Sales Forecasting through Comp Analysis

This is by far the most challenging and rewarding component of market planning! Imagine looking into a crystal ball and trying to forecast the future sales and profit on this new venture that you are about to embark upon. Most folks try to simplify this procedure by three simple statements:

1.This site is going to kill it 2.This site is OK 3.This site SUCKS

Not sure how this translates into sales? Don’t worry, neither do the folks who make these type of statements (FYI – we’re all guilty of it). Believe it or not, there is a method for determining the range of sales and profits a site may produce through a process called ‘Comp Analysis’. Some companies are really good at this process however most are not!

Our Approach

Sales forecasting through comp analysis is basically comparing the trade area and site characteristics of a proposed site to the characteristics of an existing similar site. The theory is that if these characteristics are similar, than the proposed site should produce similar sales volumes. Again, that is the theory…

Sales forecasting is both art and science and our company likes to focus on the science part of it. Our comp analysis models are custom built for every client from the ground up so that each is unique to their specific business model. This requires an in-depth analysis on all existing locations so that specific benchmarks can be established for comparison. This is a very involved process but once complete can become an extremely effective tool in all facets of business (not just new to industry developments).

For example, what if the trade area and site characteristics of an existing store with low sales volumes compare very similar to the characteristics of an existing top performing restaurant? In most organizations, real estate departments simply blame operations and operations usually blames real estate. This back and forth finger pointing has existed for decades and will probably continue for decades to come. But the true question is why did it work so well here and not so well over there? The process of logical deduction must be initiated so that the truth is revealed and the same mistake can be avoided in the future.

For more information on our unique market planning methodologies, or to find out more about sales forecasting through comp analysis, please do not hesitate to call us direct anytime or shoot us an e-mail with your questions and we will be sure to promptly respond.

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