Nowadays, retail managers have much better access to metrics to analyze their business’s performance. As always, with metrics and business, if we can measure it, we can improve it. And retailers can improve their performance in various ways. This blog tells you several of the most useful KPIs for tracking growth and performance in a retail business.
But you won’t hear about Key Performance Indicators (KPIs) in most discussions among retailers. Retail KPIs aren’t just interesting like marketing or product classification, and some retail managers might just forget about them.
However, your financial situation is the key sign that can immediately determine whether you are bleeding money or making money.
Just as your body temperature, blood pressure, and pulse are clear indicators of your body’s good health, your finances, also known as your key performance indicators (KPIs), are black and white markers for the overall health of your retail business. This blog helps you find out more and share them regularly with your sales team to optimize the strategy of your retail business.
What are KPIs in Retail?
KPIs are “key performance indicators,” the most critical metrics in your business. In other words, they’re numbers you should regularly monitor to determine if your business is on the right track.
Which metrics should you be looking at? He depends. Retail management is different for each business, so that specific measures may be more important to your business than others.
Here are 5 retail KPIs you need to track:
There are countless retail KPIs you can spend your time tracking. But your success is limited to tracking the results of the 5 items below.
1. Profit and Loss Statement
Many times a business owner may overlook losses as unavoidable. Still, they can be viewed as a failure to price, manage categories, and cover expenses correctly.
2. Average check
It is the best judge of how well your team can sell your products and the most immediate report you can influence to increase retail sales.
3. Number of Transactions/Clients
You may have fewer buyers coming back, but if we’re not tracking them, we’re not paying enough attention to encouraging them to keep coming back. A repeat customer is an uncountable retail metric.
4.Sales in each category
Not all item contributes to your sales the same way. The goal of your business should be to reduce inventory in categories that are not producing while increasing your best ranges. This report helps in managing inventory from sales; This is also called your open-to-buy.
5. Number of units per transaction
Tracking it is another way to measure how well your sales team is doing and if your sales team is well enough to encourage customers to buy add-ons or not.
Yes, most POS systems can do hundreds of reports if not thousands but at the end of the day – who cares about them? Well, our experience tells us that very few retail managers do that.
Most of the time, you need to focus on the big picture, not on the minutiae, which can allow you to miss trends.
The one final suggestion is to share the last five reports with your team regularly:
-The more your sales team finds out how the average check is tracking, the more they respect the number of customers.
-The more they understand the top categories and products in those categories, the more they know how all of this can be affected by the number of units they sell per transaction
-The more they can help with both your year-over-year sales and ultimately your profit and loss statement
Always share the retail KPI reports with your sales team.
Knowledge is power, and the KPIs we discussed in this blog are the knowledge your team needs. Hopefully, Retail KPIs help you start growing and track your business’s success. Suppose you need to create interest in your product and service or turn potential leads into sales. In that case, you should keep nurturing your sales team with fully-detailed reports of these 5 retial KPIs for effective marketing campaigns.
By using the data that RMPro provides you’ll make the wisest business decisions, you’ll be less likely to fall for a hunch or gut reaction to something and more likely to predict your future.