Retail KPIs: 10 essential indicators for assessing your store’s performance

KPIs (Key Performance Indicators) stand for Key Performance Indicators. If you run a store, they are essential for implementing effective sales strategies. Today we present the 10 essential indicators you need to track to increase your sales and monitor the achievement of your objectives.

Footfall

Let's start at the beginning: footfall in your store. How many people pass by your premises and what percentage of them enter? What is the customer profile? Are there variations in footfall? The "pedestrian flow" KPI allows you to measure all this. It's a key indicator for checking the attractiveness of your business.

But footfall is also useful for those who want to take over a store. Before taking the plunge, you can assess its sales potential.

How can you calculate it? There are a number of technological tools available, ranging from video surveillance for supermarkets to sensors and smartphone applications. These methods are more practical and safer than manual counting.

The number of transactions

Customers come into your store. But do they actually make a purchase? To find out, several KPIs are essential, particularly those linked to transactions.

The first is, of course, the number of transactions. To do this, add up all the sales. A high volume of sales heralds the prosperity of your business. However, it must be accompanied by more precise measurements.

The conversion rate

One of the KPIs that will give you a better understanding of your transactions is the conversion rate. This is an effective way of finding out the percentage of visitors who actually make a purchase. The higher the figure, the more your products attract prospects and customers.

How do you do this?

1. Add sales;
2. Add up the total number of visitors;
3. Divide the first number by the second;
4. Multiply by 100.

If the figure is high, your offer corresponds well to demand and the conversion process is fairly simple for customers.

The average basket

In addition to the conversion rate, you can calculate the average price of a basket over a given period (day, week, month, year, etc.). By dividing sales by the number of customers, you know how much each customer spends in your store.

Depending on your strategy, you may, for example, want to increase the average basket without increasing the number of customers. This indicator can also be used to compare different points of sale, to understand seasonal variations, to compare product categories, etc.

Average number of items per basket

The average number of items per basket focuses not on sales, but on the quantity of items themselves. Why monitor this KPI? To find out whether your product presentation techniques and sales offers are effective. To estimate it, divide the total number of items sold by the number of orders.

Sales per m²

Sales per square metre are best suited to physical stores, especially supermarkets. It allows you to check whether the different areas of your point(s) of sale are efficient. This is known as sales performance.

Once you have determined your turnover (sales price multiplied by quantity sold), divide it by the total number of square metres in your store. You can also estimate the average number of linear metres for each product category.

Customer Acquisition Cost (CAC)

Have you set up sales marketing campaigns to increase your sales and want to know if they're working? Several KPIs are used, but one of the most notable is Customer Acquisition Cost(CAC).

So that you don't overlook which actions are profitable and which are not, calculate it as follows: expenditure on campaigns divided by the number of customers acquired over the campaign period. You can then compare it with the figures for previous periods. You can also use it upstream to see whether the potential growth rate corresponds to your budget.

Average stock loss

Stock management KPIs are also important for optimising and monitoring the inflow and outflow of products. Average stock is used to avoid stock shortages, stock shrinkage calculates the difference between the stock indicated on the software and the actual stock, stock duration assesses your company's liquidity, stock turnover rate gives you the opportunity to monitor the speed at which stocks are replenished, and so on.

One KPI in particular that is important for stores is average stock loss. It gives you an idea of the dead stock in your warehouse. You determine it by subtracting the actual value of your inventory from the value of the final inventory. If the difference is large, you need to identify the cause of the shrinkage: shoplifting, employee theft or problems with suppliers. To do this, you can use software that uses AI to spot suspicious gestures, such as the one developed by Veesion.

The ratio of turnover per employee

KPIs can also help you assess your company's productivity. Such is the case with the ratio of turnover per employee. If it is high, it means that human resources are well managed and/or that employees are working efficiently (appropriate tools, smooth work processes, trained agents, etc.). It is calculated simply by dividing your turnover by the number of employees.

Following the same idea, you can also determine the sales ratio per employee.

Annual growth

Finally, to find out your company's growth potential, calculate the growth rate over a chosen period. To do this, compare it with another period, such as the previous year.

The formula is as follows: ((last value - reference value) : reference value) x 100.

With these 10 KPIs, you are now in a position to evaluate your store's performance and improve it. To do this, combine software specialising in performance indicators with other tools such as those for monitoring your business.