Emily Albright Miller, Vice President – Strategy, discusses new methods to succeed in today’s retail reality.
For decades, retailers have obsessed over sales performance at the individual store level—measuring daily, even hourly, transactional commerce (which usually includes conversion and traffic, too). But footfalls are declining. E-commerce and m-commerce are ever-rising. And digital is influencing and impacting every step of the consumer’s journey. These dynamics are driving retailers to rethink their entire brand strategy and rendering measurements of individual store performance increasingly myopic. As brands continue to evolve—or revolutionize—their retail strategies, a foundational enabler is loosening the confines of dated metrics.
It’s a Map, Not a Metric
Today, commerce can happen anywhere—across a multitude of channels, spaces and times. To maintain (or gain) competitive advantage, retailers must think outside of and beyond the box, measuring something much bigger than any single location: the total market map. At the end of the day (or hour, if they’re tracking same-store sales that frequently), traditional store-based metrics simply cannot successfully measure a holistic, consumer-oriented portfolio strategy. In addition, a market-based approach can provide the context that is critical to today’s commerce—competitive landscapes, market dynamics and changing consumer demographics. Understanding these forces will allow retailers to carefully calibrate against their entire portfolio of experiences, from pop-ups to flagships and everything in between.
Next-Gen Retail Requires New Metrics
Imagine your retail strategy involves closing one of your average stores and opting to invest in a smaller format in the same market. Traditional retail principles would say that you focus the assortment on top-selling SKUs across categories—in an attempt to maximize sales performance in that single location. A consumer-first portfolio approach, however, might suggest that you narrow to a single category—presenting that product in a way that is the most comprehensive, immersive and attractive to your target audience. This same approach could consider the role of this location in creating consumer-generated digital and social content, showrooming to drive online and mobile sales, and looking at the fulfillment role this location plays. So, even in a scenario where square footage is sacrificed, a portfolio approach can create new awareness, fresh consumer demand, and lift the category’s sales both online and in larger stores. This type of evolved retail strategy requires new, holistic metrics around total market lift and impact to your customer file.
“Success comes down to fostering culture that dissolves the silos between marketing and merchandising and finance and operations.”
Enabling an Evolved Paradigm
Ask yourself: Are your metrics based on a consumer-first strategy or based on an organizational structure in which each group is responsible for measuring the success of a single channel? Are you efficient in measuring KPIs but, paradoxically, unable to be agile and responsive to the market because of them? Success comes down to fostering a culture that dissolves the silos between marketing and merchandising and finance and operations. And migrating from the traditional, channel-based metrics to a total map-based reality. Only then, when you focus on different KPIs, create alternate approaches to measurement, and define new ways to drive growth, can you create superior brand experiences that perform.
Originally published in design:retail.