February 14, 2022
Summary
Apparel, Accessories & Luxury Goods companies have a Data Monetization Index (DMI) in the range of 11.7% to 31.02% with an average of 16.11%. The DMI calculation for NIKE, Inc., V.F. Corporation and Adidas is based on a valuation of loyalty and supply chain data. For all other companies, the DMI is driven only by supply chain data because we did not have access to good information about loyalty membership.
A higher DMI is generally preferable across companies and industries. By way of reference, internet companies have a higher DMI because most of their enterprise value is derived from data. For example, Google’s DMI is 93 percent as we will discuss in a later blog.
Definitions
- Data Monetization Index (DMI) = Data Valuation / Enterprise Value
- Data Valuation = Supply Chain Data Valuation + Loyalty Data Valuation
- Enterprise Value = Equity Value + Long Term Debt – Cash, a key metric used in the investment community
Methodology
The YDC team recently published a DMI for major Apparel, Accessories & Luxury Goods companies in the United States. Here is an example for NIKE, Inc. along with a benchmark that includes other companies in the industry.
The data valuation is based on research that indicates that better supply chain visibility can improve revenues by 11.7%. The data valuation for NIKE, Inc., V.F. Corporation and Adidas includes the valuation of their more than 300 million, 12 million and 165 million loyalty members The total value of data will likely be higher once additional datasets relating to product, employees and real estate are included. Going forward, we will be working to make the data valuation more real-time.
We excluded loyalty data for the other companies because we did not have access to good information about member counts.
