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Health of the Business

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To determine how well or how badly their business is doing, retailers routinely compare each month with the same month a year prior. This is because, given the large seasonal swings almost all retailers experience, there is little meaning in comparing this month’s sales with last month’s.

So, if this February you did Rs. 110,000 in sales and last February you did Rs. 100,000, your business would be 10% ahead of last year. And, if this continues for a while, you can be happy with your trend. However, if the numbers were reversed and you did Rs. 100,000 this year and Rs. 110,000 last, you would be 9% behind, and you would have to take prompt remedial action.

In looking at these figures, you must exclude new stores or departments you opened. To determine how healthy your business is, the comparison between years must be apples to apples, that is, same store performance.

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