We have officially marked the anniversary of the start of the COVID-19 pandemic. While things are starting to look up, from the arrival of vaccines to the easing of restrictions, sometimes it feels like there is always a new (and often unpleasant) obstacle lurking around the corner.
One of the next “corners” to get around in retail is the challenge of year-over-year comparisons. This is one of the most commonly used metrics of retail success, in which a retailer looks at the revenue generated by stores that have been open at least one year, and compares their growth year over year. This is often referred to as “same-store sales” or “comparable store sales” or “like-for-like sales” – for our shorthand, we’ll just call it Comp. Dark stores, closed stores, limited capacity due to social distancing requirements, reduced hours and curfews are only a few of the factors that have contributed to the demise of Comp.
Comp has historically been a reliable metric for tracking year-over-year growth. It’s such an ingrained part of the business that most retailers only think about Comp as a new store opening event – a reminder to change a non-comp store to Comp after thirteen months, so that growth comparisons only look at stores that have been open for more than one year.
In 2020, many retailers decided to move stores from Comp to non-comp during the shutdown. There was no point in, week after week, month after month, facing the reminder of what sales might have been if everything had not been shut down. But just because the pandemic is appearing to near its end does not mean that the Comp problem is over. Now, in 2021, decisions need to be made on a store-by-store basis about whether a store in 2021 should be compared against last year or remain non-comp for 2021.
And once stores open fully, there is little point in comparing 2021’s performance to 2020’s – but is it fair to compare this year’s performance to 2019’s? The biggest question of 2021 remains to be answered: Will consumers stick to eCommerce habits developed during the pandemic, or will they shift all that new online behavior back to stores? The consensus seems to be that some online shopping will return to stores – but not all of it. No one knows for sure how much.
The pandemic has rendered Comp useless. And we’re still not out of the woods. With the race between vaccines and variants and the possibility of yet another surge, even with the more hopeful advent of revenge shopping, the longer we’re in the grips of the pandemic or its aftermath, the longer the Comp problem lingers. When it comes to measuring performance, we’re now starting from scratch.
Who would have thought that Comp would be a boardroom discussion – yet that is exactly what is happening. Many retailers have set finance rules on how to measure Comp and when to look at Comp vs. non-comp. Now leadership and finance teams are sitting around the table discussing what to do for their organization. We suspect that most retailers will not take each store to non-comp for the whole year, but potentially will do so for a length of time during the worst stretch of the shutdowns.
If Comp reporting is important for your organization, take time to assess your options. There are a lot of different ways to aggregate Comp store performance, and getting creative might help in grouping stores by the relative impact the pandemic had. For example, grouping stores by government entity – by city, by county, etc. – so that stores impacted by the same regulations are grouped together, is one way to go about it. Additionally, looking at stores with similar formats (mall stores vs. those with street-level storefronts) or other non-traditional attributes might help in managing which stores should be grouped as Comp vs. non-comp.
There has been nothing easy about managing a retail chain throughout the pandemic. Even the relatively simple math of looking at Comps has become complex and frustrating. It might be easy to change the status of a store to Comp vs. non-comp. But it has never been harder to figure out when – and what – those results actually mean – and how they should influence your strategy going forward.
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