The Key Metrics For Fashion’s Future
7 October 2020
Author: Jasmine Waters
In the fight for survival, data is pushing to prove itself as the way forward. For many of us, ‘metrics’ may well be one of those words that is often bandied about without actually understanding what it means, but in a continual Wild West environment, getting hold of the relevant data could prove to be a lifeline for small brands that are fearing for the future. But what should we be looking for, and how can we best implement it?
Why should we be looking at metrics?
It’s no newsflash that brands will need to enter the new year armed with a flexible structure in place to counter any business turbulence. This starts with cash itself. Previous goals such as percentage of full-price sell-through quickly grew to be unattainable, but cash still remains king. The focus now needs to shift to both operating and free cash flow, putting independent brands in a better position to re-launch and adapt to uncertain situations if needed. The long the cash flow stays negative, the more likely a brand is to be compromised. Market share is also seen to be a key metric to keep in mind. This is considering if a brand’s sales suffer less than its competitors, even if the overall market itself is in a state of disarray. This way of thinking could help to maintain investor support – if you brand is still outperforming your rivals, there stands good reason to move forward with more expensive projects and transformation.
How can brands continue to grow?
Some brands are opting to measure their sales in Asia and the markets that bounced back the most quickly after the initial global lockdown period. Using these as a benchmark allows a brand to get a sense of what upcoming product demand may look like, but is also a riskier metric to prioritise as more Asian consumers opt for domestic alternatives. In addition to market share, metric such as tracking sell-out have also become essential – looking to when wholesalers are selling products to end clients. Including rent as a percentage of sales can allow judgement for which locations a brand can afford to hold onto, building up a timeframe and strategy for future months.
Many of the metrics we now need to value the most ultimately lead back to the ‘human touch’. Measuring digital metrics such as social media engagement, e-commerce conversion rates and third-party e-tailer sales have grown in importance, with a large part of our current livelihoods relying on online connection. Brands will need to tread the tightrope of continued focus on average spend by top consumers, as well as that of new consumers, allowing dual growth of loyalty and a reliable customer base. A “balanced scorecard” of the above metrics is now necessary to ensure we can handle what 2021 may have to throw at us, the data helping to make the clear decision-making we are sorely in need of.
Image source: https://osgoodandassociates.com/7-metrics-to-check-in-your-year-end-review/