Last updated on October 29th, 2019 at 01:13 pm
The retail industry is rapidly evolving, there’s no denying that. In fact, if there’s one thing we’ve observed about this space over the years, it is that change is constant. We hear and read about it regularly – the growth of ecommerce, the death of brick and mortar, and so on. But in today’s new retail world order, it’s not one or the other. It’s all retail.
We can call for this one-brand mindset, but we also need to measure its success. Similar to how we look at retail, we need to break down the channel silos when it comes to performance.
Forrester predicts that by 2023, 58% of retail sales will be influenced by digital. More specifically, by 2022, smartphones will play a role in 90% of all digitally-influenced sales. In today’s omnichannel world, it’s important to appreciate the halo effect channels have on one another. If you view your business holistically, you also need to measure it as such.
Omnichannel 101 Metrics
Omnichannel retailing demands a new set of omnichannel business metrics. While historical measures like same-store sales, sales per square foot and customer traffic are good success indicators, they are one dimensional – looking at just the store.
To illustrate whether your entire retail business is thriving, you need to look at the cumulative value of the following: customers, sales and fulfillment.
This is the ultimate customer health indicator. Rather than tracking individual events, it is a metric for the total spend per customer across all channels. You can measure it year-over-year, per associate or over a select time range. This will give you insights into how your customers’ behaviors are changing, which store associates are responsible for which relationships, and how season impacts sales, among other things.
This metric helps determine the omnichannel value of a store. It takes into account all sales generated through the store, regardless of whether the inventory is coming from another store, warehouse, distribution center, etc. Again, you can measure it year-over-year or per associate, but you can also look at it per store. It’s a good indicator of how well your store teams are utilizing omnichannel levers like real-time inventory visibility and endless aisle.
This is an overall measure of sales fulfilled at the store-level, even if the sale is from another store, ecommerce, etc. In today’s new retail environment, some stores are transforming into mini-fulfillment centers for online orders. It’s a cost-effective way to expand your distribution network and deliver on customer needs for immediacy and convenience. Additionally, offering modern store fulfillment options, such as buy online pickup in-store (BOPIS), can increase online orders in your store’s region.
Omnichannel Customer Journeys
The omnichannel 101 metrics will help you paint a high-level picture of your whole business. However, you may also find it helpful to track specific omnichannel customer journeys.
Research shows almost 70% of U.S. shoppers use BOPIS. As mentioned, the availability of BOPIS can make a difference to your online sales – it helps shoppers save on shipping costs and enables them to get orders faster. BOPIS is a cornerstone omnichannel capability, though, and drives more than just online conversion rates.
To measure your store sales lift from BOPIS, you want to look at purchases made in-store on the same day as BOPIS. This captures the additional sales from customers as a result of them coming in the store for their order. Just look at the 2018 holiday shopping season – of consumers who used BOPIS, 64% made additional in-store purchases. This is why it’s important to have simple in-store experiences, driven by knowledgeable store associates with one-click access to customer, order and inventory information.
It is estimated that retailers are missing out on nearly $1 trillion in sales because of out-of-stocks, which encompasses everything from empty shelves to failure to find a store associate for help. And when customers do get help, they don’t want to wait around while store associates call other stores to ask about inventory. With a better handle on stock, i.e. an accurate view of inventory in real-time, retailers can access and sell inventory from anywhere in the enterprise. Thus, capturing the sale in-store versus the shopper making a purchase online.
You can measure endless aisle with many filters, including year-over-year, per store and per associate. More interestingly, and possibly more impactful to your business, is the number and value of the items sold. This is because endless aisle allows your brand to sell more items at full price. With visibility into full price sell-through, you can understand how demand in one location drives margin across the entire enterprise. Even more, you’ll be able to measure full price savings thanks to markdown avoidance.
Recommendations For You
- Open up access to your data in real-time. To understand your true strengths and weaknesses, you need to be able to display business events as they happen. Instead of running reports at the end of the day, or being buried in disparate CSV files, implement a system that allows you to visualize metrics in real-time. This will let you make quick decisions as it relates to both operational capabilities and customer service.
- Start big then work your way small. If you really want to know if your holistic business is doing well, start with total gross merchandise value (GMV). This is your North Star metric and is how you will know if your brand is delivering value to customers. Remember, the simplest insights can often be the most powerful.
- Don’t get lost in the minutia of the data. You likely have a lot of it – and your transition to omnichannel has probably surfaced even more data than you know what to do with. That’s ok! Just because you can measure it does not mean you should or that it’s important. Ask yourself which KPI among a group do you want to impact the most? Focus on that one. And remember your main business goals…don’t let other measurements distract you from them.