How to Measure the Performance of Fashion Merchandising?

One of the most important things you need to learn when it comes to any industry is the difference between KPI and vanity metrics. The KPIs (key performance indicators) are there to give you a realistic image of just how well your business is doing, while vanity metrics increase the risk of misleading you into thinking that you’re doing better or worse than you actually are. In fact, misleading into thinking that you’re doing badly (when this is not necessarily the case), can be quite dangerous, seeing as how it can make you deviate from the right course. On the other hand, the hazards of making you believe that you’re doing better than you actually are, are more than obvious. So, here’s how you can measure the performance in fashion merchandising.

Sales volume and value

The first KPI that you should focus on is definitely the sales volume and value. Why? Well, because this directly impacts your profit. Now, there are some fashion brands that prefer to be seen as exclusive or luxurious, which is why they never put their products on sales. The reason why this is important is simply that they look at the bigger picture and focus on the value of the sale more than they do on the volume. One example is Louis Vuitton, a brand that destroys all items that they fail to sell, in order to avoid devaluing their brand as a whole. Ironically, this strategy increases the volume, seeing as how exclusivity increases the demand.

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Financial indicators

The next thing worth keeping in mind is the financial indicators. How well is your business doing at the moment? Can your sales cover your overhead? If you’ve indebted yourself in order to launch a business, how far is the break-even point? Ideally, you want to have the answers to all of these questions at every single moment, which is why having a financial advisor is a smart move. Also, they can help you make financial projections based on past and current data, thus ensuring that your brand is on the right track. This gives you an idea of where you stand as a business, not just as an entity in the fashion industry.


Another crucial metric that you want to research is the conversions. What are the conversions in fashion merchandising? Well, simply put, they are purchases per visit. This can be divided into two categories – offline and online. If you’re running a brick and mortar store, you need to ask yourself what percentage of people who visit your store actually buy your products? This is often determined by two things – your offer and the efficiency of your team. In this day and age, the majority of fashion brands also have an e-store. In that case, the conversions are determined by the efficiency of your e-commerce website.

Brand mentions

One KPI that is particularly important is brand mentions. Here, once again, you have two major categories – paid and organic. Paid mentions are either ads or promotions that you’re paying influencers for. Organic mentions, on the other hand, are the spontaneous mentions of your brand in the online environment. They’re the digital equivalent of word of mouth promotion. Earning them is a tad harder, however, seeing as how they’re completely free, their cost-effectiveness is always through the roof. Also, due to the fact that they’re organic, they seem more genuine and drastically boost your trustworthiness within the industry.

Online performance

Brand mentions are not everything, what you also need to pay attention to is the online performance of your brand. The simplest way to get an accurate estimate is to invest in reliable digital marketing reporting software. The benefits of this idea are numerous, ranging from the fact that you get all the relevant data, all the way to the fact that you get this data in the right form and format. This makes future interpretation and comparison of data a lot simpler and more effective.

Production indicators

Several other things you need to keep in mind is the fact that the efficiency of your staff isn’t necessarily something that you can control. According to Price’s Law of productivity, only a handful of employees do most of the work and regardless of how often you replace your employees, this is something that you won’t be able to fix. Still, you can always try to motivate and incentivize your staff. Also, you can track the time-efficiency of your employees. How much is getting done in an hour? How many sales? How big of an inventory efficiency?

Customer lifetime value

Another thing worth mentioning is the fact that customer loyalty is quite different in the fashion industry than anywhere else. For instance, just because your customers love your clothes, this doesn’t mean that they are exclusive to your brand. This also has a positive side, seeing as how they won’t be exclusive to any other brand (and, therefore, unavailable to your own brand). So, what you need to do is make an estimate of an average customer lifetime value. What this means is that you need to estimate how many sales and how much profit you can, on average, expect from every customer. This gives you an idea of where you’re standing and a chance to make a more accurate financial projection.

Customer acquisition cost

The amount of money that would take you to acquire a single customer is perhaps the main determiner when it comes to the cost-efficiency of your marketing and the position of your brand. You see, top-dogs in the industry are often able to acquire customers merely by their presence and passive referrals. Still, they invest millions in marketing. This is due to the fact that your renown and brand strength grow exponentially. The more you invest, the better the cost-per-conversion you get. In other words, you start slow, and then your brand renown starts snowballing.

The very last thing worth in mind is the fact that with all these metrics on your side, you really have no reason to make estimates based on gut feeling or intuition. As a business owner or leader, you’re always subjective and no matter how experienced you are, these subjective factors may cloud your judgment. For this reason, these KPIs should always be your guiding beacons.

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