MEASURING THE
VALUE OF BRICKS
AND MORTAR
Doug Stephens, founder of Retail Prophet
and author of Reengineering Retail.
I
n my book Reengineering
Retail, I argue that the
industrial-age metrics of
comparable growth by store,
sales per square foot, and gross
margin return on investment tell
an incomplete story of physical
location’s value and contribution
to the business. Judging a store’s
performance simply by regarding
its most recent sales results is
like evaluating a patient’s health
by asking what they had for
breakfast that day. It makes no
sense.
And the results of wrongly valuing
store performance can be perilous.
Witness American giant Macy’s
annual bloodletting of what appear
to be underperforming stores and
similar moves by the likes of House of
Fraser in the UK. Like a snake eating
its own tail, these businesses will, if
they continue on this path, eventually
cease to exist. But they are hardly the
only retailers falling into this same
downward spiral – most do.
In an attempt to tell a somewhat
more complete story of performance,
some brands are beginning to
attribute all or at least a portionREENGINEERING RETAIL / INSIGHT
watchpro.com / AUGUST 2019 / WATCHPRO 27
IN A WORLD WHERE CONSUMPTION IS INCREASINGLY MOVING ONLINE, HOW SHOULD THE PERFORMANCE OF PHYSICAL
RETAIL STORES BE MEASURED? WHAT METRICS MAKE SENSE IN A RETAIL LANDSCAPE THAT IS SEEING DOUBLE-DIGIT,
COMPOUNDED GROWTH IN ECOMMERCE, WHILE BRICK AND MORTAR STORES STRUGGLE TO EKE OUT SINGLE-DIGIT
LIFTS? DOUG STEPHENS, AUTHOR AND FOUNDER OF CONSULTANCY RETAIL PROPHET, ARGUES THAT BRICK AND
MORTAR STORES ARE WORTH FAR MORE THAN THE BOTTOM LINE PROFITS (OR LOSSES) THEY GENERATE.