In search of the retail metric of the future…

With the opening of not one but two ‘product-less’ concept stores (Nordstrom Local announces openings in New York), it seemed timely to re-examine a recent blog post in which we explored two arguments against the use of ‘traditional metrics’ in a rapidly evolving retail world.   The opening of a store that literally cannot measure sales provides a refreshing (and exciting!) context to reflect on those positions in an interesting new light….

Are traditional retail metrics dead?

In the article “The Way We Measure Retail Store Performance Needs to Change” retail M&A banker Richard Kestenbaum puts forward a well-reasoned and sensible argument for why retailers need to evolve their thinking when it comes to measuring store performance.

Retailers in the past relied on two key metrics, both sales driven, as a general gold standard for measuring performance – sales per square foot and store income statements.

Sales-per-square foot was used as a base-level indicator of performance; crucially, one that gave retailers to chance to make store-by-store comparisons, regardless of the size of each location.  While it may not have accounted for a host of important factors (age of store, local demographics etc.) it did at least provide a standardized basis for competitive analysis.  Combined with the evaluation of store income statements – a more localized viewpoint that treated each store as though it were an independent business – the two were presumed as sufficient by the majority of retailers.

The modern consumer’s relationship with physical retail is much more complex than it once was, having evolved beyond the point of that only looking at success from a ‘sales’ perspective can accurately represent.

Stores are no longer mere warehouses for goods, but rather interfaces for a wide range of interactions.  Customers today may use the store as a pick up and drop off point for online purchases, while retailers may use their physical locations to host experiential events, or even simply view as a showroom for product.

While traditional KPI’s are not without value, if our relationship with stores has evolved, so too, argues Kestenbaum, should our success measures as a result.

The Store as Media? 

In, “Measuring the Store of the Future“, ‘Retail Prophet’, Doug Stephens goes a step further, denouncing retail’s traditional KPIs as mere ‘industrial-age metrics’,

Judging a store’s performance simply by regarding its most recent sales results is like evaluating a patient’s health by asking what they had for breakfast that day.” 

For crystal-ball futurist Stephens (in an argument echoing the thrust of his 2017 work Re-Engineering Retail) it is not simply how much product a store can shift that represents its effectiveness, but rather how well the store is working as a ‘channel’ for the brand.

In an increasingly saturated digital space, reaching anyone online through targeted media becomes increasingly cost prohibitive.  Stephens argues that the real value of the store is its potential to reach an audience directly – in the ‘real world’. “Your stores are your media,” Stephens declares, “you’re just not measuring it” – yet.

Image result for customers queuing in-store event
A glimpse into the future? Customers wait for an event outside a Supreme store in London.

While looking to establish a more accurate method for performance measurement is a valuable endeavour, the parallels Stephens looks to draw to contemporary digital metrics (‘one positive in-store experience’ as the equivalent to a single digital impression or click through) feel perhaps a little too out there for some of the more literal-minded in the C-Suite.

Measuring the success of the store that doesn’t sell anything

Opened last week, Nordstrom’s “Local” concept store, is an 1,800 ft Upper West side behemoth, that doesn’t stock any product at all.  Customers can book ‘consultancies’ with stylists, or use the locations as a place to return products they’ve bought from other retailers (see our recent post on the announcement that Nordstrom will accept returns from Macy’s & Kohl’s in their stores).

With such a radical re-thinking of the traditional store experience, are metrics as sales per square foot even possible?  Speaking to Bloomsbury, James Nordstrom, announced that the success of his latest stores would be measured by increased market share – nary a sales metric in sight.

Is this what future of retail will look like?  No longer as a place of pure commerce, but rather something closer to the original vision of Harry Selfridge – the store as a place where people come to socialise and chat, with the incidental occasion of making a purchase an added bonus.

Have we lost that loving feeling?

In a recent interview with Forbes, TruRating CEO Georgina Nelson, observed a serious problem in contemporary retail, “Traditionally there has been something of a disconnect between customer experience and store operations… without a consistent way to measure it, how do you operationalise the customer experience in-store?”

In a world where customers no longer have the patience to put up with poor experiences, the need for a simple yet unobtrusive way to gauge customer sentiment in ‘real-time’ is more important than ever before.

If your customers are unable, or worse, unwilling to let you know how they feel about your service, then whatever the metric you land upon for measuring success, will ultimately be of little matter.

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To find out how TruRating’ point-of-sale customer feedback solution can help you to understand your customer experience and deliver rapid innovation in real-time, get in touch with one of the team today for more information. 

 

3 CX Improvements To Drive Revenue Growth

We recently submitted a guest blog post for our fantastic partners Retail Pro about three simple customer experience tactics you can implement to drive revenue growth for your business.

Because we’re generous, we’ve decided to share the intro of the article here, enjoy this taster and be sure to click through for the full read below!

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For retailers looking to compete with the fast pace and convenience of online businesses, the in-store experience is an increasingly important battleground.

While historically success for retailers may have been measured by metrics such as comparable growth by store, sales per square foot, and gross margin return on investment, these no longer tell the full story.

Modern retailers need to know more than just what your customers are buying.

To succeed today, you need to understand how each of your touchpoints impacts the totality of your customer experience.

And the trend is one that’s catching – a recent study by the Forrester Group reports, “72% of businesses now say improving the customer experience is their No.1 priority.”

Using CX to drive loyalty & revenue

For today’s retailers, the availability of point-of-sale data provides a huge range of options when it comes to building true and lasting engagement.

Creating customer experiences that are truly memorable can help drive loyalty and advocacy for your business, so it’s important to make every single moment count…

Make every experience count

In an increasingly competitive landscape, you need to focus on creating memorable experiences.  This doesn’t need to involve a radical overhaul of everything you do.

As we found with one of our retail partners, the little things can add up.

The Retail Prodigy Group (master franchisee holders for Nike) is committed to providing the ‘ultimate customer experience’ with every visit. In practice, this manifests itself in a series of relatively cost-efficient but rigorously maintained, service measures, especially at the point of sale.

Staff at RPG are trained to ask for each customer’s name and always offer multiple product selections at the checkout. Customers are made to feel welcome with small personal touches, creating an authentic and warm experience.

This not only creates happy customers but can lead to financial gain too – we measured a 30% increase in the average transaction as a result of these measures and 5% increase in total revenue.

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To read the article in its full unabridged glory, click here!Image result for retail pro logo png

We’d love to hear your thoughts as to the best ways to create memorable customer experiences and how to measure the results. Get in touch with us on Twitter or Linkedin and leave your comments below!

City Beach: a TruRating Story

The TruRating crew were recently lucky enough to spend a little time with the team behind one of our fantastic retailers, City Beach.

HQ’d in bustling Brisbane, City Beach has been trading for over 30 years, building up a reputation as a go-to vendor for youth fashion across Australia.  With over 65 stores open across the country, they’re certainly a busy bunch.

It was amazing to see how the City Beach team have embraced TruRating across the breadth of their organization and we left Brisbane with a skip in our step.  One particular quote from COO, Anita Dorwald, had us blushing,

“For us, it is no longer a nice to have, it’s an essential to have… to help us navigate the brave new world of omnichannel retail.”

To get the whole scoop, watch the video below, and thanks Anita, we love you too!

To find out more about how TruRating can help your business, just leave us your details here.

Cara McCullogh