.e. student, contractor, retiree, etc.): ___________________________ Age:_______
Date:___________________ Time: ___________________
1) Howof en do you visit ReStore?
a. T isismyf rst visit. b. 1or moretimesper week
c. 1to 4timesper month d. Lessthan 5timesper year
2) Howdid you learn about ReStore?
a. T rough Habit for Humanity b. Word of mouth (friend, family, co-worker, etc.)
c. T rough theinternet d. Advertisement
e. Other_____________________________
3) Haveyou ever donated to ReStore? ( YES / NO )
Whyor whynot?______________________________________________________________________
4) What wereyou lookingfor today?(Pleasecircleall that apply)
a. Just browsing b. Buildingmaterials
c. Decorations d. Furniture
e. Flooring f. Bath
g. Lighting h. Appliances
i. Other _____________________________
5) Did you makeapurchasetoday? ( YES / NO )
If yes, what?_________________________________________________________________________________
6) Whydo you shop at ReStore?(Pleasecircleall that apply)
a. Product Selection b. Convenienceof Location
c. Staf d. Price
e. ReStoreMission (Assistsin fundingtheconstruction of Habitat homes)
f. Other_____________________________
7) Howfar did you travel todayto visit ReStore?
a. 2or fewer miles b. 2to 4miles
c. Greater than 4miles
8) Howfar would you bewillingto travel to visit ReStore?
a. 2or fewer miles b. 2to 4miles
c. Greater than 4miles
9) Howconvenient/accessibledo you f nd it to navigatethroughout ReStore?
a. VeryDif cult b. SlightlyDif cult c. Neutral d. SlightlyEasy e. VeryEasy
10) If you haveanyother general comments, pleasefeel freeto expressthem below.
____________________________________________________________________________________
____________________________________________________________________________________
“Your response
shapesour
tomorrow”

Page 8
SECONDARY RESEARCH

Page 9
Sales Figure Analysis
Abstract:
Charged with the task of improving sales per square foot, we found it prudent to ask
and discover what those figures actually are. We accomplished this by measuring each
product category as given to us by the ReStore staff. These dimensions, used with the
average sales from the last three years, yield the historic sales per square foot.
Coupled with the popularity of items (based on survey results), the findings guide our
recommendations.
Methodology:
The dimensions that account for dimensional portion of the "sales per square foot"
equation were taken by hand, in-store, with as much accuracy as possible (in most
cases, +/- 1 inch). Recognizing a potential discrepancy in the "square footage"
occupied by different items -- say a dining room table versus a shelf of paint -- we
then multiplied recorded floor areas by the corresponding number of shelves, where
applicable, to gain a more representative metric of habitable retail area (shelving
and/or floor space).
AN IMPORTANT NOTE ON DIMENSIONS: while the square footage depicts as closely
the current store conditions of what items take up what space, these numbers
(particularly regarding furniture) can fluctuate significantly depending on the nature
of inventory. As such, these numbers reflect the generalconditions of past data.
To find the "sales” portion of the of the “sales per square foot”, we averaged annual
sales of each category from the last three years, due to partial information. A
regression analysis of the sales data was also utilized to look for trends in the sales
history of key categories tracked by the register system currently utilized by the
ReStore outlet (appendix A-13 provides a detailed breakdown of how this was
accomplished).

Page 10
AN IMPORTANT NOTE ON SALES: because the sales numbers used are averages, it is
again important to note that the sales per square foot is an average of past data,
which may or may not reflect recent trends.
Findings:
We confirmed some assumptions as well as observed some interesting conditions
from the Sales per Square Foot that were not as apparent in the raw sales data. (See
Appendix A-17 for raw data)
Confirmed Assumptions:
 Furniture: the undisputed leading sales category by revenues (23% of total
sales), furniture's sales per square are near the top performers ($84 .09 per
foot per year).
 Building Materials: survey results and staff observations indicate that building
materials (lumber, doors, and windows) are the most sought items. Sales per
square foot analysis reveals that of the three, doors and windows are in fact
some of the top selling categories as well ($89.09 and $86.47 /ft2/yr.,
respectively)
Additional Findings:
 Appliances: the highest profit margin item, unsurprisingly, with annual sales of
$199 per ft2
 Hardware: while hardware accounts for 11% of the total revenues, a healthy
share, in terms of sales per habitable retail area it excels at $94 per foot
annually, the second best performer
 Lumber: as mentioned earlier, this popular sale item by request does not fare
as well in sales, ranking in the bottom fourth ($31.68 per foot per year, 10% of
habitable retail area)
 Plumbing: plumbing is an adequate seller by total revenue (8.1%), yet ranks
second to last in sales per square foot ($27.20 annually, 15.3% of retail area)
 Miscellaneous: as this category is a catchall, it can be hard to identify what is
being underutilized where. Nonetheless, these miscellaneous items occupy an

Page 11
estimated 10.6% of habitable retail area while generating just under $5 per foot
of that area
Local Real Estate Analysis
Abstract:
Part of our charge was to examine the option of moving to a new location. We
researched what this would entail in terms of considerations for moving to a new
location and potential increases/decreases in rental charges.
Methodology:
We utilized several resources to determine the current real estate market in Lawrence
including lease costs for the market from Loopnet.com and also the current inventory
for this area by talking with Realtor© Kirsten Flory of Colliers International Real
Estate. Moving considerations were also taken from talking with Mrs. Flory as well as
consulting readily available material found on the ReStore Support Group, found at
the Habitat for Humanity website for affiliates and volunteers
(https://my.habitat.org).
Findings:
While the recommendations section “Maintain Current Location” includes many of the
details concerned with attempting a move, key highlights from our findings are as
follows:
 The inventory for available retail space is shrinking in the Lawrence area,
driving lease costs upward.
 The current cost of a retail lease for Lawrence averages at $14.71 per square
foot, annually.
 The current lease the Lawrence Habitat for Humanity ReStore is $6500 per
month, which translates to $8.78 per square foot, annually.

Page 13
RECOMMENDATIONS

Page 14
Maintain Current Location
From our research of the commercial real estate market of Lawrence, and from
discussions with commercial real estate brokers and the ReStore Support Group, we
have come to the conclusion that it is in the best interest of the Lawrence ReStore to
postpone a relocation and instead renew the lease for the current location. We have
identified a number of reasons that support this conclusion:
 Time Constraints
o There is simply not enough time to relocate. According to the “Relocation
Action Item Timeline” provided by the ReStore Support Group, it is suggested
a ReStore relocation process begin 15 months prior to the projected grand
opening of the new location. This is to allow for completion of time
consuming endeavors such as acquiring necessary funding, identifying a
suitable location, and negotiating a lease.
o The selection of a suitable location and the negotiation of the lease can take
months alone.
 Limited Options for Relocation
o As the economy continues to improve, Lawrence is experiencing a decline in
commercial real estate vacancy rates.
o Finding a suitable space in a desirable location will be difficult
o Moreover, declining vacancy rates are resulting in a rise in rental lease rates.
 The current yearly rent per square foot for retail spaces is $15.00 (the
Lawrence ReStore is currently paying approximately $9.00 per square
foot yearly).

Page 15
If and when the time comes to reconsider relocating the Lawrence ReStore, we have
identified a number of items to be considered:
 Increase in Fixed Costs
o A new location with a larger square footage will most likely entail a
considerable increase in rent as well as utilities.
o The Lawrence ReStore will have to significantly increase sales to
accommodate the increase in expenses.
 The ReStore Support Group provides a number of documents and
Microsoft Excel files to assist in projecting future cash flows and
expenses.
 The individuals working in the ReStore Support Group office are more
than happy to assist the Lawrence ReStore with this process.
 Relocation Expenses
o Substantial expenses will be incurred throughout the relocation process that
must be planned for.

Page 16
 According to the ReStore Support Group the average amount spent on
opening a new ReStore was $100,000 with some spending as little as
$25,000 and others spending as much as $250,000.
o Some of these expenses include, but are not limited to;
 Building Uplifts
 Between $25,000 and $125,000 has been the range of amounts
spent on improvements needed at new locations by past ReStore
outlets.
 Price will be largely determined by the amount of work that must
be done to new location in order to accommodate the needs of a
ReStore.
 Covered Donation Center
 Between $10,000 and $25,000 has been the range of amounts
spent on a covered donation center at new location to ensure
enough merchandise for grand opening and beyond.
 Fixtures and Displays
 Between $5,000 and $15,000
 Opportunity Costs
 Opportunity costs in the context of relocation are all foregone
sales due to the relocation process.
o A sample breakdown in the difference in costs incurred with a move can be
found in appendix A-16.
 The ReStore Support Group suggests that ideally there should be only a one week
gap from the time the old ReStore closes, and the new ReStore opens. This weeks’
worth of sales that will not be recognized should be considered.
 The ReStore Support Group also suggests working all inventory down at the new
location in an effort to move as little merchandise from the old location to the new
location. To facilitate this, they suggest incrementally marking down merchandise
a couple months before the closing of the old ReStore. This lost revenue should
also be considered.
This does not preclude the option of moving at a future date. If any move is
attempted it is recommended that the negotiated lease agreement hold the rent per
square foot, annually, to as close as possible, or lower, than the current lease price at
the existing location (approximately $9.00 per square foot, annually).

Page 17
Optimization of Existing Space for Top Sellers
Research into the current sales data, when paired with additional data gathering into
the current layout of the store, lead us to recommend the following:
Focus on the “top sellers”: Research conducted utilizing historical sales data and
customer surveys identified the following as the top sellers at the Lawrence ReStore:
 Appliances
 Furniture
 Hardware
 Cabinets
 Doors
 Windows
The graph below identifies the “ideal” utilization of the retail floor space based upon
percentage of revenues attained in each category (i.e. with Furniture being your top
revenue earner, it can be argued that by percentage of sales, up to 1900 ft2 of floor
space should be dedicated to this category). The two graphs recognize the layout of
the store as it currently exists (5,645 ft2 of retail floor space) and the inclusion of 990
ft2 based upon our recommendation below (see “Utilize Exterior Storage Space”).
Consolidate the odds and ends: Determine what miscellaneous items might be
floundering, eliminate them and reconfigure the shelf space accordingly.
Consolidate plumbing: Because this category is still a strong seller by volume, a
simple re-evaluation of its configuration is needed (note: toilets and baths are the
largest items; movement to a more prominent area in the store and/or a larger area
dedicated to sales, combined with a push for more donations of this type).
Utilize Exterior Storage Space: It is the recommended that the exterior building,
currently utilized for storage purposes, be upgraded and utilized as a receiving and

Page 18
sorting building, thereby freeing up an additional 990 ft2 in the main building for
retail purposes.
The current layout of the store has 990 ft2 dedicated to the purpose of receiving,
sorting and stowage of donated material, located at the back of the main building
while an additional 1,057 ft2 exterior building is used for storage alone. As ReStore
works solely on a donation basis (all items sold are received in the form of donations),
there is no “regular” inventory per se. The need for storage should not exist – all
items received should immediately be set out upon the sales floor in order to
generate revenues as soon as possible and free up space for additional donations.
Any costs incurred by upgrading the exterior building, to include lighting, heating,
new doors and general repairs to the structure would be offset by the increase in
retail space in the main building. Utilizing sales data from the 2012 year, this
increase in retail floor space would equate to an annual increase of $34,610 (990 ft2 x
$34.96 per ft2/year).

Page 20
SeeAppendixA-17forraw

Page 21
Inventory Management
The implementation of an inventory management system would allow for greater
tracking of donated material coming into the store and also aide in the marketing and
promotion of sales.
An inventory management system will provide ReStore with basic inventory receipt
and item tracking capabilities to allow for better analysis of the flow of inventory,
both in and out. Furthermore, the system will allow the capability for ReStore to
capture on hand inventory data immediately, as required, while also indicating
quantity and length of time the merchandise has remained in inventory. This
information will allow the timely movement of donations through price markdowns or
regularly held (and advertised) sales. Also, items in inventory that have been
categorized as “slow movers” or have simply been on the sales floor for too long of a
duration will be subject to review and appropriate action will be taken (i.e. place item
on sale, lower the price, relocate item to more visible location on sales floor or
markdown to zero to free up retail space for more profitable items).
Off the Shelf systems readily available for resale outlets (no official endorsement of
any of the following examples…)
– Transact POS for Habitat ReStore
(http://transactpos.com/Solutions/HabitatReStore/tabid/209/Default.asp
x)
– Intuit Quick-Books
– Excel spreadsheet and/or ledger system
 IMS allow the creation of databases to ensure timely movement of donations
• IMS also allows for advertising of inventory on flyers, website, etc.

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Marketing to Demographics
Since ReStore’s end goal is to increase their profits, we wanted to analyze multiple
facets of its business beyond just its location. Our group was curious about what
demographics ReStore was serving and what its marketing strategy was. Through our
primary and secondary research, we were able to come up with the following
conclusions and recommendations.
• Seek out younger age groups
– Lawrence 2010 census: 54% age 20 - 50
– ReStore: 36% are aged 20 – 50
Our market and customer research shows that 54% of the Lawrence population is
between the ages of 20 and 50, but only 36% of the ReStore customer base falls
within that age range. This means that 64% of all ReStore customers are over the age
of 50; the ReStore serves a significantly older demographic from the majority

Page 23
demographic of Lawrence. In order to most efficiently penetrate the Lawrence
market, ReStore must decrease the disparity between these two figures by capturing
more of the younger demographic, those in between the ages of 20 and 50.
• Advertise in community publications
– The University Daily Kansan
– Church Bulletins
– “Lawrence” Magazine
– Douglas Co. / Jayhawk SR magazine
• Increase web/social media presence
– Revamp and update of website
– Twitter, Facebook, Linked-IN
• Flyers at “community” bulletin boards
Currently, ReStore advertises itself using online media, specifically the ReStore
webpage (http://www.lawrencerestore.org/) and Craigslist (www.craigslist.com), an
online classifieds website. Occasionally ads are taken out in the Lawrence Journal
World but typically for special events only. Through our survey, we investigated how
customers were finding out about ReStore in an effort to analyze the efficiency of
their current marketing strategy. The survey indicated that a very small percentage of
those customers who took the survey found out about ReStore through any type of
advertisement or online media. The majority, approximately 70%, of customers who
took the survey discovered ReStore through word of mouth and about 35% discovered
ReStore through their relationship with Habitat for Humanity (see the figure below).

Page 24
In an effort to make their marketing campaign more productive, we recommend
ReStore pursues more mediums of advertisement (such as those mentioned above) to
reduce reliance on word of mouth advertising and its affiliation with Habitat for
Humanity. By pursuing the alternative mediums of advertisement recommended
above, ReStore will be able to better reach the market segment they are struggling to
connect with – the younger demographic of Lawrence identified in the previous
section.
Adjustment of Current Hours

Page 25
A review of the hours that the ReStore operates is recommended to determine
whether the current posted hours of operation meet the actual trends in customers
shopping at ReStore. This can be accomplished by annotating over a period of time
(recommend no less than two weeks of normal store operations/non-holiday period)
the number of customers in the store at a set time interval (i.e. every hour). Using an
analysis tool, such as Microsoft Excel, this data can then be graphed and trends in the
data collected can be more easily observed:
 When do peak hours (most customers) occur?
o Peak hours in the morning may indicate a need to open earlier
o Peak hours in the evening hours may indicate a need to close later
 When are your busiest days, by customer count?
o What promotional tools can you utilize to increase customers on “slow”
days

Page 26
APPENDICES

Page 27
A-1: SURVEY - Have you taken this survey before?

Page 29
A-2: SURVEY - Profession
Profession Number of Respondents
Retiree 44
Contractor 10
Student 10
Artist / Graphic Design 8
Handyman / Carpentry / Woodworking 6
Administrative 5
Nursing / Therapy / Caregiver 5
Home Owner 4
Self employed 4
Homemaker 4
Farmer 4
Architect / Interior Design 4
Technician / Scientist / Engineer / IT 4
Teacher 3
Retail Sales 3
Electrician 3
Business Owner 3
Landlord 3
Chef / Line Cook 3
Unemployed 3
Financial Services / Banking 3
Educator 2
Customer Service 2
Editor 2
Antique Collector 2

Page 30
Waitress / Bartender 2
Transportation 1
ReStore Staff 1
Sign Technician 1
Shopper 1
Project Manager 1
News Director 1
Marketing 1
Photographer 1
Horse Whisperer 1
Grocery Store Employee 1
Government 1
Geologist 1
Curtis Lamb 1
Businessman 1

Page 31
A-3: SURVEY - What is your age?

Page 32
A-4: SURVEY - How often do you visit ReStore?

Page 34
A-5: SURVEY - How did you learn about ReStore?

Page 35
A-6: SURVEY - Have you ever donated to ReStore?

Page 37
A-7: SURVEY - What do you shop for at ReStore?

Page 38
A-8: SURVEY - Have you ever made a purchase at ReStore?

Page 39
A-9: SURVEY - Why do you shop at ReStore?

Page 41
A-10: SURVEY - How far do you travel to the Lawrence ReStore?

Page 43
A-11: SURVEY - How accessible/convenient do you find
ReStore?

Page 45
A-12: Analysis of Sales Data by Year
9%
increase
6%
increase

Page 46
A-13: Habitat ReStore Dimensioned Floor Plan

Page 48
A-14: Regression Analysis of Sales Data
Objective:
To study the sales figures and design a model to allocate the sales area in the optimal way.
Theory:
Auto-Regression (AR) model was used to project sales figures for 2013 (Variables
have been checked for order of integration using unit root method and differenced)
∆𝑌𝑡=𝛽1∆𝑌𝑡−1+𝛽2∆𝑌𝑡−2 + 𝛽3∆𝑌𝑡−3 + ⋯+ 𝛽 𝑛∆𝑌𝑡−𝑛,
Where 𝑌𝑡 is the random variable representing sales at time, t;
𝑌𝑡−𝑛 is the random variable representing sales at time, t-n;
𝛽𝑖 is the regression coefficient when ∆𝑌𝑡 is regressed on ∆𝑌𝑡−𝑖, i= 1 to n;
∆ represents forward difference i.e. ∆ 𝑌𝑡 = 𝑌𝑡 − 𝑌𝑡−1
Equations have been fitted for each of the 14 departments as follows:
S.No. Departments Equations Durbin-Watson
Coefficient
1 Appliance
𝑌𝑡 = 0.88𝑌𝑡−1 2.75
2 Cabinets
𝑌𝑡 = 0.89𝑌𝑡−1 3.09
3 Doors
𝑌𝑡 = 0.94𝑌𝑡−1 2.19
4 Electrical
𝑌𝑡 = 0.99𝑌𝑡−1 2.52
5 Flooring
𝑌𝑡 = 0.86𝑌𝑡−1 2.66
6 Hardware
𝑌𝑡 = 0.98𝑌𝑡−1 2.55
7 Lumbar
𝑌𝑡 = 0.92𝑌𝑡−1 2.57
8 Furniture
∆𝑌𝑡 = −0.42∆𝑌𝑡−1 2.21
9 Windows
𝑌𝑡 = 0.89𝑌𝑡−1 2.66

Page 49
10 Paint
∆𝑌𝑡 = −0.31∆𝑌𝑡−1 − 0.35∆𝑌𝑡−2 2.04
11 Plumbing
𝑌𝑡 = 0.98𝑌𝑡−1 2.30
12 Roofing
∆𝑌𝑡 = −0.69∆𝑌𝑡−1 2.04
13 Tile
𝑌𝑡 = 0.27𝑌𝑡−1 + 0.69𝑌𝑡−2 1.62
14 Miscellaneous 𝑌𝑡 = 0.38𝑌𝑡−1+0.26𝑌𝑡−2 1.89
Once the sales figures were projected for 2013, growth of sales for year 2011, 2012
and 2013 were computed. Then the geometric mean growth was calculated to derive
the contribution of each department sales in the total sales. Based on this regression,
two scenarios have been analyzed:
(1) Scenario 1: No expansion but optimally allocating sales area
(2) Scenario 2: Using spare space and optimally allocating sales area
Scenario #1: No expansion but optimally allocating sales area:
Sales Area = 5,645 sq. ft.
3.06
38.80
59.10
173.53
184.05
194.56
221.38
238.40
434.47
434.91
531.09
581.32
652.93
1897.41
0.00 200.00 400.00 600.00 800.00 1000.00 1200.00 1400.00 1600.00 1800.00 2000.00
Misc
Flooring
Roofing
Windows
Paint
Appliances
Tile/Brick
Lumber
Plumbing
Doors
Cabinets
Electrical
Hardware
Furniture
Allocation of area (sq. ft.) as per sales growth (Without
expansion)

Page 50
Scenario #2: Using spare space and optimally allocating sales area:
It was found that the garage space was under-utilized and thus can be used for future
sales.
Existing Sales Area = 5,645 sq. ft.; Unutilized Space (Garage) Area = 990 sq. ft.
∴ New Sales Area = (5645 + 990) sq. ft. = 6,635 sq. ft.
4.86
58.45
115.84
211.58
234.22
285.10
302.30
319.56
512.97
521.11
610.13
662.58
738.73
2057.55
0.00 500.00 1000.00 1500.00 2000.00 2500.00
Misc
Flooring
Roofing
Windows
Appliances
Lumber
Tile/Brick
Paint
Plumbing
Doors
Cabinets
Electrical
Hardware
Furniture
Allocation of area (sq. ft.) as per sales growth (Using spare
space)

Page 51
A-15: 2010 Demographic Profile (U.S. Census Bureau Data)

Page 55
A-16: Moving Costs Comparison
Assumed Move
to new
Location
Remain at
Current
Location
Total Square Feet 10000 8884
Cost per sq. foot $13.00 $8.78
Total $130,000.00 $78,000.00
Moving Cost * $50,000.00
Tenant
Improvement $50,000.00 $15,000.00
Total Costs $100,000.00 $15,000.00
Year 1 Costs $230,000.00 $93,000.00
Year 2 Costs $130,000.00 $78,000.00
Year 3 Costs $130,000.00 $78,000.00
Total Costs for 3 yrs. $490,000.00 $249,000.00
Expense Difference $241,000.00
* Moving costs data based upon data from the ReStore Support
Group

Page 56
A-17: Sales per Square Foot Analysis
MeasurementsbyCategorybyShelfArea,TakenInStore
FurnitureElectricalHardwareCabinetsPaintFlooringMiscTilePlumbingWindowsLumberDoorsAppliances
187.5252968515072802431611562.512020
12073.31809648142.5151213581312.511260
1002885681036224162
30330457.580168
ShelfArea:5660144248
504830
60168
60
96
759.5943.3332294215.5214.557125582119653723280
totalSqFt:5450.8
%GrossShelfSpace13.9%17.3%6.1%5.4%4.0%3.9%10.5%4.7%15.1%3.6%9.9%4.3%1.5%
AverageSales/SqFt84.0931.2094.3285.0631.6832.114.9744.6427.2086.4731.6889.09199.91
(grossshelfarea)
MeasurementsbyCategorybyFloorArea,TakenInStore
FurnitureElectricalHardwareCabinetsPaintFlooringMiscTilePlumbingWindowsLumberDoorsAppliances
187.58418587.547.5358168165.212020
1204812751024244511565.211260
1006612603385654
FloorArea:3014.66817162464
5682062
5081630
605.33
60
96
759.5212.666621050.571.592.3358233196248.423280
TotalSqFt:2509.89
%FloorSpace30.3%8.5%2.6%8.4%2.0%2.8%3.7%2.3%9.3%7.8%9.9%9.2%1.5%
AverageSales/SqFt84.09138.40474.48119.08135.2096.3330.73196.2595.8586.4768.4889.09199.91
(floorarea)

Page 57
Sales (from given financial statements)
2010 2011 2012 Average Avg % of Tot Sales
Appliances 19431.38 17,030.32 11515.99 15992.56 5.8%
Cabinets 26614.09 20,125.03 28281.64 25006.92 9.1%
Doors 19984.56 19,381.49 22641.75 20669.27 7.5%
Electrical 28336.19 28,161.32 31797.21 29431.57 10.7%
Tile/Brick 10835.91 13,349.56 9961.72 11382.40 4.2%
Flooring 7820.44 6,511.95 6329.8 6887.40 2.5%
Hardware 30141.62 29,293.04 34511.64 31315.43 11.4%
Lumber 20217.24 10,809.03 20006.53 17010.93 6.2%
Roofing 4126.18 2,489.52 4110.97 3575.56 1.3%
Plumbing 21921.61 20,515.24 24564.85 22333.90 8.1%
Paint 5379.76 6,475.15 8628.48 6827.80 2.5%
Windows 18065.11 16,336.19 16442.79 16948.03 6.2%
Furniture 46933.33 53,819.81 90847.27 63866.80 23.3%
Misc 6708.57 861.78 942.43 2837.59 1.0%
Total Annual Revenue ($)266515.99 245159.436 310583.07 274086.165
Sales reordered by top Revenues
2010 2011 2012 Average Avg % of Tot Sales
1 Furniture 46933.33 53,819.81 90847.27 63866.80 23.3%
2 Hardware 30141.62 29,293.04 34511.64 31315.43 11.4%
3 Electrical 28336.19 28,161.32 31797.21 29431.57 10.7%
4 Cabinets 26614.09 20,125.03 28281.64 25006.92 9.1%
5 Plumbing 21921.61 20,515.24 24564.85 22333.90 8.1%
6 Doors 19984.56 19,381.49 22641.75 20669.27 7.5%
7 Lumber 20217.24 10,809.03 20006.53 17010.93 6.2%
8 Windows 18065.11 16,336.19 16442.79 16948.03 6.2%
9 Appliances 19431.38 17,030.32 11515.99 15992.56 5.8%
10 Tile/Brick 10835.91 13,349.56 9961.72 11382.40 4.2%
11 Flooring 7820.44 6,511.95 6329.8 6887.40 2.5%
12 Paint 5379.76 6,475.15 8628.48 6827.80 2.5%
13 Roofing 4126.18 2,489.52 4110.97 3575.56 1.3%
14 Misc 6708.57 861.78 942.43 2837.59 1.0%
Total Annual Revenue ($)266515.99 245159.436 310583.07 274086.165
Sales/SqFt (Gross Shelf Area) Sales/SqFt (Floor Area)
1 Appliances 199.91 Hardware 474.48
2 Hardware 94.32 Appliances 199.91
3 Doors 89.09 Tile 196.25
4 Windows 86.47 Electrical 138.40
5 Cabinets 85.06 Paint 135.20
6 Furniture 84.09 Cabinets 119.08
7 Tile 44.64 Flooring 96.33
8 Flooring 32.11 Plumbing 95.85
9 Paint 31.68 Doors 89.09
10 Lumber 31.68 Windows 86.47
11 Electrical 31.20 Furniture 84.09
12 Plumbing 27.20 Lumber 68.48
13 Misc 4.97 Misc 30.73

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