How Retail Revenue Really Works (and Why It Matters)

Estimated read time: 8 minutes

You chose your brick-and-mortar location with care—based on visibility, local buzz, or maybe a small business lease incentive. You dreamed of being part of a thriving district.

Yet, foot traffic isn’t what you hoped or maybe your revenue feels unpredictable.

If you’ve ever wondered whether it’s just your store, let’s clear that up.

The Frustration Behind the Foot Traffic

There’s a predictable journey that most physical retail businesses go through. Understanding it can give you clarity about what’s within your control and what’s influenced by outside forces—like seasonality, market changes, or even foot traffic patterns.

When you understand your revenue journey, you’re better equipped to:

• Filter industry advice and retail trends

• Make strategic timing decisions about leases and expansions

• Align internal growth plans with real-world retail behavior

Let’s dig into the four distinct phases of brick-and-mortar retail revenue, adapted for today’s market.

Phase 1: New Store

You’re open, finally! The lights are on, the shelves are full, and customers are trickling in. This partial first fiscal year is all about visibility, learning, and building early traction.

For most businesses, this phase doesn’t last a full 12 months because few stores open on the first day of the fiscal year.

At this stage in your revenue journey:

• Data is limited and mostly anecdotal, based on personal observations

• You’re learning business rhythms — from retail operations to product lifecycle

• Customer foot traffic and shopping patterns haven’t stabilized

Common Frustration: You can’t predict what a “normal” month looks like yet, and that makes planning hard. But that’s expected.

Phase 2: Non-Comparable Store

Once you complete a full fiscal year, you shift into what larger retailers call a "non-comp" phase. Your data is now tied to a complete retail cycle, but it’s still too early to make year-over-year comparisons.

"You still need to really understand the end-to-end calendar journey of your brand with your customer."

Due to customer foot traffic, this phase also includes:

• Pop-up businesses or those selling in-person seasonally

• Online-only brands and hybrid sellers

• Brick-and-mortar stores that recently moved, resized, or restructured

Modern Context: Co-retailing (shared retail spaces), subleases, or BID-sponsored pop-up programs often land a business in this phase, even if the brand is established. Remember, if you’ve moved brick-and-mortar locations, or have inconsistencies in your pop-up market schedule and locations, you’re resetting your metrics.

Phase 3: Comparable Store Year 1

This is your second full fiscal year in the same space, with no major changes to your square footage or architectural structure. Finally, you can compare this year’s numbers to last year’s and begin to make more informed decisions.

At this point in your revenue journey:

• You have baseline data for foot traffic trends and corresponding revenue

• Patterns are emerging across seasons, which help inform your strategies

• You can begin to layer gut instincts on top of the data

Watch Out: Retailers often feel frustrated that data still doesn’t tell the whole story. That’s normal. There’s still variability in the early stages of comparison.

Phase 4: Comparable Store Year 2+

You’re now in your third full fiscal year (or more), and the halo effect of “new” has worn off. You’ve experienced seasonality, unexpected slow periods, and rushes that you can now anticipate.

"So much of the extra noise about your space, your foot traffic, your seasonality — it starts to level out."

This is the phase in your revenue journey where:

• Data becomes a reliable decision-making tool

• Inventory planning and stock control gets sharper

• Promotions can be more precise

Cautionary Note: External forces, like shifts in your neighborhood or local initiatives, can still impact performance. But now you have enough internal history to recognize what’s temporary vs. systemic.

Understand Your Foot Traffic Struggles

If you’re struggling with foot traffic, you’re not alone and you might not be to blame.

Increased property costs, an overall reduction in business hours, and local initiatives all influence street activity.

Combine this with more coretailing and flexible lease structures, and what used to be “established” foot traffic might now be part of a rotating roster of retail tenants.

Your revenue journey isn’t just about where you’re located. It’s about how long you’ve been there, how consistent your presence has been, and how deeply your operations are aligned with your business model.

Watch and Learn

Watch the original video where I explain the four phases of the revenue journey for brick-and-mortar retailers.

When you understand where you are in the journey, you can:

• Make informed decisions about your future growth and expansion

• Focus on business levers in your control

• Develop problem-awareness so you can get advice that fits your phase

With the right Merchant mindset and retail business tools, your next phase can be your most confident one yet.

“Chris - this is BEYOND helpful and encouraging for business owners like myself who are few years in. There's so much out there for how to get started but it's tough to find good resources for the "in-business" part of small retail. The "Revenue Journey" is the perfect title for it, too. It truly is a journey with different phases and reasons for each!” — Anna Maria Muñoz

Strengthen Your Retail Foundation

Understand the Four Pillars of Merchant Method and learn how to use the retail fiscal calendar to guide your journey.

The Four Pillars of Merchant Method

Each phase of your revenue journey ripples across your business.

At Merchant Method, we teach that every retail decision affects:

• Product: What you sell and how it’s merchandised

• People: The market you serve and how you engage them

• Process: How your business operates day to day

• Profit: Your revenue, pricing, and financial strategy

Retailers who align their decisions with these Four Pillars see stronger results, even when conditions shift.

Retail Fiscal Calendar

Adopting the 4-5-4 Retail Report and Merchandising Calendar, a retail tool with greater benefits than a standard calendar, helps reinforce your revenue growth.

It orients your planning, product timelines, and growth benchmarks around how retail actually works, not how we wish it would.