Working in retail means that you must keep track of a lot of metrics: prices evolution, stock level, sales numbers etc. It is very important to track your KPIs so you know if you are losing money, or if you can optimize your sales area and find new opportunities to grow your revenue. Actually the performance tracking system of any retail business should start at the earliest.

You will also want to get those KPIs automated as much as possible so, as a manager, you are able to get the information you need as soon as possible. Most of the new generation BI tools can now gather your data directly from your POS system and update your sales metrics instantaneously.

Retail is a very competitive business in general and getting those KPI metrics correct and available on-time is part of the magic combination that will give you an edge over your competitors.

How to Calculate Retail KPI

Nowadays, a lot of software will help you calculate your retail KPIs. But it is important to understand what is being calculated and how they are being calculated.
Here are a sample of important metrics to follow when you are working in retail:

  • Customer GROSS Profit = Customer Sales – Customer Cost of Goods Sold for a period
  • Break-even ($) = Fixed Costs / Gross Margin Percentage
  • Customer Profitability = Customer Sales – (Customer Returns – Customer Cost of Goods Sold + Customer Promotion Expenses + Activity Based Cost of Servicing Customer) for a period
  • Visit to Buy Ratio = Sales Transaction Count per period / Visit Count Per Period
  • Inventory turnover rate: Cost of goods sold / average inventory = inventory turnover (per defined time period)
  • Profit Margin: (Gross profit / total revenue) x 100 = profit margin percentage
  • Sales per square foot: Total sales / total square feet of sales space = sales per square foot

Retail KPI Dashboard Examples

With so many diverse KPI to follow, you will need different dashboards or reports, each of them focusing on one specific aspect of your retail business. On the sales side, you can organize them by product category, or regions. But tracking sales metrics is not the only performance you should be looking after, make sure you have a proper Satisfaction and an HR dashboards.

Measuring satisfaction and its reasons will help you make the necessary optimization at your retail store and focus your marketing budget more accurately.
Turnover in the retail industry is high and could turn out to be a more important cost that originally thought, keeping track of the states of your current workforce will help you avoid unnecessary bad situations.

Discover more about KPI metrics with our other guides :

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Senior Analyst

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