• Shane Thomas

The Ag Retail Metrics of Tomorrow

Updated: Nov 5, 2019

Ag retail is evolving. That means KPI’s (key performance indicator's) and benchmarks of ag retails need to evolve too. Today, focusing extensively on margin, inventory or market share for example isn’t bad, but it actually can leave retails measuring something that won’t align closely with performance and changing business models in the future.

The report below is consumer based retail, but to me the message remains the same: Look for more meaningful metrics to manage the business as it shifts.

The Future of Retail Metrics | Deloitte


One example of a KPI that larger retails can consider RIGHT NOW as a benchmark KPI to better understand their highest performing retails today is PROFIT per PERCENT STOREFRONT. This takes into account performance while also considering market place competitive dynamics plus their ability to turn that store front into profitable sales while managing costs.

If ag retail location 'A' had a storefront percentage in their geography of 5% (from AgData’s BPI numbers) and a profit of $100,000, then they average $20,000 per 1% of store front. If retail 'B' across the province has $190,000 in profit and 11% storefront then they are averaging $17,272. This shows they are not taking advantage of such a strong market share, or mismanaging costs. The point? It's an indicator that suggests where to dig deeper.

Retails could benchmark this across all locations to grasp the true performance of a specific location. This helps to assess handicapped performance across the entirety of the business.

Finding progressive KPI’s needs to start with understanding what data you collect today, what you are capable of collecting and what is valuable to your business success. I think this understanding is lacking across many businesses, not exclusive to agriculture or ag retail.

Near, Medium and Long Term Considerations

While the business shifts are just starting today so ag retails don't need these new approaches implemented tomorrow; I believe they need to begin identifying them today based on the trends that will come.

In the nearer term, traditional KPI’s don’t consider how different sensor (See and Spray technology) based technology could impact volumes.

For example, obtaining an entire customers pre-burn herbicide application on 3000ac if they have clean fields vs. an entire farm whom has dirtier fields for example will have significant variation in total product sales. This doesn't even consider how business models could change given this type of technology.

For the near to medium term considerations of how e commerce could shift market share dynamics across vast geographies. The need for omni-channel metrics will evolve.

This isn't limited to market share, but could start to consider traditional e-commerce metrics like leakage, average basket order, cross selling and more (not to mention daily active users, browse time etc!). I think as ag retails get more comfortable with an e-commerce offering there will be ag specific metrics that become the north star for heavily investing ag retails.

In the longer term there will be an evolution to alert driven crop input commerce (through ambient tech) and once again different metrics of performance will need to be utilized to assess performance. Or this could go further to a yield solution offering that bring in an entirely new approach to metrics.

Many ag retails today have more macro financial numbers they look at today as well, which could progress too. All encompassing metrics like return on invested capital (ROIC) is an example of a focus to better understand how their investment in new technology is performing and stems along the lines of what I talked about previously in Data and Digital Infrastructure as Assets.

There wont be one silver bullet or measuring stick, rather there needs to be a holistic approach that measures complementary KPI’s that paint a full picture. This will include indicators around omni channel approaches, operational efficiency and that consider both growth and profitability in a balanced way. Some metrics will still be followed, but what is considered "adequate" may change.

Starting to challenge the status quo of metrics today will help to enhance the outcomes of tomorrow in ag retail.

308 views0 comments

Recent Posts

See All