OLD Media Moves

Are Big Box retailers fudging some numbers?

December 29, 2005

If you cover big box retailers — Wal-Mart, Home Depot, Lowe’s, Target, Costco, etc. — then here is something to think about:

These retailers like to report certain numbers to show the strength of their business. And business reporters often use these numbers in stories about these companies. I’m specifically talking about sales per square foot and same-store sales.

But are these retailers playing with these numbers, either intentionally or unintentionally? The reason I pose the question is that I’ve increasingly noticed that these retailers will set up products in their parking lots and get sales from these products. The home improvement retailers take over thousands of square feet in their parking lots for these products. I visited the parking lot of the home improvement retailer near my parent’s house just this morning, and about one-third of the lot was overtaken with products such as sheds and lawn equipment.

I made an inquiry to a friend in the industry, and he says that the square footage used for such purposes does not count when the companies measure sales per square foot. In other words, the sales get counted, but it artifically inflates the number because the square footage used to make these sales doesn’t.

I’d imagine that these sales have a bigger effect on the sales per square foot number than the same store sales number. Still, it’s something to ask about the next time you’re talking to that Big Box retailer. It might even make for a nice story if your market is saturated with such retailing efforts.

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