Improving retail store performance is understandably challenging. Although when considering the e-commerce boom, it’s never been more critical for brick-and-mortar retailers to find new ways of improving performance.
But even though it’s a straightforward goal, several variable factors will impact the likelihood that you can achieve it. Moreover, these variables will keep changing.
Fortunately, you can increase your chances of improving retail performance by monitoring and tracking specific metrics or key performance indicators.
Tracking these five essential metrics will help you keep things running smoothly.
Foot Traffic Numbers
The number of customers that enter and exit your store or foot traffic is an essential metric when measuring retail performance. With this metric, you’ll be able to determine customer conversion rates. Moreover, foot traffic data can also be used to improve the customer experience and store performance.
To gather foot traffic data, you will need to invest in people counter devices with security solutions from Genetec.
Retail Conversion Rates
The next essential metric is retail conversion rates. It’s important to know the difference in numbers between store visitors and customers. Because some visitors won’t buy anything, you will need to compare foot traffic numbers to sales transactions; this will determine your retail conversion rates.
Average Sale Value
Now that you know how many customers you have, it’s also essential to know how much each customer spends on average per purchase. This metric is pretty easy to calculate; divide the transaction total by the number of transactions to get the average sale value.
The average sale value will help you determine when customers are spending less or more than usual.
Items Per Purchase
The average size of the customer’s cart, or how many items they purchase at a time, is another essential bit of data that measures store performance.
There’s a good chance your point of sale system already provides you with this detailed data. With this, if the transaction volumes are lower, the number of items will seem irrelevant, such as comparing a wireless headset to an iPhone. However, when the transaction volumes are higher, the number of items becomes essential.
If the number of items per transaction increases but transaction values are stable, this might indicate that customers are buying cheaper products in higher volumes.
Sales Profits Before Costs
The gross margin, or sales profits before costs, is the difference between revenue and cost before considering other expenses. This metric is essential because it indicates what a retailer survives on before profits. The gross margin should be set high as it must account for salaries, taxes, rent, and other retail expenses.
Setting the gross margin high leaves enough room to cut back should you need to run a promotion or sell off old stock at discounted prices.
Improving retail store performance is easier when using essential metrics like foot traffic numbers, conversion rates, average sale value, items per purchase, and gross margins. Nevertheless, other ways you can improve retail performance include providing employee training, optimizing the checkout process, running sales and promotions, organizing inventory management, and offering customer loyalty programs.
