You won't find key performance indicators in most discussions among retailers. They just aren't sexy like marketing or product assortment can be so they can easily be left on a shelf.
However, your financials are the vital signs that can determine right away if you are in need of bleeding money or doing just fine.
Just like your temperature, blood pressure and pulse are clear gauges of your body's good health, your financials also known as your key performance indicators (KPIs) are black-and-white indicators when it comes to your company's overall health. Know these and share with your management team regularly. Here are the six results you need to track:
Profit and Loss Statement
Many times we overlook losses as inevitable but they can be seen as a failure to price right, to manage categories and cover expenses.
Average check
It is the best judge of how well your sales crew can move your products and the most immediate report you can affect to grow sales.
Number of transactions/customers
You might have fewer shoppers walking in, but if we aren’t tracking them, we may not be paying enough attention to encouraging them to return.
Also checkout my post 5 Ways For Any Small Retailer To Maximize Cash Flow
Sales by category
Not every item contributes equally to your sales. The goal is to reduce inventory in categories not producing while increasing your best categories. This report helps manage sales to inventory; also called your open-to-buy.
Year over year to date
Like transactions, the past year could be as much as 20% lower than other years. But is it an anomaly or part of a larger trend?
Number of units per transaction
The profit comes from the second item. Tracking this is another way to measure how good a job your sales crew is doing, and if your displays and signage are tempting customers to add-on.
Yes most POS systems can slice and dice hundreds if not thousands of reports, but at the end of the day - who gives a hoot to read them?
The answer: few.
One final suggestion I make is to share the last five reports with your crew on a regular basis.
The more employees know how the average check is tracking, the more they respect the number of customers that purchase your goods, the more they understand what the top categories and products in those categories are, the more they understand how all of that can be affected by the number of units they sell per transaction, the more they can help both your year-over-year sales and ultimately your profit and loss statement.
See also, How To Increase Retail Sales KPIs: Ditch Being Passive
Knowledge is power. By using data to inform your decisions, you'll be less likely to fall for a hunch or a gut reaction to a sure thing and more likely to predict your own future.
Are you a hungry brick-and-mortar store owner who’s ready for a fresh, people-obsessed strategy? This training is for you if you want to grow your business using a powerful customer experience formula proven to make your cash register chirp.
