As Retailers perfectly know, store floor-space is a scarce resource and as such, it’s absolutely invaluable.
Unlike in the virtual world of online retail where space is not a factor, in brick-and-mortar stores each square foot is expected to make a certain amount of dollars – for example, according to data provided by eMarketer, a couple of years ago Apple Stores generated an amazing $4,798.82 per sq.foot, luxury jeweler Tiffany $3,132.20, while department-stores such as Macy’s made around $160/$200.
Let’s not forget that, like it or not, we are now operating in an omnichannel world, so it’s about time to stop evaluating stores purely through traditional store-sales figures – we need to add also influenced sales; these sales occur on different channels (typically ecommerce website, Mobile, etc.), but are “instigated” in-store.
In other words, the true value brick-and-mortar stores generate must be accounted appropriately because the source of value creation is becoming more and more independent from the location of value capture – the value generated by physical stores is potentially significantly bigger than just the economic value of sales that take place directly on the shop-floor; for instance, an apparently not-profitable store may actually be creating significant value as a showroom, where customers are able to discover and experience products that are afterwards purchased online – that is, on another channel.
The issue is, how to measure influenced sales?
The basic answer is, create a link between the store visit (first) and the online purchase (after); this is easier said than done, anyway:
- some Retailers use surveys on their Ecommerce sites: they explicitly ask e-shoppers if they visited a physical store before purchasing on-line
- some Retailers in their physical stores dispense discount-coupons to be used online, then track their redemption
- some Retailers use loyalty data to compare store visits and online visits, accordingly infer influenced sales insights
As a matter of fact, a definitive, effective/efficient solution is still up in the air.
Andy Cavallini – http://retaildom.com