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What is a store worth?

Shoppers walk down pedestrianised Regent Street
Reuters/Simon Dawson
As shopping changes, the way we measure a store's value has to change with it.
  • Marc Bain
By Marc Bain

Fashion reporter

Published

For a retailer to know whether a store is worth its cost—whether it’s getting a return on its investment—it needs a way to determine its value. In the past, that was simple enough. Shops were first and foremost points of sale, their value to the retailer closely tied to how much stuff they sold. A standard way to calculate that was to measure how much it sold relative to its size, or sales per square foot.

These days, the calculation is a lot more complex. E-commerce is siphoning sales from brick-and-mortar retail, reducing the sales per square foot of countless stores. At the same time, stores are taking on additional roles in the new shopping ecosystem that’s emerged, and their value beyond being a place where shoppers can buy stuff is moving to the forefront. They’re logistics hubs, immersive brand experiences, touch points for existing customers, and powerful tools to acquire new ones. Today, even if a purchase doesn’t take place in a store, a store may have still had a hand in making it happen.

That means retailers need to consider factors in addition to in-store sales if they want to measure the full value of their physical footprints. Here are some measures experts say they should have in mind.

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