The retail industry is highly competitive. It is one of the fastest growing industries worldwide.
Based on the 2015 Global Powers of Retailing Report, the US has
seventy-six of the world’s largest retailing companies. With the growing number of retailers, staying on top will be a tough job.
Retailers who want to rise above their competitors must know all the details about their company. This is where a Key Performance Indicator (KPI) comes to place.
KPIs are helpful in evaluating and monitoring a company’s performance in achieving certain targets or goals. KPI can also help retailers come up with right business decisions.
Having a KPI dashboard which contains the right data at the right time can help improve the productivity and performance of your company.
While there are many KPIs that a retailer can keep track of, we have compiled ten of the most helpful KPIs for any retail business.
- Sales Per Square Foot
= (Total Sales / Total Square Feet of Sales Space)
This will help you track your sales volume per square foot.
It will help you recognize which areas of your store bring in more profit. It will also help you understand why one area is more profitable than others.
- Total Sales Count
= Total No. of Sales in a Defined Time Period
Measures the sum of transactions made in your store within a given period.
It will let you know when your store is busiest, and how much product you sell in a certain period. This data will help you improve your staffing and customer satisfaction.
- Average Purchase Value
= (Total Revenue for a Given Time Period / No. of Transactions)
This will let you know the average amount every customer spends per transaction in any given period. This will help you improve your sales strategies and pricing.
- Average Sales per Transaction
= (Total Sales / Total Transactions)
This is helpful in evaluating the effectiveness of your advertisements and promotion campaigns. It is also helpful in knowing how the spending behavior of every shopper.
You can also compare data among your store locations.
- Conversion Rate
= (No. of Visitors / No. of Customers)
This will let you know how successful your company is at converting visitors into customers. It will also help you see which areas of your store needs more attention.
- Gross Margin Return on Investment (GMROI)
= (Gross Margin / Average Inventory Cost)
This will let you know the overall performance of your business. It will help you know how much you are making in every dollar you have invested in your inventory.
- Inventory Turnover
= (Cost of Goods Sold / Average Inventory)
This is also known as stock turn. It will help you know how many times an inventory or stock has been sold in a given time frame.
It will also help you analyze the size and level of your inventory.
- Product Returns
= (Number of returns / number of items sold) x 100
This will help you recognize any issue with customer service, product quality, and marketing promises.
- Profit Margin
= (Gross profit / total revenue) x 100
This will let you know the actual money you have earned, and it will also let you see if your sales are higher than what you’re making.
- Sell-through percentage
= (Number of items sold / beginning inventory quantity) x 100
This will let you know the percentage of items sold over the number of items put up for sale.
Knowing about this is important because it will let you see how your products are performing. This will also help you in coming up with better ideas about sale items and re-order quantities.
While there are a lot of KPI dashboard software available online, some come with high price tags.