A spreadsheet can make almost any grocery concept viable if the sales assumption is high enough.
That is exactly why sales forecasting deserves skepticism.
A responsible forecast should not begin with the sales number the project needs in order to succeed.
It should begin with the market.
Questions worth asking include:
- How many people are realistically within the trade area?
- What is their estimated grocery spending?
- Where do they shop now?
- Which competitors are convenient in actual travel patterns?
- What percentage of local spending could this store realistically capture?
- How quickly could that capture develop?
- Are seasonal or tourism effects important?
- Is the proposed store size reasonable for the demand?
- Are sales assumptions consistent with comparable stores?
- What happens if sales are 10, 20, or 30 percent below the base case?
A downside scenario is not pessimism.
It is a way of asking whether the project can survive being wrong.
What is the strongest evidence you have seen used to support a grocery sales forecast? What evidence do you wish developers used more often?