Rob and Pumpkin Auerbach started Rainbow Blossom Health and Wellness stores in 1977 to share their passion for a natural lifestyle. Today there are 5 Rainbow Blossom locations in and around the Louisville, KY area all with the mission of improving the health and wellness of their communities.
In 2004 Summer Auerbach, Rob and Pumpkin’s daughter, took over the management of Rainbow Blossom and continues to enhance not only the health of the community, but the health of the company as it moves towards the future.
CoMetrics was instrumental in getting my bearings so I could figure out where to help the business.
With this in mind, Summer hired James Followell as the company’s CFO. James came to the company with many impressive degrees, including a MBA and a JD, however, he had no previous experience in grocery retail. Fortunately, the CoMetrics platform helped him understand exactly where the stores were underperforming.
What James found was the beginning of flat to declining sales. According to CoMetrics’ CoScore, Rainbow Blossom was falling behind the majority of INFRA (Independent Natural Food Retail Association) members with a score of 41, while the majority of the group had a score over 50. James dug deeper into the numbers using the data provided by CoMetrics.
The CoMerics data showed that Earnings were problematic as sales were flat to declining while expenses were increasing and this was not an industry wide problem. Gross Margin was inconsistent – high in some areas and low in others. Efficiencies were a concern, as it appeared they were spending more than average on wages. Additionally, they were paying more on Fixed Expenses (such as rent and utilities) than the majority of the group. James took a deeper dive into the data in order to break down and resolve issues.
Sales and returns growth were lagging behind the group. Rainbow Blossom’s sales declined by 0.5% in 2015 while most of the INFRA member’s sales grew with over half the member’s sales growing by more than 4.4%. James found there was no rhyme or reason to sales decline or growth, it appeared to be random. Using the benchmarking data, the team was able to analyze product specific trends to strip away products that weren’t producing at a comparable rate. As a result, Rainbow Blossom’s Sales and Returns Growth jumped up to 5.1% by 2017.
The data was showing that Rainbow Blossom’s Gross Margin was well over the group’s average for the last six out of eight quarters. This motivated James to go product by product and see where they may be overpriced and turning away customers. He was also able to see where Rainbow Blossom was overpaying for items compared to the rest of the group. He took the data to suppliers and was able to negotiate cost down to reflect the groups average.
Rainbow Blossom’s Operating Expenses were higher than the groups average. Specifically, personnel expenses were over 25% and the majority of INFRA members spent less that 22% of sales on personnel. This enabled James to take the data to the managers and show them what was possible based on the benchmarks. He motivated the team by increasing their existing incentives for every quarter they came in at, or under the benchmark. It worked! Efficiency is now at 22% of sales.
Rainbow Blossom was paying more than the group average on Fixed Expenses such as Rent and Utilities. James took the benchmarking data to his vendors and was able to negotiate over a $17,000 dollar savings.
Rainbow Blossom is a different company because of CoMetrics.
In a period of three years the team at Rainbow Blossom, using the data on the CoMetrics platform, completely turned around a small chain of grocery stores. Today, they are growing and more profitable than the typical INFRA member.