Typical Key Performance Indicators of the Fashion Industry

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Typical Key Performance Indicators of the Fashion Industry
In the fashion industry, performance is key. (fashion woman image by Frenk_Danielle Kaufmann from Fotolia.com)

Key performance indicators (KPIs) are statistical guides that help organisations measure how well they are performing in relation to their strategic goals and objectives. They are important markers for customers, stakeholders and employees to understand whether an organisation is on track or not with its goals. The fashion industry typically operates through retail outlets and therefore will have KPIs similar to that industry as well as performance measures related to the creativity of designers and acceptance of their products by their customers.

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Media Features

Media features relates to the number of times that magazines, television programs or Internet articles refer to a fashion outlet's product. Many media outlets have fashion features as part of their program listings and use these media to introduce their customers to trendy and fashionable styles. A count of media features will normally be recorded by the public relations (PR) team working with the fashion business. It is also used to measure the effectiveness of the PR team.

A well-organised and -connected PR firm should have no problem getting key television shows, magazines or fashion websites to feature their client's products. The more airtime or magazine space fashion houses gets, the more awareness they get with their targeted customers, and this will usually translate to store (physical or online) visits and hopefully sales.

Net Operating Margin

Net operating margin (NOM) is a measure (in percentage) of an organisation's income after deductions such as taxes, wages and materials have been paid for. It could also be defined as the ratio of operating income to net sales. It gives investors and stakeholders an idea of how much a company makes on every dollar of sales; the higher the margin, the better.

This is a key performance indicator which can be used to compare organisations in the industry for ranking purposes or profitability. The fashion industry is highly competitive and fluid, which means that organisations must work harder to reduce production costs; as a result, NOM is one measure which reveals how well they perform in this particular area.

Like-for-Like Sales

Like-for-like sales compares a particular sales income performance after removing the effects of expansion and shop closures. This measurement is often used in the fashion industry due to its dynamic nature. Use of like-for-like figures ensures that data isn't exaggerated or understated. It's also an important KPI not just for the organisation but also for analysts and investors to establish real growth/reduction and help to possibly identify opportunities for buy-outs.

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