In the ever-changing world of retail, understanding how your store stacks up is key. That's where Comparable Store Sales (CSS) reporting and planning come in. In this guide, we'll break down everything you need to know about CSS, why it matters, the important metrics, how to improve, and efficient planning techniques.
Comparable store sales, or "comps," are also referred to as "same-store sales" or "identical-store sales."
Getting to Know Comparable Store Sales
Comparable Store Sales (CSS) is your stores’ performance report, minus the impact of new stores opening or old ones closing. You’ll typically be looking into your sales performance by channel, e.g. web, stores, wholesale, etc. If you’re opening up stores quickly, looking at the percentage growth of your stores channel will be misleading. This is because it will be blending the organic growth (i.e. comp stores growth) with the inorganic growth (i.e. growth coming from new stores).
Accordingly, you’ll want to analyze your sales growth on a comp and non-comp basis. This is a common metric that public retailers use in their public earnings reports. You can see an example from Walmart’s FY24 Q4 earnings press release here and below:
The Company’s omnichannel model continues to resonate with customers helping to deliver strong growth, including comp sales of 4.0%
How to Calculate Comparable Store Sales
To calculate CSS, you’ll need to keep track of Open and Close Dates at the location level. Each open store, will start being included in the Comp Store Sales numbers, once it anniversaries (has been open for a year).
In some cases, you might want to add an additional buffer, say 60 days, to the comp start date, to account for the fact that following the opening of a store, sales might show anomalous behavior. Reasons for this could be an increased spike in the new store sales due to a marketing event or slow start to sales as customers are getting more familiar with the store in the region.
Once you have a comp start date for each location, your sales metrics for this year and last year, should start including that particular store once the comp start date has elapsed.
Must-Have Metrics
Below is what comp metrics would look like in a merchandise plan.
In this example, you have 2 sets of metrics for Gross Sales $. The top section is for the non-comp sales and the non-comp LY comparison. In this section, we’re looking at sales as they happened in each year for WK1-WK4. You can see that YoY growth on WK1 is 41.6%, and this looks great!
However, this is due to the fact that the retailer has increased the number of stores from 15 to 23 over the last year, and this is inorganically inflating YoY Growth.
A more relevant gauge on the growth of the business here is “Comp Variance” and “Comp %”, which show how the same store sales have been growing.
Another interesting metric to look at is the “Spread %”, which shows the % of the sales that are attributable to new store openings. You can also see that “Spread %” and “Comp %” would sum up to the total “Var %”.
Creating a Merchandise Plan Accounting for Store Openings
Now that we’ve covered how to report on comp store sales and the relevant metrics to look at, let’s discuss how to build out a Merchandise Plan, in an environment where you’re quickly opening up new stores.
First step is to estimate the Comp % on existing stores. You can achieve this by looking at the historical growth and making adjustments based on changes on your merchandise and marketing strategy.
Next step would be to understand the inorganic growth you’d be getting from your new store openings. To do that, you can look into:
- Number of stores you’re opening
- Compare the expected sales on the new stores to existing stores. For example, Store 10 is expected to be 75% of Store 1.
- Account for the opening time for the new stores.
After doing the exercise above, you’ll end up with a Spread %, similar to what we reported on in the previous section by week.
You will then have both a Comp % and a Spread % that you can add to get to the Var % to the previous year.
Summing it all up
We’ve covered why Comp Store Sales is a critical metric in an environment where your store count is changing. It is important both from a reporting and planning perspective. As you can see, there are many pieces to the process. As the number of variables such as store openings and closings the process gets especially challenging. Furthermore, finding similar stores manually vs. automatically is error prone.If you’d love to learn how you can automate this process, a merchandise planning solution like Toolio can help. If you would like to learn more on how, please get in touch.
