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, at the end of 2014 Apple Stores generated an amazing $4,798.82 per sq.foot, luxury jeweler Tiffany $3,132.20, while department stores such as Macy’s make around $160/$200.
Dear Retailers, don’t forget that, like it or not, we are now operating in an omni-channel world, so please stop evaluating stores purely through traditional store-sales figures, but add also influenced sales – sales occurring on other channels (typically ecommerce website, Mobile, etc.), but “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 – in point of fact, I strongly believe that 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 can 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) – of course this is easier said than done, anyway:
- some retailers use surveys on their ecommerce sites: they explicitly ask e-shoppers if they visited a 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 e-visits and accordingly infer influenced sales insights
An effective, efficient solution is still up in the air… …but, as a matter of fact, we’re all working on it.