New Metrics for a New Retail Industry

Written by:



\"RREmpowered with easily accessible information and almost endless global alternatives, shoppers demand value-added, seamless cross-channel shopping experiences, and they exhibit little patience or tolerance for retailers who “don’t get it.”

As a result, retailers are in a reactive period of immense change, and the retail industry in 2016 is as disruptive as it’s ever been. Whereas e-commerce once changed the game, it’s no longer effective as a standalone strategy, and retail’s new website is –- in effect — the store; and the new front door of the store is now located…on mobile devices.

It’s a post-channel, spiraling, circuitous shopper journey, and retailers are hastily trying to marry their business models to it.

So, if the retail game has changed, why are we keeping score the same old ways?

A new omnichannel retail reality is forcing the industry to develop and use a new set of evaluative metrics, from managing the business on the front lines and in-store to developing critical strategies from the C-suite and boardroom.

Related to physical retail, fundamental business models and the economics they are built upon need to be revamped. Physical retailers have long planned on huge windfalls from traditional retail seasons, be it Holiday, from Thanksgiving through New Year’s Day, or Valentine’s Day, Mother’s Day, “Dad and Grads” and Back-to-School. The business models that stores were built on –- and on which retail businesses still largely depend upon –- were rooted in those key periods of profitable performance.

However, while big peaks in seasonal volume remain, for the most part profits have moved elsewhere, particularly as shoppers stretch shopping seasons, starting earlier and ending later each successive year. Holiday shopping is now almost entirely deal-, convenience- and novelty-driven, and that’s not a formula for either long-term, sustainable growth or profitability.

So, where do we go from here?

In the new omnichannel world, retailers must first establish their go-to-market differentiation and value proposition to shoppers, and then redefine the role of their stores as necessary for support. Some stores will become de facto distribution centers, while still others –- like Samsung’s new store in New York’s Meatpacking District –- brand showrooms. The one commonality will be the importance of being a branded touch point between retailer and shopper, and one that reinforces (and furthers) the shopping experience throughout the shopper journey.

Sales and sales growth have been and will remain key metrics in retail, but only within a context of cash flow and market capitalization. And, not entirely surprising, it might be time to cut same store sales loose as a key performance metric. You get what you measure, and attributing sales to particular channels only drives channel conflict. It also has nothing to do with an omnichannel shopper experience.

Sales-per-shopper is the most salient selling metric, and it’s available across all channels. Plus, while average transaction value (ATV) is still useful, sales per customer across all channels is more reflective of omnichannel effectiveness.

Other key operational metrics include customer acquisition costs and lifetime customer value calculations, and shopper experience requires analysis into shopper engagement and shoppers’ transitions through their often widely varying purchase cycles. It’s about brand awareness, recognition, retention and loyalty. And, for retailers, it’s about maximizing each and every opportunity to connect with, interact, listen and engage.



Scroll to Top
the Daily Report

Insights + Interviews right to your inbox.