Be careful with the sales assumptions that make every project work on paper

[Viable Food]

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?