What Do These Upbeat Retail Sales Results Really Mean?

Retail sales results for February have come out, and two major tracking services - Retail Forward and the International Council of Shopping Centers - report that comp store retail sales rose at least 3.7% in February: "their best monthly gains since the economy began its meltdown in November 2007." (In fact, we believe that is the sixth straight month of sales increases!)

Then, ShopperTrak reported that while sales were up in February vs LY (just 1.2% on their numbers), shopper foot traffic was down 3.1%. So, either average transactions were higher, or retailers were better at converting shoppers to customers. (Our bet is on the latter: motivated retailer meets purpose-driven shopper!)

What do reports such as these mean to independent retailers? Especially since they are reporting results of major national chains.

Well, we believe they do matter in several ways. First, they provide yet another benchmark against which to measure your own stores' performance. How were your February sales? You now have some context for assessing your own progress. (And maybe feel a bit better about what you did accomplish!)

Second, it provides insights into how consumers are feeling. Maybe "Frugal Fatigue" is in fact becoming more prevalent. For the 90% of the population that still have their job, they may be gaining some confidence that it is okay to spend.

No question, the spending that does occur will be much more purposeful and restrained than 2007. There is no going back to that! But those retailers who have edited their assortments to better match what their very best customers want will be well positioned going forward.

Even better prepared are those retailers who have been analyzing more than top line sales numbers. When sales are down, why? Fewer transactions? Smaller average transactions? Fewer items per transaction? These insights can be powerful for planning your store's progress in this New Normal.

Third - and perhaps most important about benchmarks - the financial community is reading these reports as well. Bankers and the credit departments of your vendors should be encouraged by these positive signs. In your discussions with them, be sure to have armed yourself with the most recent perspective on consumer confidence.

Remember, unemployment is a lagging indicator of the economy; consumer confidence is the leading indicator, particularly for retailers.

You're Focusing on What?! "Top Line Sales"?

"How are sales?"  

That's the international greeting of retailers.  And well it should be.  But if you watch only top line sales, you are not in control of your business.

For example, many retailers will lament, "Last week, sales were off 5% from L.Y. When are things going to get better?"  

But, consider these retailers: 

• "Last week, sales were off 5% from L.Y.  But, transactions were even with L.Y.  Ah ha! Maybe we should spiff our associates for add-on sales."  
  
• "Last week sales were off 5% from L.Y.  But transactions were off 15% from L.Y.  Ah ha! We need a Customer Appreciation Plan whereby our customers get 10% off future purchases each time they bring in a new customer."

See, targeted action steps to address the causes of sales declines, not just the symptoms. And look what it can do for you:

1. Reduce frustration!
2. Spend limited resources wisely
3. Involve sales associate in a positive way

All this just by looking at the free data you already have, and just using it!

Every retailer has access to the number of sales transactions they've had: daily, weekly, monthly.  (It's in your POS system or your cash register.) But too few actually take the next steps – to tally, analyze, identify trends - that can turn it into valuable management information.  

Few independent retailers can work harder.  But there are opportunities to work smarter!