Revenue per store matters, outlet numbers doesn't!
Size does matter, but having more numbers of stores does not necessarily translate in to higher revenues for retailers. The bottom line is to have high income levels for each and every individual store in the chain, because this is what will ultimately transform in to better sales and high profits for the retailers.
Fibre2fashion has compiled and researched data from the recently released listings of the top 100 retailers from across all verticals in the US done by Alliance Data on the basis of sales growth achieved in 2007 vis-à-vis 2006. We have tried to compare per store yields of apparel retailers and have come to some startling conclusions from this data.
The iconic high end retailer from New York, Saks topped the rankings as well as took the cake with the highest number of earnings per store. In 2006, Saks had a mere 180 stores from which it was able to generate sales of US $2.94 billion which in turn delivered a stupendous yield of $16.33 million per store.
In 2007 store count grew to 197 stores and sales to $3.28 billion which ultimately converted in to a earning per store of $16.66 million.
In comparison, in case of Bed Bath & Beyond, second in the ranking, each outlet could muster only 50 percent of the proceeds generated by a store of Saks. With a turnover of $6.61 billion from 816 stores, each outlet could realize proceedings of only $8.10 million per store in 2006.
In contrast, sales and number of outlets grew to $7.04 billion and 971 respectively in 2007 but, average returns per store fell to $7.2 million depicting a negative growth of 11.11 percent when evaluated with figures of 2006.
Other retailers in the rankings could deliver average or even below average takings per store when corresponded with figures of an outlet of Saks. Among the first five, income for an outlet for TJX averaged $7.0 million and $7.2 million, Ross stores $6.9 million and $7.1 million while Urban Outfitters could not garner a growth and it's per store income stayed stagnant at $6.15 million in 2006 and 2007 respectively.
In contrast, Collective Brands which is last in the ranking could deliver a per store yield of only $611,700 and $620,200 with a store count of 4,572 and 4,894 in 2006 and 2007 respectively. When evaluated with Collective Brands, the number of outlets owned by Saks is a mere 4 percent to that of Collective Brands, but in comparison, sales turnover per store of Collective brands is just 3.79 percent to that of Saks
The contrast in group sales turnover is also notable. On the strength of its high number of stores, Collective brands could boast of an income of $2.79 billion and $3.03 billion only in 2006 and 2007 respectively, the figures which again do not match up to those delivered by Saks.
A general feeling could arise among our readers of the comparison made of an iconic fashion brand and a next door apparels retailer. Our objective was to only bring fortha point that a high number of stores necessarily may not translate in to over all high revenues.