Retail Decision-Making: Three Hidden Factors Skewing KPIs

Are retailers missing growth opportunities by failing to account for nuances in data used to make decisions? Finance and ops leaders may take data at face value, when the reality is more complex. First, some types of data are higher quality than others. Second, while the focus on quant data is strong, ignoring qualitative data may result in the wrong decision. Finally, assigning values to intangibles may make some diehards queasy, but quantifying ambiguity is an exercise worth doing as it may be the difference between success and failure.

1. Harnessing 1P data from e-comm and mobile is alchemy — creating and mining your own gold: The quality of data sourced from in-store sensors for edge computing, mobile, and web activity is important to factor into ROI calculations when evaluating capex for customer data platform (CDP) technology adoption. The ability to combine 1P data with 3P data unlocks a new dimension of user insights and predictive analytics. Despite this, many consumer companies continue to sourced data using traditional market research methodologies rooted in opt-in surveys and small sample sizes. Investing in CDPs may initially give CFOs sticker shock, but meticulously calculating ROIs for the most relevant and pressing Cloud and AI use cases - accounting for intangibles and applying rational coefficients to accurately measure data quality — may prove implementing CDP’s ROI is much higher over time than originally determined.
2. Qualitative findings are critical to informing demand forecasts: Spending time in market observing, listening, inquiring, and understanding can yield insights to localize execution, increasing demand. Case in point, the demand for certain product lines can be expanded by capitalizing on the differences in usage occasions by market. Consider a stylish wide-leg jogger. In Chicago, styling this casually with a matching sweatshirt and sneakers in marketing creative and in store displays can work well since Chicagoans tend to dress casually on more occasions. In many large western European cities, styling that jogger with a button down, nice outerwear and boots will mean shoppers won’t relegate the look to Sunday leisurewear thus increasing the likelihood they’ll see the value of it, increasing demand.
3. Initial forays into brick and mortar are branding plays: The first location in a new region or sub-region can pay dividends far beyond revenue per square foot. When analyzing locations based on rent/sq foot, foot traffic, nearness of competitive set, average HHI with a certain mile radius, and other optimal demo data, it may seem a mall location in New Jersey is the lowest risk way to enter the US in order to test waters. The truth may be quite different. If a brand’s value prop is clear and its marcomm has proven effective, then it’s important to understand that establishing the brand firmly in the target demo’s mind is formative. Being in front of early adopters and influencers drives EMV. With strong ownable creative, messaging, and in-store experience to create viral buzz and PR wins, opening a first location on a storied shopping thoroughfare is more likely to accelerate brand equity and pay long-term dividends. While rent in NYC’s Soho, Madison Ave, or Fifth Ave may be sky high, quantifying the value of entry into early adopter consideration sets, earned impressions across media from early adopter buzz, and storefront signage as OOH advertising impressions should all be factored into decision-making equations.