Troubled high street music and technology retailer HMV has reported a full year £16.2m pre-tax loss, something which senior management will have seen coming a mile off, despite predictions that the company will return to the black sometime next year.
In physical retailing, outputs drive action – product sell-through, store LfLs (both outcomes) immediately tell a CEO whether the problem is in a particular store or category, or everywhere. The physical retail world is characterised by fixed costs, limited actions and established rules of thumb. Simple data tells the story.
The ‘inputs’ of online retail are both more numerous and more changeable. Online there are fewer upfront constraints on scope or reach. Combine this with the almost limitless possibilities for adjusting the hundreds of day-to-day activities. The consequence is that the data is considerably more complex – there is more data, more often, from more interconnected sources. The ‘outputs’ – sales, conversion rate, average order value – are as a result unhelpful, as each can be affected by a wide variety of causes. The outputs online tell you what’s happened but give no clue as to what’s actually going on.
Metailers measure at a much more granular level of detail, focusing on the inputs.
For more information, download our manifesto for a metailer here