Top 5 Retail KPIs for your Shop or Store
Posted on 15th June 2017 in KPIs
Written by Freya Hughes
When you’re working out your Key Performance Indicators (KPIs) for your retail business, you’ll notice that there are endless metrics to keep up with. Measure too many and you might get distracted from the actual business while measuring too few will see mistakes slip through the net. We’ve put together our top five KPIs – here at FUTRLI we like to think of them as Key Predictive Indicators because a business should look forwards, not just back – to help you choose what is most important to measure for your shop or store.
As metric obsessives, we’ve summed up some of the key KPIs to measure in your retail business. Keep up with the comings and goings of your cash, customers and revenue so you can best equip your shop or store for success.
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1. Wages to revenue
You need to know the amount of revenue created against your shop or store’s wage expenditure. You can track each salesperson’s transactions to identify who is doing well and meeting or exceeding targets, and it’ll also alert you to who might be underperforming. In an industry such as retail where employees are often on a similar basic wage, this is a great way of obtaining an average of how your team are performing. If this ratio sees more revenue that wage expenditure, you’re on the right path. If it’s the opposite, it’s time to look at how things can be improved. Find out more about your wages to revenue ratio here.
2. Number of transactions/customers
Tracking how many customers enter the premises against how many sales are made will show you how successful your team are at closing deals. Tracking who enters a space is soon to be the norm, says The Telegraph. Attempts at a WiFi connection is the way some high street stores are counting how many customers pass through their doors in the UK. Now you have this figure you can cross reference it against your financial reports to and see if you need to entice more customers in.
Once they’re in, if your staff are to greet everyone that enters the shop, the chances of making a sale are greater. You can even upsell after greeting a customer as recommendations are often taken seriously. If staff ignore customers entering the premises then there’s less chance of making a sale. Ensure your team are all aware of what’s expected of them. Not paying enough attention could damage your bottom line.
Also be sure to think about why customers might not be tempted to pop into the shop. Is the exterior welcoming? Do you have any unique offers? This KPI can alert you to many issues in your shop or store, which can be put into a forecast to ensure you’re on the path to success in the future.
3. Average profit per site
This is a metric that would be used by franchises or retailers with multiple branches of their shop or store. Measuring profits per site, you’ll be able to identify your strongest site. Is this one performing best because of location, your team or perhaps the successful site is larger? Whatever the reason, measuring this KPI will allow you to see what works and what doesn’t if you want to expand. Using the data you’ve collected from this will see you branch out with an informed idea of what will help and what might hinder your success.
If your business can maintain a high average profit when growing to multiple locations, then further growth would be a good plan at this point. If you experience an increased average profit after a change in structure validates the changes made. Learn to calculate this KPI here.
4. Revenue per customer
Measure how much revenue you generate per customer is going to give you a great knowledge as to how your staff are operating. If the figure is high, your team are probably doing their best to up- and cross-sell products and/or services.
If this is a low number, you need to investigate ways you can make buying extras more enticing for your customers. Look to the layout of your shop or store- is everything located in places that are easily accessible? Have you placed smaller ‘after-thought’ items near the till so customers are tempted to spend more? Calculate your average here.
5. Inventory to sales
This KPI shows your inventory levels against the sales you’re making. Measuring this will show you how much stock you need to order each period. If you have a high inventory to sales ratio, it might mean you’re focusing too much on items that aren’t so popular. Perhaps conduct a one-off sale to shift additional items, then use your accumulated data to reorder the things that sell the best. You need to aim for a low inventory to sales ratio. Keep on top of this ratio by finding out more here.