Should the same-store sales metric be retired?
Dragged down by steady traffic declines, same-store sales numbers may be failing to show how physical stores boost online revenues.
In a column for Forbes, Steven Dennis, president of SageBerry Consulting, writes that the metric doesn’t take into account stores’ role in recruiting new customers as well as converting shoppers that start their shopping online but need to touch, feel or try on a product before buying. Same-store numbers also fail to consider the contribution of omnichannel practices such as BOPIS and online returns.
Instead, “same trade area,” which accounts for all sales regardless of purchase channel within the influence area of a store, may be more useful. Wrote Mr. Dennis, “Critically, it also provides the basis for understanding the drivers of customer segment level performance at a more granular and actionable level.”
In its 2015 report, “Bringing Store Performance Into Focus,” Kurt Salmon said traffic and transaction-based metrics such as same-store sales growth, sales per square foot, conversion, basket size, average retail price and labor as a percentage of sales fail to capture the “full value” of physical stores.
“Stores are the hub of the new omnichannel ecosystem,” the report stated.
Kurt Salmon said retailers need to measure “overall cross-channel brand performance” by consolidating store and digital P&Ls, expanding key metrics to measure all of the levers that drive customer behavior across the customer journey and recalibrating labor metrics to account for the full set of activities store associates perform.
In a blog entry last year, Bridget Johns, head of marketing & customer experience, RetailNext, wrote that new metrics are needed to measure the “full shopper journey.” At the store level, capture rate, conversion, frequency and duration of visit integrated with sales per shopper and average transaction value could “develop a quality of traffic and interactions/transactions metric” that balances the traffic declines, she said.
Ms. Johns said the ability to “tie the shopper journey in-store back to her purchases online” remains “the Holy Grail for retailers, and an extremely difficult problem to solve. But even understanding this for a small subset of your shoppers (perhaps starting with those most loyal) can answer a lot of questions about how the channel interplay is — or isn’t — working for you.”
- ‘Same-Store Sales’ Is Retail’s Increasingly Irrelevant Metric – Forbes
- Bringing Store Performance into Focus – Kurt Salmon
- Replacing Same Store Sales as Stores’ Key Metric – RetalNext
- The Same-Store Sales Reporting Debate – RetailWire
Discussion questions: Do you agree that the same-store metric has become obsolete in the omnichannel age of retailing? How should store performance metrics be reimagined?