Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

FASHION and LUXURY SECTOR WICI-KPIs
proposed by WICI Europe
in collaboration with NIBR–WICI Italy & EFFAS CIC
The objective of this project is to identify standard KPIs in the Fashion and Luxury
industries. The distinctions between fashion and luxury are sometimes blurred.
However there are three essential differences:
1. The relationship to time is radically different between fashion (ephemeral) andluxury (eternal)
2. Fashion does not convey the dream required to belong to the world of luxury
3. Fashion targets a potential mass market
The starting point for the identification of KPIs for the Fashion and Luxury sector is themodel sketched below (see Figure 1), which shows how intangibles are linked to thevalue creation process. To achieve this objective, it is necessary to:•define the processes of the Fashion and Luxury industries;•
determine the elements of these processes that can be monitored andmeasured to achieve better results in terms of brand value creation.
The top section of the proposed model presents the ideal-typical value chain forcompanies operating in the Fashion and Luxury sector, whilst the left-side of the model
highlights the six core competencies which are “critical success factors” across theIntellectual Capital categories.
The inner part of the model presents the main relationships between the corecompetencies / critical factors and the value chain activities explained in a five schemaprocess.
1.

2.

Brand Management process (Figure 2.1)
Brand Management is one of the most important processes in the Fashion &Luxury sector, since it is responsible for the promotion of a specific product,
product line, or brand. Specifically brand management deals with the conception,planning and promotion of new lines/products in order to increase the brand’s
position within its relevant market and enhance consumer beliefs and attitudes
towards it.
Style / Design process (Figure 2.2)
The Style / Design process is one of the most important elements of a fashion or
luxury company. Designers have to stimulate customers to buy new products
while conveying an ideal image incorporated in the brand.
Designers or their fashion scouts travel the world looking for new trends to use as
inspiration.
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Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

3.

4.

5.

The Style / Design process is one of the most capital intensive elements in aluxury company. For this reason, it is important to rationalize designer creativity art
with operating costs.
It can be realized internally or externally to the firm.
Production process (Figure 2.3)
The development of prototypes and the production process are the art oftransforming designs into finished goods and finding appropriate raw materials forthe shaping of the designer’s creation.
The people working in this office are among a company’s most important humancapital, come from a design and production background and have multidisciplinary
skills.
Distribution process (Figure 2.4)
Distribution is the art of selling goods, messages and images/fantasies of a brand:a) Direct Operation Stores (DOS)Direct distribution is the most capital intensive distribution channel but also themost efficient method for creating the best relationship between brands andcustomersb) Flagship stores function as advertising costs and/or investments for Luxury
companiesc) Sales staff
Sales staff must be trained to win the loyalty of customers and guarantee thatboth direct distribution and after-sales services are in line with the brand’s
intrinsic value.
Human capital must be the embodiment of the brand concept and prestige andcommunicate them both to customers entering the “temple” of the brand.
d) Customer List
Customized relationship with clients is a significant key success point for
Luxury and Fashion companies
Services partnering (Figure 2.5)
The services partnering includes three main departments: Human Resources(HR), Information Technology (IT), and Administration, Finance and Control(AFC).
a) Human Resources generally refers directly to the CEO and, only for theadministrative aspects, to the AFC department. Specifically, HR’s activities areusually concerned with recruitment, employee selection and evaluation, payroll
processes, skills development and tracking, training, maintaining personnel
records, benefits, and managing the performance record.
b) Administration, Finance and Control (AFC) is responsible for planning andcontrol of operations, accounting processes, tax obligations, financial andadministrative controls, and business analysis activities.
c) The Information Technology (IT) is cross-functional to the other processes in
the organization and generally refers to AFC. The IT department is responsible
for storing, protecting, processing, transmitting and retrieving information.

The model matches the proposal of the WICI concept paper (see its sections 4 and 5)
and as the model illustrates, not all the critical factors have the same degree ofimportance in the value chain.
Disclosure of too many KPIs is problematic, because it distorts and undermines thestrategic and substantive significance / implication of each KPI, while potentiallymisleading users. Therefore, every company should choose a certain number of real
‘key’ indicators for its own value creation mechanism. On the other hand, WICI-KPIs,
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Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

which include a wide-range of indicators for companies to choose from, recognizingthat what is relevant for one company to disclose may be very different for anothercompany (see Table 1).
The strength of the model lies in its ability to display the critical areas to be investigatedand measured through the proposed KPIs along the entire Fashion and Luxury sector
value chain.
The basic premise is that a certain activity in the value chain is contingent upon a
specific set of core competencies / capabilities, which in turn is driven by a pool ofintangibles, each of which (as not measurable per se) is approximated in terms of
measurement by a certain number of KPIs.
In this way, different perspectives of analysis can be provided, since each KPI can bediversely weighted in a company’s analysis depending on the KPI’s importance in thatcompany’s value chain.
For each of the IC-linked core competencies / critical success factors in the Fashion
and Luxury industry a list of KPIs is identified (see Figure 3 below).
In Table 1, the same list of WICI-KPIs is proposed in a different format and with adeeper level of detail and information. In particular, Table 1 distinguishes the WICIKPIs for Fashion and Luxury between those that are strongly recommended (“Musthave”) and those that are simply suggested (“Nice to have”). In this Table, each KPI is
also connected to one of the six critical success factors (“Focus”), to the relatedIntellectual Capital area (e.g. Human Capital, Organisational Capital and Relational
Capital), and to the company process / activity it refers to. Table 1 provides also someindications on the formula to utilize for the calculation of each WICI-KPI (“KPIs
formula”) as well as on the characteristics of the measurement unit (e.g. number,percentage, value, trend, etc.) (“KPIs features”).

3Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Figure 1. Process Scheme1
Core Competencies

Operating processes

BrandManagement

1

2

3

4

5

Style/Design

Production

Distribution

Services
Partenting

Nurturing talentquality
Valuable customer
relations
Rapid and quality
product innovation
Systematic and trusted
partnering
Organizational
flexibility andadaptibility

6 Efficient and reliable
execution

1

In the matrix, the column “Core Competencies” includes the main KPI’s categories as conform with their use in other WICI’s projects, while the row “Operating processes”
refers to the main specific processes in the Fashion & Luxury sector.

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Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Figure 2.1. The proposed model – Brand Management Process

Brand Management
Brand
Management

Style/Design

Production

Distribution

Services
Partnering

MARKETING
DEPART.
Consumerneeds

PRODUCT
MANAGER

Strategies

FOUNDER/STYLIST/
BRAND
MANAGER

Goals

SALES
DEPART.

5

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Figure 2.2. The proposed model – Style / Design Process

Style Process
Brand
Management

Style/Design

Production

Distribution

Services
PartneringCEO
consumerdemandPRODUCT &BRAND
MANAGER

Directives

STYLE

DesignInfo

MARKETING

Prototype6

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Figure 2.3. The proposed model – Production Process

Production Process
Brand
Management

Style/Design

Production

Distribution

Services
Partnering

PURCHASES

EXTERNAL
PRODUCTION

INTERNAL
PRODUCTION

WH

Quality control

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Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Figure 2.4. The proposed model – Distribution Process

Distribution Process
Brand
Management

Style/Design

Production

Distribution

Services
Partnering

SALES

Wholesale

Direct Retail(DOS –
DirectOperation
Stores)Franchising& Licencing

Online8

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Figure 2.5. The proposed model – Services Partnering

Services Partnering
Brand
Management

Style/Design

Production

Distribution

Services
Partnering

CEO

AFC

HR

IT

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Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Figure 3. Fashion and Luxury sector: the complete list of proposed KPIs per core competencies/critical success factors
1

Nurturing of talent quality• Average employee’s age and seniority• Staff turnover• Training hours• HR education• Job rotation• MBO• Boutique sales staff training experience• Employee commitment index• High quality recruitment• Management/Employee share of ownership• Annual career review rate
• Share of women in upper/top mgmt.
• Share of employees in talent programs• Training costs (also per employee)• Access rate to training• Financial KPI forecast hit rate by management• Position in students’ annual employer ranking
survey• Formal mentorship• No. of CVs received• Proportion of staff covered by collective
bargaining agreements• Executive compensation on total revenues/net
income• Share of executive positions filled internally4

Systematic and trusted partnering• Suppliers by main raw material• Suppliers turnover rate
• Dependence rate from key suppliers• Raw materials purchase cost
• Raw materials purchase cost by main raw
material• Average distance from key suppliers• Shipment times• Outside contractors' number and saturationlevel• External product development• Number of exclusive suppliers vs. total
suppliers• Number of second-tier suppliers that havebecome first-tier• Weight of licensing

2

Valuable customer relationship• Brand value• Number of brands• Loyalty of clients to a specific brand• Customer satisfaction index• Brand awareness• Brand preference• Reputation index/External image• Internet community• Customer list
• Behavior of customers on the list in relation
to loyalty activities• Elasticity of demand• Customer loyalty rate
• Exhibition participation ratio• Items being bought by customers on the list
• Longevity of customers on the list
• Top of the line
• Avg. breadth of information available on
customers• Advertising costs• % of total income generated from brand

5

Organizational flexibility andadaptability• Share of employees familiar with strategy• Average expenditure per capita• Employee Satisfaction Index• Child Labour

3

Rapid and quality product innovation• Number of meetings between purchasers
and suppliers• No. of new patents registered during the year
• No. of new products developed• Local production rate
• Internal communication• Competitors• Portion outsourced on total sales

6

Efficient and reliable execution• Sales by geographic area, main products, lines,
brands, distribution channels• Gross margin by geographic area, main
products, brands, distribution channels• Market share by geographic area
• Average number of sales people per 100 sq
meters of shop
• Sale volume per square meter• Franchisee average sale
• Outlets sales per square metre• DOS sales per square meter• Headcount• Headcount by contract's type
• HR absenteeism• Headcount by Department• Number of staff in boutique• Revenue of sales to customers on the list
• Number of franchisee• Break-even point of franchisees• Maintenance costs for franchisees• Number of outlets• DOS number of wholesale stores• Maintenance costs and break-even point for
DOS (direct operation stores)• Products selected that were out of stock• Delivery's delay• Delivery costs that were too high
• Problems with connection to website• No confirmation or status report given(To be continued)

10Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

1

4

Nurturing of talent quality

Systematic and trusted partnering

2

5

Valuable customer relationship

Organizational flexibility andadaptability

3

Rapid and quality product innovation

6

Efficient and reliable execution(continued)• Website selections claimed to be limited• Sites that were difficult to navigate/do notprovide enough information• Turnover rate of entire boutique staff• Existing DOS and new openings’ square meters• Number of DOS (direct operation stores)• Transportation expenses• Flawed items on sold goods• Number and types of flaws found in finishedgoods by the internal Quality Department• Percentage of sales allotted for sale staff
bonuses• Production timetable• Backlog• Direct costs per square meter• Like-for-like and reported sales growth• Average sales per transaction• Capex• Average time to complete the first prototypes• Amount of time for the Design Office to selectthe final models of a collection• Number of models designed vs. number chosen
for the final collection

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Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Table 1. The complete list of KPIs for the Fashion and Luxury sector
Nr
1
2

3

4
5
6
7
8
9

10

11
12
13
14

Focus

Process

Nurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality

All processes
All processes
All processes

Nurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality

All processes

IC area
Human
CapitalHuman
CapitalHuman
CapitalKPI
Average employee' s age
Average employee's seniority
Staff turnoverTraining hours

Distribution
process
Services
Partnering

Human
CapitalHuman
CapitalHuman
CapitalHuman
CapitalHuman
CapitalHuman
CapitalNurturing oftalent quality

Services
Partnering

Human
CapitalNurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality

Services
Partnering
Services
Partnering
Services
Partnering
Services
Partnering

Human
CapitalHuman
CapitalHuman
CapitalHuman
CapitalHigh quality recruitment (e.g.,
recruitment from the 5 best
business schools and/or the 5best technical schools)
Management/Employee share ofownership
Annual career review rate

All processes
All processes
All processes

HR education
Job rotation
MBO
Boutique sales staff training
experience
Employee commitment index

Share of women in upper/top
mgmt (to attract female talents)
Share of employees in talent
programs

KPI’s
features
Ratio of the sum of employee's age and the total number age and trendof employees.
Ratio of the sum of employee' seniority and the total
time andnumber of employees.
trend
Number of people who left the company during thepercentage
year on the total workforce at the beginning of the year and trend(in all company and specifically in the Design Officeand development Office.
Amount of training hours on the number of employees
percentage(total and for HQ employees and sales people).
and trend
Percentage of employees by the education's degree.
percentage
and trend
Percentage of employees who changed their task in the percentage
last year on the total number of employees.
and trend
Percentage of bonuses on the successful objectives
percentage
achieved by the employees.
and trend
Sum of the training hours.
time andtrend
It is scored from an annual Employee Survey whichscore andprovides a reliable measure of employees' commitment trend
to their work and the company.
Percentage of high quality recruitment on total
percentage
recruitment.
and trend
KPI Formula

Percentage of stocks of company owned by
employees/management.
Number of career advancement cases on total
employees.
Number of women on the total upper/top managers.
Number of employees in talent program on the total
employees.

percentage
and trend
percentage
and trend
percentage
and trend
percentage
and trend

Suggested
relevance
Nice toHave
Must Have
Must Have

Nice to
Have
Nice to
Have
Nice toHave
Must Have
Must Have
Must Have

Must Have

Nice to
Have
Nice toHave
Must Have
Must Have

12

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Nr

Focus

Process

IC area

KPI

KPI Formula

Services
Partnering
Services
Partnering
Services
Partnering
Services
Partnering
Services
Partnering

Human
CapitalHuman
CapitalHuman
CapitalHuman
CapitalHuman
Capital23

Nurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality

24

Nurturing oftalent quality

Services
Partnering
Services
Partnering
Services
Partnering
Services
Partnering
Services
Partnering
Brand
Management

Human
CapitalHuman
CapitalHuman
CapitalHumancapitalHumancapitalRelational
CapitalBrand
Management

Relational
CapitalAge of brands

Age of each brand.

BrandManagement

Relational
Capital

Number of brands

It is calculated in conformity with the KPI's description. number and
trend

Must Have

Brand
Management

Relational
CapitalLoyalty of clients to a specificbrand

Average tenure of clients.

Must Have

16
17
18
19
20
21
22

25

26

27

28

Valuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationshipAmount of training costs on total income. Amount oftraining costs per sales/service representative.
Training costs per employee
Average expenses of training and education for the
average number of employees during the year.
Access rate to training
Proportion of training hours for employees at eachcareer's level.
Financial KPI forecast hit rate by Percentage of financial goals achieved by the
management
management in the period investigated.
Position in students’ annual
Average rank for the top 10 universities in the main
employer ranking survey
countries in terms of sale' s volume.
(whether it is possible)
Formal mentorship (whether it is Share of employees with formal mentor (where an
possible)
existent process).
No. of CVs received
N° of CVs received in the year.

Suggested
relevance
Nice toHave
Must Have

Nurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality
Nurturing oftalent quality

15

Training costs

KPI’s
featurespercentage
and trend
percentage
and trend
percentage
and trend
percentage
and trendscore andtrend

percentage
and trend
number andtrend
Proportion of staff covered byNumber of employees covered by collective bargaining percentage
collective bargaining agreements agreements on total employees
and trend
Executive compensation on total It is calculated in conformity with the KPI's description. percentage
revenues/net income
and trend
Share of executive positions
It is calculated in conformity with the KPI's description. percentage
filled internallyand trend
Brand value
Accounting or Mark-to-model valuation (e.g. royalty
number andrate).
trend
number andtrend

number andtrend

Nice toHave
Must Have
Nice to
Have
Nice to
Have
Nice to
Have
Nice toHave
Must Have
Nice toHave
Must Have

Nice toHave

13

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Nr
29

30

31

32

33

34

35

36

37

38

39

KPI’s
featuresscore and
trend

Suggested
relevance
Must Have

Customers awareness survey’s results.

score andtrend

Must Have

Customers preference survey’s results.

score andtrend

Nice toHavescore andtrend

Must Have

Average age of website customers and Average age ofcustomers on the list.

number andtrend

Nice toHave

Customer list

Customized relationship with clients

number and
trend

Must Have

Behavior of customers on the list
in relation to loyalty activities(invitations to pre-salecampaigns, offers of customized
credit cards or gift certificates)
Elasticity of demand

Turnover generated from customers called for pre-salecampaign
and/or
Percentage of customers’ numbers called to the pre-salecampaign that attended the pre-sale campaign event
For the most significant product, ratio of the difference
between the number of items sold during period (X) andperiod (X-1) and the difference between prices at period(X) and (X-1)
Percentage of sales by customers older than five years.

percentage
and trend

Nice toHave

percentage
and trend

Nice toHave

percentage
and trendMust Have

Percentage of participation in the top ten exhibition
world-wide.

percentage
and trend

Nice toHave

Items being bought by customers Percentage of items bought by customers on the list.
on the list

percentage
and trend

Nice to
Have

Focus

Process

IC area

KPI

KPI Formula

Valuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationship

Brand
Management

Relational
CapitalCustomer satisfaction index

Customers satisfaction survey’s results.

BrandManagement

Relational
CapitalBrand awareness

Brand
Management

Relational
CapitalBrand preference

BrandManagement

Relational
CapitalReputation index/External image Brand/Company perception from customer/stakeholder
survey’s results

Distribution
process

Organisationa Internet communityl Capital

Distribution
process

Relational
CapitalDistribution
process

Relational
CapitalValuablecustomer
relationship

Distribution
process

Relational
CapitalValuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationship

Distribution
process

Relational
CapitalCustomer loyalty rate

Distribution
process

Relational
Capital

Exhibition participation ratio

Distribution
process

Relational
Capital14

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Nr
40

41

42

43

44

45

46

47

48

49

number andtrend

Nice toHave

IC area

Valuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationship
Valuablecustomer
relationshipRapid andqualityproduct
innovation
Rapid andqualityproduct
innovation
Rapid andqualityproduct
innovation
Rapid andqualityproduct
innovation

Distribution
process

Relational
CapitalAge of customers on the list

Average age.

Distribution
process

Relational
CapitalLongevity of customers on thelist

Average longevity.

Brand
Management

Relational
CapitalTop of line (best selling product It is calculated in conformity with the KPI's description. Number andjust before and after sales period)
trend

Services
Partnering

Relational
CapitalAvg. breadth of information
available on customers

Percentage vis-à-vis a list of potential customer
information.

Advertising costs

Historical trend in total advertising costs both inabsolute value and as a percentage of sale volumes.

Style / Design Relational
process
CapitalKPI Formula

Suggested
relevance
Nice to
Have

Process

Style / Design Relational
process
Capital

KPI

KPI’s
featuresnumber and
trend

Focus

percentage
and trend

number,percentage
and trend% of total income generated from It is calculated in conformity with the KPI's description. percentage
brand
and trendMust Have

Nice toHave
Must Have

Must Have

Production
process

Relational
CapitalExternal communication

Number of meetings between purchasers and suppliers.

number andtrend

Nice toHave

Production
process

Relational
CapitalNo. of new patents registeredduring the year

No. of new patents registered during the year.

number andtrend

Nice toHave

Production
process

Relational
CapitalNo. of new products developed

No. of new products developed.

number and
trend

Must Have

Production
process

Relational
CapitalLocal production rate

Local production volume / Total volume.

percentage
and trend

Nice toHave

15

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Nr

50

51

52

53

54

55

56

57

58

59

Focus
Rapid andqualityproduct
innovation
Rapid andqualityproduct
innovation
Rapid andqualityproduct
innovation
Systematicand trusted
partnering
Systematicand trusted
partnering
Systematicand trusted
partnering
Systematicand trusted
partnering
Systematicand trusted
partnering
Systematicand trusted
partnering
Systematicand trusted
partnering

Process

IC area

KPI

KPI Formula

KPI’s
featuresnumber and
trend

Suggested
relevance
Must Have

Style / Design Relational
process
CapitalInternal communication

Number of meetings with the Design Office to fine-tune
the first prototypes.

Production
process

Relational
CapitalCompetitors

Number of competitors by main product.

percentage
and trendMust Have

Production
process

Organisational
CapitalPortion outsourced on total
sales

Percentage of sales when a part of the manufacturing
process is outsourced to other manufacturers.

percentage
and trendMust Have

Distribution
process

Relational
CapitalSuppliers by main raw
material

Number of suppliers by main raw material.

percentage
and trendMust Have

Distribution
process

Relational
CapitalSuppliers turnover rate

Rate of entry of new suppliers and exit of those lessefficient during the previous two years.

percentage
and trendMust Have

Distribution
process

Relational
CapitalDependence rate from key
suppliers

Percentage on total costs of goods sold (COGS) of the key percentage
suppliers.
and trendMust Have

Distribution
process

Organisational
CapitalRaw materials purchase cost

Historical trend in the total purchase cost (in absolutevalue and as a percentage of sales).

Must Have

Distribution
process

Organisational
CapitalRaw materials purchase costby main raw material

Raw materials purchase cost by main raw material.

number,percentage
and trend
percentage
and trend

Distribution
process

Organisational
Capital

Average distance from key
suppliers

Sum of the Kms from the main suppliers divided by the
number of key-suppliers.

number andtrend

Nice toHave

Distribution
process

Organisational
CapitalShipment times

Average shipment times by geographic area.

time andtrend

Must Have

Must Have16

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Nr

Focus

Systematic andtrustedpartnering
Systematic and61 trusted
partnering
Systematic and62 trusted
partnering
Systematic and63 trusted
partnering
Systematic and64 trusted
partnering
Organizational
65 flexibility andadaptability
Organizational
66 flexibility andadaptability
Organizational
67 flexibility andadaptability
Organizational
68 flexibility andadaptability
Efficient and
69 reliable
execution
Efficient and
70 reliable
execution
60

Number of outside contractors and their level ofsaturation.

KPI’s
featuresnumber and
trend

Suggested
relevance
Must Have

External product development

Number of designs (or prototypes) realized externallyon the total number of designs (or prototypes).

percentage
and trendMust Have

Relational
Capital

Number of exclusive suppliers
vs. total suppliers

It is calculated in conformity with the KPI's
description.

percentage
and trend

Nice toHave

Production
process

Relational
CapitalIt is calculated in conformity with the KPI's
description.

Relational
Capitalnumber,percentage
and trend
percentage
and trendMust Have

Distribution
process

Number of second-tiersuppliers that have become
first-tier
Weight of licensing

All processes

Organisational
CapitalShare of employees familiar
with strategy

Number of employees involved in MBO on total
employees.

percentage
and trend

Nice toHave

Distribution
process

Relational
Capital

Average expenditure per capita Ratio of total income and the number of customers.

Services
Partnering

Human Capital Employee Satisfaction Index

Employee satisfaction survey’s results.

Score andtrend

Must Have

All processes

Human Capital Child Labour

Description of the procedures put in practice toprevent and prohibit child labour

description

Must Have

Services
Partnering

Relational
CapitalSale volumes by regions, country, geographical area,
main products, brands and distribution channels.

number and
trend

Must Have

All processes

Relational
CapitalGross margin by regions, country, geographical area,
main products, brands, distribution channels.

number and
trend

Must Have

Process

IC area

KPI

Distribution
process

Organisational
CapitalOutside contractors' number
and saturation level

Production
process

Relational
CapitalProduction
process

Sales by geographic area, main
products, lines, brands,
distribution channels
Gross margin by geographic
area, main products, brands,
distribution channels

KPI Formula

Royalties on total turnoverMust Have

Nice toHave

17

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Nr

Focus

Efficient and
71 reliable
execution
Efficient and
72 reliable
execution
Efficient and
73 reliable
execution
Efficient and
74 reliable
execution
Efficient and
75 reliable
execution
Efficient and
76 reliable
execution
Efficient and
77 reliable
execution
Efficient and
78 reliable
execution
Efficient and
79 reliable
execution
Efficient and
80 reliable
execution
Efficient and
81 reliable
execution
Efficient and
82 reliable
execution

Process

IC area

KPI

KPI FormulaMarket share by geographic area External statistics.

KPI’s
featurespercentage
and trend

Suggested
Relevance
Nice toHave

All processes

Relational
CapitalAll processes

Human Capital Average number of sales people
per 100 sq meters of shop

It is calculated in conformity with the KPI's
description.

number andtrend

Nice toHave

Services
Partnering

Relational
CapitalSale volume per square meter

Average sale volumes per square meter of directs
shops, mono-brand outlets.

number and
trend

Must Have

Distribution
process

Organisational
CapitalFranchisee average sales

Sales per franchisee on total sales per square meter.

percentage
and trendMust Have

Distribution
process

Organisational
CapitalOutlets sales per square metre

Sales per square meter through outlet on total sales per percentage
square meter.
and trendMust Have

Distribution
process

Organisational
CapitalDOS sales per square meter

Sales through DOS (direct operation stores) on total
sales per square meter.

percentage
and trendMust Have

All processes

Human Capital HeadcountNumber of employees.

number and
trend

Must Have

All processes

Human Capital Headcount by contract's type

Number of employees by contract 's type.

number and
trend

Must Have

All processes

Human Capital HR absenteeism

Average HR days of absenteeism per year

number and
trend

Must Have

All processes

Human Capital Headcount by department

Number of employees by organizational department.

number andtrend

Nice toHave

Distribution
process

Human Capital Number of staff in boutique

It is calculated in conformity with the KPI's
description.

number and
trend

Must Have

Distribution
process

Relational
CapitalIt is calculated in conformity with the KPI's
description.

number andtrend

Nice to
Have

Revenue of sales to customers
on the list

18

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Nr

Focus

Efficient and
83 reliable
execution
Efficient and
84 reliable
execution
Efficient and
85 reliable
execution
Efficient and
86 reliable
execution
Efficient and
87 reliable
execution
Efficient and
88 reliable
execution
Efficient and
89 reliable
execution
Efficient and
90 reliable
execution
Efficient and
91 reliable
execution
Efficient and
92 reliable
execution
Efficient and
93 reliable
execution
Efficient and
94 reliable
execution

Process

IC area

Distribution
process

Relational
CapitalDistribution
process

Organisational
CapitalDistribution
process

KPI

KPI Formula

KPI’s
featuresnumber and
trend

Suggested
relevance
Nice to
Have

Requests to buy the customer
list from consumer credit banks,
credit agencies or institutions
Number and weight offranchisees

It is calculated in conformity with the KPI's
description.
Total number of franchise shops on total shop number

percentage
and trendMust Have

Organisational
CapitalBreak-even point of franchisees

Volume of sales at which net sales equals the amountof costs.

number and
trend

Must Have

Distribution
process

Organisational
CapitalMaintenance costs for
franchisees

It is calculated in conformity with the KPI's
description.

number andtrend

Nice toHave

Distribution
process

Organisational
Capital

Number of Outlets

Total number of outlets.

number and
trend

Must Have

Distribution
process

Organisational
CapitalDOS number of wholesale stores Total number of wholesale stores.

number and
trend

Must Have

Distribution
process

Organisational
CapitalMaintenance costs for DOS(direct operation stores)

It is calculated in conformity with the KPI's
description.

number andtrend

Nice toHave

Distribution
process

Organisational
CapitalBreak-even point of DOS

Volume of sales at which net sales equals the amountof costs with respect to DOS (direct operation stores).

number and
trend

Must Have

Distribution
process

Organisational
CapitalProducts selected that were outof stock

It is calculated in conformity with the KPI's
description.

number andtrend

Nice toHave

Distribution
process

Organisational
CapitalDelivery's delay

Number of finished goods completed in the time fixedby the “Time Office”.

number andtrend

Nice toHave

Distribution
process

Organisational
CapitalDelivery costs that were too
highNumber of customer's complaints on delivery costs.

number andtrend

Nice toHave

Distribution
process

Organisational
CapitalProblems with connection to
websiteNumber of customer's complaints on connection
services.

number andtrend

Nice toHave

19

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Nr

Focus

Efficient and
95 reliable
execution
Efficient and
96 reliable
execution
Efficient and
97 reliable
execution
Efficient and
98 reliable
execution
Efficient and
99 reliable
execution
Efficient and
100 reliable
execution
Efficient and
101 reliable
execution
Efficient and
102 reliable
execution
Efficient and
103 reliable
execution
Efficient and
104 reliable
execution
Efficient and
105 reliable
execution
Efficient and
106 reliable
execution

KPI’s
featuresnumber and
trend

Suggested
relevance
Nice toHave

Website selections claimed to be Number of customer's complaints on connection
limitedservices.

number and
trend

Must Have

Organisational
CapitalSites that were difficult tonavigate

Number of customer's complaints on connection
services.

number andtrend

Nice toHave

Distribution
process

Organisational
CapitalSites that do not provide enough Number of customer's complaints on connection
information
services.

number andtrend

Nice toHave

Distribution
process

Human Capital Turnover rate of entire boutique
staff

number andtrend

Nice toHave

Distribution
process

Relational
CapitalExisting DOS and new
openings’ square meters

Number of employees who left the job during themonth by the total number of boutique staff at midperiod evaluated.
Total square meters for the existing DOS and the totalsquare meters for the DOS opened during the last year.

number andtrend

Nice toHave

Distribution
process

Relational
Capital

Number of DOS (direct
operation stores)

Total number of DOS.

number and
trend

Must Have

Distribution
process

Organisational
CapitalTransportation expenses

Historical trend in transportation expenses in absoluteterms and as a percentage of sales.

Must Have

Production
process

Relational
CapitalFlawed items on sold goods

Average flawed items, in absolute value and as aproportion of sold goods

Production
process

Organisational
CapitalProcess

IC area

KPI

Distribution
process

Organisational
CapitalNo confirmation or status report
given

Distribution
process

Organisational
CapitalDistribution
process

KPI Formula
Number of customer's complaints.

It is calculated in conformity with the KPI's
description.

Production
process

Number and types of flaws
found in finished goods by theinternal Quality Department
Human Capital Percentage of sales allotted forsale staff bonuses

number,percentage
and trend
number,percentage
and trend
number andtrend

It is calculated in conformity with the KPI's
description.

percentage
and trend

Nice toHave

Production
process

Organisational
Capital

Number of finished goods completed with respect tothe timetable.

time andtrend

Nice toHave

Production timetable

Must Have

Nice toHave

20

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

Nr

Focus

Efficient and
107 reliable
execution
Efficient and
108 reliable
execution
Efficient and
109 reliable
execution
Efficient and
110 reliable
execution
Efficient and
111 reliable
execution
Efficient and
112 reliable
execution
Efficient and
113 reliable
execution
Efficient and
114 reliable
execution

KPI’s
featuresnumber and
trend

Suggested
relevance
Must Have

Average direct costs per square meter.

number andtrend

Nice toHave

Like-for-like and reported sales
growthExisting DOS's growth (like-for-like growth) on thesales growth.

percentage
and trend

Nice toHave

Relational
Capital

Average sales per transaction

It is calculated in conformity with the KPI's
description.

number andtrend

Nice toHave

Relational
CapitalCapexDOS' s capital expenditures and the capex for the new
openings.

number and
trend

Must Have

Style / Design Organisational
process
Capital

Average time to complete thefirst prototypes

It is calculated in conformity with the KPI's
description.

time andtrend

Must Have

Style / Design Organisational
process
CapitalAmount of time for the Design
Office to select the final models
of a collection
Number of models designed vs.
number chosen for the final
collection

It is calculated in conformity with the KPI's
description.

number andtrend

Nice toHave

It is calculated in conformity with the KPI's
description.

number and
trend

Must Have

Process

IC area

Production
process

Relational
Capital

Backlog

Total value of sales orders waiting to be filled.

Services
Partnering

Relational
Capital

Direct costs per square meter

Services
Partnering

Relational
CapitalServices
Partnering
Services
Partnering

Style / Design Organisational
process
CapitalKPIKPI Formula

21

Fashion and Luxury KPIs proposed by NIBR - WICI Italy (Interim Version 1.0) as of 18 May 2011

About the Network Italiano per il Business Reporting (NIBR) – WICI Italy
NIBR – WICI Italy was founded in December 2010 and is the official Italian jurisdiction for the “World Intellectual Capital / Assets Initiative” (WICI
Global), the global Network for business reporting, and for the “World Intellectual Capital / Assets Initiative Network for Europe” (WICI Europe).
As of May 2011, NIBR members who have contributed to the preparation of the document “Fashion and Luxury Sector KPIs” are:Stefano Zambon
Andrea Gasperini
Marta Degl’Innocenti
Giuseppe Gullo
PierMario Barzaghi& Lorenzo Solimene
Nunzio Visciano,
Fabrizio Ceppi &Stefano Tripputi
Enrico Mambelli

WICI Europe & University of Ferrara
Aiaf “Mission Intangibles®”, Associazione Italiana degli Analisti Finanziari
Aiaf & Department of Management, University of Bologna
Andaf
Assirevi & KPMG
Borsa Italiana

Independent Global Fashion and Marketing Consultant

22