Measuring retail success in an omni-channel world

Omni-channel retailing is – or should be – changing the way retailers evaluate their business performance. Same-store sales have been the key metric utilized to measure a retailer’s health for many years but this metric only measures the traffic in the physical store without understanding the influence brick-and-mortar has on e-commerce or vice versa. Attracting and retaining customers wherever they choose to shop is more important than where they shop or where they ultimately buy, as long as it remains with your brand. Total revenue is far more important than individual channel revenues.

Since today’s shopping journey is often cross-channel, it is shortsighted not to consider the indirect influence and impact each channel has on the other channel sales. The consumer purchase decision is rarely isolated to one touch point – most customer journeys utilize multiple channels. According to Nielsen reports, 60% of consumers shop online before buying in the store (webrooming) and more than 50% of consumers browse in a store before making a purchase online (showrooming). Another impact on total sales is catalog shopping or catalogrooming – where consumers shopping in a catalog and then purchasing online or in the store.

A strong argument can be made that stores should stop trying to attribute sales to a specific touch point, which is what same store sales measure, as the consumer’s decision process is often impacted by many brand interactions — not just the last one. A better approach is to look at it from a holistic perspective — measuring sales by “markets” instead of individual stores or online vs. in-store.

From an in-store sales associate compensation perspective, retailers should consider giving in-store associates a commission credit based on some prorated formula of online sales from consumers in their geographic area — assuming that an in-store experience (showrooming) may have influenced the purchase. This commission rate will have to be less than the in-store sales commission rates, but it would help overall incentives and compensation for sales associates. Some channels are actually carrying through the in-store sales person’s ID but that is almost impossible to enforce.

This new understanding of the retail omni-channel experience would give everyone in a company, from the CEO to the store management and associates, a better understanding of their role in the customer experience and a bigger buy-in to the idea of servicing the customer wherever and however they prefer to shop.

I appreciate your feedback on this topic.  Please share your thoughts and opinions below.

Ken

Ken Morris

Principal
Ken was CEO and President of LakeWest Group and founder of CFT Consulting and CFT Systems, a retail software company. Earlier in his career, he held retail information technology executive positions at Lord & Taylor, Filene’s (Macy’s), Talbots, Stop & Shop Supermarket Company, and Sears. His experience is with strategy, selection development and deployment of retail management systems and processes.

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