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April 28, 2016

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Traditional measurement of store profitability tended to be much more straightforward. It required deducting costs from in-store sales and potentially adding an allocation for supplier contributions. Digital has completely transformed how retailers function, and a new way of thinking and operating is required that takes into account how stores support the full customer journey. In some cases, it may be appropriate to consider stores as predominantly showrooms for products, with fulfilment either by home delivery or via a collection point. 

As well as helping the customer to make a more informed purchase, this approach would also assist in better understanding demand. A new set of metrics and measurement of profitability is needed if store contribution is to be accurately assessed in this new digital retail world. This must include quantifying the traffic locally generated by stores to digital channels.