The way retailers report their like-for-like sales should be streamlined to reflect factors including the growth of online sales, a retail think tank has said.
The KPMG/Synovate Retail Think Tank (RTT) is calling on the retail industry to work together to come up with a standard guide to reporting like-for-like sales – or run the risk that the measure will become obsolete.
At the moment there are no guidelines to how retailers should report like-for-like sales, which aim to provide a measure of underlying performance by taking out the impact on sales of new or closed stores. Retailers can choose whether they include figures on stores that are being refurbished, whether they include VAT, changes to products, discounts or promotions. That makes it difficult, says the RTT, to compare figures for different retailers.
It’s also important, said the RTT, to come up with a consistent approach to reporting sales online and from other emerging channels.
RTT member Richard Lowe, head of retail and wholesale at Barclays Corporate, said: “A retailer may well be enjoying remarkable online growth with sales driven through a combination of click-and-collect and purchases made via the internet, but these may not be visible if you were to look at business’ like-for-likes in isolation.”
Rather the RTT is recommending that website sales be included in like-for-like sales, except in the case of new website launches. They should only be excluded if sales through other channels are completely independent of the existing portfolio, a situation that is expected to be rare.
It is also suggesting that trading updates for like-for-like sales should cover a standard period of time, especially over Christmas. Other recommendations, in a new KPMG/Synovate Retail Think Tank white paper include excluding new and closed stores from like-for-like figures but including stores that are being refurbished, unless their closure is extended and significant, and giving sales figures both with and without VAT.
Tim Denison, director of retail intelligence at Synovate, said: “To the outside world the value of disclosed like-for-like sales figures is diminishing, simply because all too often they neither provide a fair reflection of underlying sales, nor do they provide a fair comparative base between retailers.”