We live in a world where most of us make our purchases online. So, is it still fair to use sales per square foot as the standard way to measure a retailer’s performance? No, it isn’t. The industry evolves, so must the metrics used to assess it.

Online and Offline Performance Is Connected

Most retailers use multiple mediums to reach their target audience. What many of these retailers fail to acknowledge is how their presence on one channel influences brand perception and sales on another.

For example, a customer may make regular grocery purchases from a particular e-commerce website. Let’s say you have guests coming over for dinner. On the way home from work, you realize you need to stock up on vegetables for tonight’s meal. You are more than likely to visit an offline store run by the same retailer than any other store. And why not, you know the kind of products sold, the quality to be expected, and the type of service you will get.

An Offline Presence Can Influence Online Performance

With everything from groceries and medicines to clothes and cosmetics available online, it is tempting to believe that retailers no longer need brick and mortar stores. It isn’t surprising to note that in 2018, 5,864 stores were closed across the USA by retail chains. The number is expected to grow annually. This trend is not limited to the USA but is being played out all over the world.

What is interesting to note is that many retailers have seen a dip in eCommerce sales after an offline store was shut down. Customers may take the shuttered store as a sign that the brand isn’t doing well.

Defining New Metrics To Evaluate Performance

Retailers can no longer afford to evaluate sales separately for online and offline platforms. One of the metrics that may be used is to compare online sales with geographic locations. It will be interesting to note the relationship between revenue and locations where the retailer has a brick and mortar presence. The analysis may also show how traffic to the website is higher from these locations.

With this information in hand, instead of closing down stores, retailers may choose to open more stores in locations from where they have high online sales. These stores don’t need to carry all the products the retailer offers. Small format retail outlets are gradually replacing big box stores.

Inventory can also be managed as per the type of products bought online by people from the area. For example, a retail outlet near an office area may need to stock stationery and office furniture while the outlet near a college must stock up on dorm supplies.

Pioneering The Online Offline Balance

In today’s on-the-go economy, retailers must strike a balance between their online and offline presence. Alibaba.com, an eCommerce giant is one of the pioneers of this new retail format. In 2017, they opened a brick and mortar supermarket called Hema. Today, Hema is present in over 80 locations across China. The store isn’t different from others just because an eCommerce player backs it. Hema has cashier-less checkouts and even a robotic restaurant in one branch.

Similarly, JD.com opened digital-first grocery store by the name of 7Fresh. Shopping here is a futuristic experience. For example, when you scan the barcode on a piece of fruit, the display screen will tell you where it has been sourced from, what it tastes like, etc. Like e-commerce stores, they even have an app that shows you customer reviews. You can also pay using digital wallets.

Amazon too has opened an offline store with cashier-less checkouts. The Amazon Go store in Seattle uses an app and sensor technology from self-driving cars to track what customers pick up from the shelves. When you walk out of the store, the purchases are billed to their existing Amazon accounts. In essence, you can walk into the store, pick up what you want, and walk out without having to stand in checkout lines. Wonderful, isn’t it?

What these brands are essentially doing is applying their insights from e-commerce to the offline space. Most of us won’t buy a new product without first reading reviews — now this can be applied to shopping in a supermarket too! That is the kind of customization offline stores are doing to ensure that their customers’ are having the best shopping experience.

Our Two Cents

The Omni-channel experience blends the offline and online shopping experience seamlessly. It doesn’t just change the way customers shop, it changes the way retailers measure their customer experience too. By looking at both online and offline sales, retailers can get a complete picture of their sales growth. And, at the end of the day, this is what’s most important.

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