Replacing Same Store Sales as Stores’ Key Metric

Bridget Johns
Bridget Johns
Chief Marketing Officer, Head of Growth Strategies

If today’s multichannel shopping journeys are so different than they were in yesteryear, why would retailers continue to evaluate store performance using only yesteryear’s key metric?

Coming out of this past holiday season, one thing was painfully clear to me. If retailers continue to use same store sales as a metric, they will continually and forever disappoint themselves, their management and their investors/the markets. It is simply no longer the most relevant metric to understand how well, or poorly, you are doing as a retailer on a store-by-store basis.

As long as I can remember, retailers have used same store sales increases or decreases as the absolute barometer of success. Once it was known if sales were up or down, the conversation would then turn to margin and other metrics that spoke to the health of those increases or decreases. Oh how the times have changed … but, unfortunately, our metrics haven’t.

Leaving the past holiday season and venturing through the NRF BIG Show and into the new retail year, I keep coming back to one simple thought … if we keep looking for success in same store sales increases, we are going to continue to be disappointed.

Shoppers just don’t shop the way they did even as recently as one year ago. Rather, shoppers now shop everywhere and nowhere all at the same time, from their mobile devices, from inside a store, from the parking lot of their office building, from … literally everywhere. ShopTalk is a new conference being launched this year and the cover of their event brochure has a picture of a monkey on a toilet with a mobile phone. Why? Guess what, 10 percent of us have made online purchases from – you’ve guessed it – the potty.

Physical stores are here to stay, and that’s not exactly ‘news.’ But, what is news is the way the retailers and the financial community must change about how they both think about and MEASURE the store experience.

From where I sit, the in-store shopping experience needs to be measured through metrics and data, but at the end of the day, does it really matter where – what channels, either online, in-store, in-app, etc. – shoppers actually make their purchases?

The customer is already so far ahead of retailers and she is determining what her experience looks like. She is in the dressing room checking other sizes and colors of her item of choice on websites – either the store’s or someone else’s – and she is determining where she will ultimately part with her money.

So what’s a retailer to do? Well, defining any new metrics is paramount. I’m working with clients on this opportunity right now, and currently I can’t say definitively what those new definitions are. But, I do know a few things that need to happen:

  1. New retailer metrics need to cover the full shopper journey. What are your customer’s year-over-year spend increases or decreases, and what’s the cost of acquisition (across all channels)?
  2. At the store level, measurement will continue to be critically important, but metrics like capture rate, conversion, frequency and duration of visit must be integrated with sales per shopper and average transaction value to develop a quality of traffic and interactions/transactions metric to balance the traffic decreases that by now are de rigueur for most every store.
  3. As and when you can, tie the shopper journey in-store back to her purchases online. This is, of course, 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.

At the end of the day, I don’t think there is a magic formula for success, but I do think those retailers who aren’t thinking along these lines and evolving how they manage and measure physical stores will continue to feel the holiday blues long after the season ends.

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