A measure of the sales growth of a retail store over a specific period, comparing sales from the same store in the previous period.
What is Same Store Sales (SSS)?
Same Store Sales (SSS) is a retail metric that measures revenue growth of stores open for a year or more. It gauges organic growth by excluding newly opened or closed stores. The formula is: SSS = (Current Year Sales - Prior Year Sales) / Prior Year Sales * 100%. Positive SSS indicates revenue growth, and strategies to improve it include enhancing customer experience and loyalty.
How SSS works
- Comparison of Stores: SSS compares the sales performance of stores that have been open for at least a year.
- Excludes New Stores: It excludes the revenue generated by newly opened stores to focus on existing store performance.
- Eliminates Store Closures: SSS also eliminates the impact of store closures to provide a clear picture of ongoing sales growth.
- Calculation Formula: SSS is calculated by subtracting the sales of the prior year from the current year, then dividing by the prior year sales and multiplying by 100.
- Percentage Change: The resulting percentage indicates the growth or decline in sales compared to the previous year.
- Performance Indicator: Positive SSS indicates growth, while negative SSS suggests a decline in revenue.
- Reflects Organic Growth: SSS reflects how well a retailer's existing stores are performing without the influence of new store openings or closures.
- Assessment of Strategies: Retailers use SSS to assess the effectiveness of strategies in boosting customer loyalty, improving products, or enhancing the shopping experience.
Remember, the context of industry and economic factors is crucial for interpreting SSS accurately.
Pros of SSS
- Accurate Performance Assessment: SSS helps retailers accurately assess the true performance of their existing stores by excluding the impact of new store openings and closures. This provides a clear picture of how well the core business is performing.
- Focus on Customer Loyalty: SSS highlights customer loyalty and engagement with a retailer's brand. Positive SSS indicates that existing customers are returning and spending more, which can be a result of effective marketing, customer service, and product quality.
- Strategic Decision-Making: SSS is a valuable tool for making strategic decisions. Retailers can identify trends and patterns in their existing stores' sales performance over time, enabling them to make informed decisions about inventory management, pricing, marketing campaigns, and other aspects of their business.
Cons of SSS
- Limited Scope: SSS only considers the performance of existing stores and doesn't account for the potential growth from new store openings. This can lead to a limited perspective on overall company performance and growth potential.
- External Factors: SSS may be impacted by external factors such as economic conditions, changes in consumer behaviour, and competitive pressures. These factors can influence the results and make it challenging to attribute changes solely to the retailer's strategies.
- Seasonal Variation: Seasonal fluctuations can heavily influence SSS, particularly if a retailer's products are highly seasonal. This might lead to inaccurate assessments of overall performance, as certain periods of the year might naturally have higher or lower sales.
FAQ
Below you will find answers to common questions
What is Same Store Sales (SSS), and why is it important for retailers?
SSS refers to the comparison of sales generated by established stores over a specific period, typically year-over-year. It excludes sales from newly opened or closed stores. It's important for retailers as it helps measure the organic growth of existing stores and indicates their performance without the influence of store expansions or contractions.
How can retailers improve their Same Store Sales (SSS) performance?
Retailers can enhance their SSS performance by focusing on strategies like improving customer experience, optimising product assortment, implementing effective marketing campaigns, and enhancing operational efficiency.