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Success in retail is dependent upon a number of factors. One of those factors is your analytics package. You should ensure that you are measuring the right performance indicators and that you are using the information you gather effectively. So what should you be measuring?
Here are some key performance indicators (KPI) that most retailers should be measuring daily:
- Sales Per Hour – How many sales per hour does your store log? How about your entire chain, or each particular region within the chain. If you know how many customers you have overall and know how many sales per hour you make, you can determine the effectiveness of your in-store promotions.
- Dollars Per Transaction – What is the average sale for every transaction taking place at the point of sale? Know this and you can increase it. Set it as your goal and work toward improving your dollars per transaction.
- Wage Per Sale – This KPI is a reflection of how much you are paying your employees against your actual sales. If your average sale is $7.93 and you average 100 sales per hour, then you can figure out how profitable you are based on how much you are paying your employees per hour and per sale. A Wager Per Sale Average of $29.48 is good if your average employee is earning $12/hour. That leaves you a good margin for other expenses.
- Sales Per Square Foot – How much retail space do you own? Is it paying its keep? The way to know is to figure out your sales per square foot.
- Stock Turnover Rate – How fast do you turn over your inventory? You should know this for your total inventory as well as each SKU. You may turn over your entire inventory in three months, but it could take only three days to turn over one particular item that is a best seller.
- Gross Margin – The one metric you don’t want to forget is your gross margin. This refers to the gross profits as a percentage of your sales. If your sales per hour equals $105,583.83 and your profits from those sales (what’s left after expenses) is $25,483.38, then you know your gross margin. All you have to do is work out a plan to increase it.
Retail analytics is important. Know what to measure, and measure the right stuff.
