Through a special arrangement, presented here for discussion is a summary of an article from Retail Paradox, Retail Systems Research's weekly analysis on emerging issues facing retailers.
A couple of weeks ago a friend of mine asked me, "So what is a Retail Winner, exactly? And how did RSR come up with the term?" On the one hand, I was kind of surprised to get the question -- it's kind of a cornerstone of our benchmark reports and anyone who has read a report of ours will know the term is used heavily. It's also defined in the overview section, though I'll be the first to admit that the definition there is fairly boilerplate, and we keep it short in an effort to get quickly to the meat, the survey questions and analysis.
At the most basic level, we define Retail Winners as retailers who outperform Wall Street's expectations for year-over-year comparative store sales growth, which is usually around inflation. In other words, if you're not growing faster than inflation, then you're not growing.
But this definition is not without controversy and, in fact, the issues we have with it represent some of the big changes that are happening in the industry. For example, what does it mean to look at year-over-year store comparable sales? Well, if online sales are growing through the roof but store sales are flat, does that mean the retailer isn't a winner? Maybe not! In fact, we're seeing more and more where retailers are combining online sales and reporting it as part of their comparable store sales. And we're starting to see situations where retailers are sub-leasing floor space to complementary retailers, not as store-within-a-store but as wholly separate stores with their own entrances, reducing the floor space in their stores as online takes up more sales.
When customers are shopping across channels, it gets harder and harder to look at just one channel's sales as the basis for comparison. We're trying to loosen up that requirement over time, while still being careful not to let a retailer measure something like unchecked new store growth as real "growth." Unfortunately, Wall Street still looks at performance as comp store sales growth, and as that kind of focus tends to drives a lot of executive behavior, we continue to look at it that way too -- but always with an eye towards the continued evolution of the measure.
Generally speaking, winners win. They do a better job of incorporating change and the technology that supports change. Most importantly, they focus on the customer and on solving the lifestyle wants and needs of their customers. That's not about selling stuff -- selling more stuff is just the outcome.