by Alan Miklofsky | November 2025
Retailers often ask what constitutes a “healthy” annual sales increase. While there’s no single number that applies to every store, the answer begins with understanding what your sales must grow by just to stand still—and only then what it takes to grow in real terms.
Start with the Bare Minimum: Matching Expense Inflation
At a minimum, your year-over-year sales growth must exceed the aggregate rate of inflation across your operating expenses. That means all categories combined—Administrative, E-commerce, Marketing, Occupancy, and Personnel.
If those costs collectively rose 5% this year (and for many retailers they did), then a 5% sales increase merely keeps you even. Anything less means your profit margins are shrinking, even if your topline looks steady.
A Better Benchmark: Real Growth After Inflation
Healthy growth doesn’t start until your sales rise beyond expense inflation—typically 2–3 percentage points above it. So if your expenses inflated 5%, a 7–8% increase in sales represents true growth in profitability and operational strength.
Of course, this depends on your market, your mix, and how well your team executes. A 3% growth rate might be solid for a mature, stable business in a slow-growth region, while 10% or more may be expected for stores investing heavily in e-commerce or expansion.
Look Deeper Than Just the Top Line
While growth percentage is an easy metric to quote, healthy stores also track:
• Comp-store growth vs. new-location contribution
• Gross margin maintenance or improvement
• Expense ratios (especially payroll, occupancy, and marketing)
• Customer retention and acquisition trends
Top-line growth is only meaningful when supported by strong margin and disciplined expense management.
How to Calculate Expense Inflation Accurately
To find your “bare minimum” growth target, compile your prior year’s actual expenses across the five major categories—Administrative, E-commerce, Marketing, Occupancy, and Personnel—and compare them to this year’s. The weighted average increase becomes your inflation baseline.
If you’re unsure how to calculate it or want to see a practical model, I can help outline a method that ties directly to your Profit and Loss Statement.
The Bottom Line
Healthy growth isn’t just a number—it’s growth after inflation. In 2025’s environment, that often means aiming for 7–10% year-over-year sales increases to stay ahead of expense pressures and build real value in your business.
© 2025 Alan Miklofsky. All rights reserved.