Understanding and answering the issue of “what exactly are same store sales?” is needed whenever one is incorporated in the retail business and it is requested to perform a store by store comparison of sales in almost any given time period. Usually, most analysts will request a sales comparison of 1 store versus another store over some kind of defined time period for example within the Christmas season or springbreak, for instance.
Many store chains have a tendency to make use of this performance measurement by making use of it to all the outlets inside the store chain for any predefined period of time. Usually, they’ll go ahead and take sales generated in a single particular store then apply at this same store at the very same time previously, usually in some kind of year-over-year fashion that compares now versus then.
One must make sure make certain the revenue that’s been produced by sales at this store is used inside a like fashion to a different store that’s similar with regards to the period of time it has been opened up and the like. Evaluating a previously-existing store to some recently-opened up store has a tendency to deliver an invalid result and may skew the measurement of performance between all stores.
In most cases, rather of using the metric by stating that one will compare sales in one store to a different, a retail chain may do what it really calls a “comparable store sales comparison” or perhaps a “like-store sales comparison.” The 3 terms mean exactly the same factor, though, and they’re most frequently utilized by store chains which are openly-held, as a means of calculating operational results.
Searching at sales inside a same-store way could be effective when retail chains are undergoing rapid growth and opening new outlets in a steady clip. It’s possible to have a same-store comparison and hands it to analysts who are able to differentiate the revenue generated at new stores (most of which might be generating start up business due to excitement) and already-existing stores that depend on steady business.
Most frequently, a same-store sales comparison is performed by searching in the effective operations at outlets which have been open for some time throughout a certain week around after which evaluating it to that particular same week annually previous. This provides the organization a pleasant look that may reveal any variation in performance year-over-year and enables the organization to manage for several variables that may affect analysis.