You Know Improved Store Design Helps Increase Sales, But Would You Believe 46%?

You know what I like about American Eagle? The company is about the only retailer I know that is willing to openly discuss ROI on store renovations. Here's what the retailer had to say at its recent conference call:

"In 2005, we ... remodeled 43 stores. Remodeled store economics are quite positive. After a renovation, average store sales increased 46% and sales per square foot increased 14% on a square footage increase of 29%. We have about 160 stores yet to remodel."

I think sharing information like that with the investor community is pretty darn smart, because it leads to less push-back when you get to the next part of the discussion:

"For fiscal 2006 we expect capital expenditures to be approximately $175 million. This is related to [50] new and [50] remodeled stores, our new Pittsburgh headquarters in center as well as the construction of a new distribution system in Kansas, to support Martin and Osa, intimates expansion and potentially our direct business."

Back in the mid-nineties, DDI and GlobalShop worked with Deloitte on a major study about ROI and store renovations. We even sponsored a competition to recognize renovations that increased sales. Both initiatives were short-lived.

When DDI editors interview retailers regarding store renovations, they always ask about the impact on sales. Nine times out of 10, they are told, "We don't release that information."

What's the big secret?

--Karen Schaffner

Comments

[danny]

That's interesting, it's like the packaging of a product but for a store front. instead of walking through a supermarket with item trying to catch your attention, you're walking through a mall with well designed stores trying to get that few seconds of your attention.

[Jason266]

AE remodeled their store in downtown Indianapolis, but I don't recall there being a bouncer controlling a mob of people trying to get it.

46%? That's pretty impressive.