Are Retailers Measuring the Wrong Things?

Yeah, absolutely, Martin.

And hi, everybody.

Thanks for joining us today.

Those KPIs are definitely there for a reason.

If you're running a retail business, you can't afford the top line, right? I mean, the top line drives absolutely everything.

You've got to be super focused on your gross margin.

You've got to have all of your operating costs nailed down.

Employment costs, which have obviously been a massive source of pressure for retailers over the last couple of years.

Rental costs obviously have been a huge problem.

And all those other metrics like basket size, conversion, all that other stuff.

Those numbers fundamentally are telling you whether you're making money, whether your customers are buying, what they're buying, and whether the business is healthy.

If I was presenting to a board, I would expect those measures to be front and center.

So my initial reaction to the challenge is retailers aren't measuring the wrong things, but the question might be, Are we interpreting those measurements properly?

And that is exactly where I challenge it.

I don't think they're wrong.

I just think they're maybe incomplete.

Most of them tell us what happened yesterday.

They're backward facing impact of what's actually happened in the past.

Very few tell us whether we'll be successful tomorrow.

Are we looking in the rear view mirror a little bit too much? I mean, let's take sales.

Surely sales are the ultimate scorecard.

I definitely regard them as that, right? When people talk to me about KPIs and the KPIs are good, you know, then it always comes back to, well, the KPIs are good, but the sales are down.

So you know what? Those KPIs aren't right.

I mean, the key thing is customers are either buying or they're not.

And I think that's just the clearest measure there is.