What does comp mean in retail

Comparable store sales, also known as same store sales, compare sales for a company's stores for one year to those of the same period for prior years, typically on a quarterly or monthly basis. Comparable store sales indicate whether the company's sales are increasing or decreasing over time. Comparable store sales are important barometers used by company management and financial analysts as well as potential investors in the company.

Significance

1. Comparable store sales are often a reliable indicator of whether a retailer's business is increasing or decreasing. Because they compare the same portions of the year, comparable store sales take into account factors such as seasonal changes. In theory, most of the same factors that influence store sales in the first quarter of one year should have a similar effect for the first quarter of the following year, allowing for an accurate analysis.

Causes

1. An increase or decrease in comparable store sales typically occurs from rising or falling prices or a change in the number of customers who frequent the stores. Sales might increase because the store is charging higher prices than the year before and the number of customers remains unchanged. A sales decrease is often a sign that some customers might now be shopping elsewhere, perhaps because of the entrance of a competitor into the market.

Considerations

1. While comparable store sales are often reliable indicators of store performance, they are not foolproof. For example, if store sales are typically strong during a flexible holiday such as Easter, which might occur in March one year and April the next, the results might be skewed regardless of whether monthly or quarterly sales are compared. A special sales promotion not offered the previous year could skew the figures for a given period of the year. Opening a large number of stores during the year can also make company-wide comparable store sales look attractive in relation to the previous year.

Effects

1. Retail analysts use comparable store sales as part of their evaluation of a company's financial health. In general, rising comparable store sales is a sign that the company is doing well and growing, while declining comparable store sales over an extended period of time could mean that the company is in trouble. Top management uses comparable store sales figures to determine whether changes need to be made to marketing strategies or operational procedures.

2020 was unprecedented in every way. For retailers, it changed the way they do business. Traditionally, measuring the performance of stores has been done by looking at Comparable Store Sales. Comparable Sales or Comp Sales (or Like for Like) compares current year actual results to the results of the same time periods in the previous year. 2020 was anything but Like for Like. 

In March of 2021, the world will “Comp” Covid-19. What does this mean for your stores and your organization? Starting in March, all of your historical data will become less valuable to use as a comparative. How do you compare against not being open, or against being open on reduced hours or with capacity limits?

Some might say that the easiest thing to do would be to compare 2021 to the last “normal” year, being 2019; however, it is not that simple. There are the obvious differences to 2020, such as stores closures, shortened store hours, and in-store capacity limits. What is more significant is that 2020 brought on huge changes in customer behavior. We need to consider the impact of these changes when determining how to measure performance going forward.

Customer behaviors learned over the course of 2020 are here to stay. Services that were ‘occasional’ in 2019 like BOPIS, curbside pickup and same day shipping have become standard practices, and are now expected offerings in the eyes of the customer. The magnitude of the changes we’ve seen in customer behavior, as well as the speed at which they have adopted these new services, are more significant than any other year that retailers have experienced in recent history.  

While these changes in customer behavior won’t limit a retailer’s ability to achieve 2019 sales volumes, they will have a significant impact on 4-wall performance. This is especially true regarding ratio metrics such as Average Transaction, Conversion and Visit Value. Since nothing is “like for like” anymore, establishing a new baseline on how to measure store performance will be essential to measuring and motivating your store and field staff.

Is Comp still King? It’s Time to Establish a New Baseline

1. Reorganizing Your Financial Plan

Your financial plan is still the foundation, though the sales distribution across channels will change. This change will need to be considered as product is planned for the stores in 2021. We’ve learned from the customer that the full size / color assortment does not need to be physically in the store, as they are now more comfortable with digital purchases. This, in turn, changes your in-store tasks and activities, further diminishing the relevance of 2019 as a useful benchmark.

2. Unified Commerce: Combining Online and Offline Sales

Retailers should consider creating a consolidated view of all sales channels within a market, to get a better understanding of store performance. With all the new digital activities available in the last year (click and collect, endless aisle, curbside pickup, etc.), it is essential to combine all local demand generation and order fulfillment activities. This will give a more complete picture of what the store influences. This will give retailers a more accurate view of sales within a market area and allow you to better recognize and reward performance.

3. Using Trend to Set Targets on Operational Metrics

Given the limited value of Comp metrics, how should a Retailer go about setting targets in 2021?  While year on year changes in weekly Market Sales is an interesting financial metric, it will do little to drive insights and performance within your Store organization.  For that, Retailers will need to focus on the trends of key ratio metrics such as Average Basket, Conversion and Visit Value.  Adopting a strategy of improving on last week’s results will both ground the targets in ‘what is possible’, as well as give your Stores a meaningful target to strive for.

4. Understanding the Shift

Many retailers had to accelerate their omni-channel strategy over the last year to keep up with the changing customer behavior. What retailers had planned to execute over the next 3 to 5 years was achieved in as little as 9 months. Looking at ecommerce sales as % of total retail sales over last the 14 years, we can see it took 10 years for penetration rates to double, whereas we saw a 40% increase in 2020 alone.

US Brick and Mortar & Ecommerce Sales
14 Year Comparison

Source: Digital Commerce 360, 2021.

In summary, 2020 has prompted significant and permanent changes in Customer behavior and has brought many ‘novel’ service strategies to the forefront.  And yet, with all this change, Retail remains a simple business that focuses on the customer experience and is driven by metrics. The coming year will present a unique opportunity for Retailers to establish a new baseline from which to set goals and measure performance in the future.

StoreForce can help you to achieve your retail goals and labor planning effectiveness. Interested in learning more? Contact us and engage with one of our retail experts as to how we can future proof your overall retail store management.

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Tests were administered one week prior to the simulated COMP. Respiratory gas measures were conducted using a wireless portable ergo-spirometry system (Oxycon Mobile Pro, Jager, Wurzburg, Germany) in breath-by-breath mode.

LabT data were deemed useful to provide relevant information to other measures made during COMP trials.

A year later, comp numbers compare a store open a full 30 or 31 selling days with one open three or four days.

The same folks who brought you chargebacks, markdown math and reverse auctions work on same-store comp scams in their spare time.

Three players finished with 19 points in a Winter League comp, Jean Batten Jones winning from Karen Jones and Jenny Jones and Jean Jones (19) won another comp from Lynne Monro (19) and Dilys Jones (17).

TERRY HILLARY scored 41 points to beat Andy Baker and Gary Simmonds by one in a comp at RHOS-ON-SEA and club president Tony Fox scored 29 points over 12 holes to finish four clear of Joe Chapman and Barri Jones.

Brian Downes (46) won a senior comp by four from Mike Hollings with Tom Grady third on 41 and John Kelty, Maelor Davies and Keith and Brian Jones scored 56.3 to win a senior Texas Scramble from the three man team of Noel Jones, Robert Jarvis and Mike Griffiths.