Key Performance Indicator are the metrics that fashion and luxury companies look at to steer the wheel of the company towards success.
Performance indicators for bricks and mortar stores are similar but different from the digital stores KPIs.
Managers look at KPIs by comparing their values Year on Year to see if the company is improving its performance and also they benchmark the company’s performance against other companies and brands.
Fashion managers usually look at the average of the market for each KPIs when the data is available. But they also look at best in class performers to set their targets.
- Gross Sales
- Net Sales
- Gross Margin
CRM & Digital Marketing KPIs
- Return on Advertising Spent (ROAS)
- Cost per Acquisition (CPA)
- Number of sessions
- Churn Rate
- Cost per Lead (CPL)
- Cost per Click (CPC)
- Email Opening Rate
- Email Click Through rate
- Bounce rate
- Pages per Visit
- Page Exit Rate
Micro Conversion KPIs
- Add to cart
- Add to wish list
- Add to cart from wishlist
- Check out funnel completion
- Newsletter subscriptions
- Account creation
- Conversion Rate
- Ratio product views / product purchases
- Site speed
- Page Load time
- Server Response Time
- Conversion Rate per Device type (Mobile, Tablet, Deskto)
- Conversion rate per Screen resolution
Digital Production KPIs
- Digitization Lead Time
- Cost per photo
- Cost per digitised product
Operations KPIs, logistics and customer service
- Number of contacts managed and closed
- Number of customer care contact per order
- Time to pick up and ship
- Number of on time delivery
- Number of claims
- Number of parcels lost
Commercial KPIs: Gross Sales, Net Sales and Gross Margin
Gross Sales, is the monetary value of the sales of a period of time, usually compared with the same period of the previous year. It can be measured also in number of units of products sold. The ratio of sales versus last year (LY) is a percentage e.g. +8% vs. LY.
Net Sales, is the monetary value of the sales minus the returns of a period of time, also measured period vs period as for the Gross Sales above. It is the real KPI to measure the performance of the e-commerce channel because the Returns are a characteristic part of e-commerce.
Returns are the percentage of products returned vs the products sold, it is usually calculated in numbers and monetary value. Returns are characteristic part of e-commerce as the customers have the right to return a product bought online.
Gross Margin is the result of Net Sales minus Cost of Goods Sold (COGS). Is the first indicator of a business profitability i.e. the sales minus the cost of the product sold. The rest of the costs that a company has to sustain such as marketing and rent are not included in the Gross Margin.
Financial KPIs: EBITDA, EBIT.
EBITDA it’s a profitability indicator that Investment companies generally use to establish the profitability of a company. EBITDA stands for (Earnings Before Interest, Taxes, Depreciation and Amortization). The general rule is that if a company is able to manufacture goods, sell them and have money left to pay the depreciation cost of the investment it means that the business is sustainable in the long term. This KPIs is frequently used for the evaluation of a company on the market.
EBIT, it’s a profitability indicator that takes into account all the costs that a company needs to sustain in order to manufacture and sell their products on the market, including the depreciation. So for example if we need to build up a bricks and mortar store or an e-commerce platform to sell our products the EBIT will be calculated as Sales – COGS – Annual depreciation quota of the investment (Accrual)
Retail Performance Indicators, Traffic, Conversion Rate, Sales per Square Foot, UPT, AOV.
Store Traffic is the number of visits that a store receives per day / week / month. It’s essential that a store is palced in a location that is able to generate traffic. Department stores, Outlet villages and the Main commercial streets in the cities have accurate data about the traffic that they are able to generate and that determines also the cost of rent of a shop.
Ecommerce Conversion Rate
Conversion Rate is the number of orders that a store is able to generate divided by the number of persons that entered the store in the period of time. If a person enters twice it counts for two. This is important to understand because also in the ecommerce KPIs the number of visits is different from the number of visitors. Learn more about Conversion Rate.
Sales per square foot are and indicator of the sales performance of a store in relationship with its size in square feet or meters. It is used to compare the performance between two or more stores. For example we can compare two stores with different internal visual merchandising layout and determine which one performs better. Also the introduction of digital and ecommerce elements in the store can be a factor in the sales per square foot performance.
Leads generated are the number of people who signed up to receive news from the company it can be calculated in terms of forms filled out, email address collected, apps dowloaded, followers. It’s mainly a digital KPI but it is more and more relevant to bricks and mortar stores as they become more similar to media or touch point.
Units per Transaction (UPT) and Average Order Value (AOV) are metrics that measure the ability to Cross Sell and Up Sell. If a person comes into your store to by a jacket and you are able to sell her also a shirt you are doing Cross Selling, if a person comes into a store with the idea of buying a 200 Euros jacket and you sell him a 300 Euros one you are doing Up Selling.
Sell Through Rate is the percentage of products sold divided by the number of products bought as initial stock. It is monitored during the season to track the progress of the sell out of a product category, a collection or specific products. It’s the buyer’s responsibility and objective to optimise the sell through rate.
Ecommerce KPIs vs Bricks & Mortar
What are the key performance indicators for a Digital Fashion Business? How are digital KPIs different from bricks & mortar ones?
There are many more KPIs to track for a digital store than a bricks & mortar one.
CRM & Digital Marketing KPIs
Churn Rate is the percentage of customers that do not return in storenor abandon the brand over a period of time. If a customer on average buys from you four times a year, a loyal customer of buys ones and then doesn’t return for the rest of the year is a customer lost.