With the advent of Multi-Channel Retailing and online sales becoming a big component of retailers revenues, Analysts are finding it difficult to gauge Retail Success or failure during Holiday period.
Current retail measurements are outdated, experts say, and investors now need to take a varied approach to making informed decisions about which retailers will see the fattest profits.
What was once a more cut-and-dried formula has in recent years become far more complicated, as consumers gravitate online and buy gift cards, and traditional shopping days lose their importance.
Same-store, or "comp," sales, which have been a heavily relied upon statistic, measure sales at stores open at least a year. But neither online sales nor the bulk of holiday gift cards shows up in same-store sales data for November and December.
While I never gave it a thought, looks like in view of multiple channels that Retailers have started using, the "Comps" as the article confirms has really become a not so useful metric. There is a scope for some study to factor in the effect of Online Sales to the entire sales of the retailers.
As Sucharita Mulpuru, multichannel retail analyst at Forrester, sees it, today's retail measuring sticks don't always consider the whole picture, "and the whole picture is a pretty complex picture.
"In general, retail metrics are pretty outdated and comp sales are one of the most outdated," Mulpuru said. "Stores are absolutely being cannibalized by the Web. It's really a naive and outdated metric that has outlived its use."
The stakes are high in accurately predicting U.S. retail health during the holidays, which can contribute as much as 40 percent of yearly profits for retailers. That is especially true this year, when fears over consumer spending are rife amid high gasoline prices, a housing slowdown and a credit crunch.