Here’s one way retailers can measure cross-channel influence
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
How much do stores really influence online and how much does online really influence stores?
The topic came up at a private event I attended in early November focused on omnichannel and the future of the store. How hard it is to measure cross-channel influence is usually one of the first things to surface in such discussions.
I shared findings from RSR’s omnichannel strategy report that showed retailers seem to completely underestimate digital’s influence on stores (and vice versa). Retailers believe online only influences about 30 percent of store sales, and yet companies including Forrester that estimate online influences put that figure at 60 percent or higher.
One attendee, however, pointed to how a store closing could offer some cross-channel insights.
His team had been going through an analytics exercise that looked at sales by customers across channels in a given area to understand the overall health of that trading area. In the middle of the analysis, a store closed and it showed that online sales in that trade area also fell 20 percent.
Twenty percent! That particular trade area took a double hit by closing that store — it lost the store’s sales and the visibility and presence in consumers’ minds to the point that it lost online sales too.
This retailer was lucky that it happened while doing its analysis or else management might not have seen this kind of drop at all. But now we have something to look at too. Whether closing a store or opening a new one, retailers should make sure that part of that process entails a before and after look at customers living in that trade area to see the impact the store had on online sales.
Such an analysis won’t definitively answer the question of how much each channel influences the other, but it could spark a more pragmatic conversation about online/store influence.
DISCUSSION QUESTIONS: What do you think of the cause-and-effect relationship between store openings/closings and cross-channel sales? Do you see any other paths to measuring how one channel influences the other?