Topic: Retail Sales

Retailers: Understanding and Increasing Your Average Sale

By Bob Phibbs

Moneyball, the movie with Brad Pitt showed how one baseball team began winning by picking players based on their averages rather than a gut feeling how a player "could do."

As a retail consultant, I always run six financial reports when working with a new retailer. There are two retail sales reports in particular that detail the averages any retailer must look at to increase their sales: Your Average Sale (also known as the average check in the restaurant industry,) and Your Average Number of items.

Here is why each is important and how to increase. These two metrics are most able to increase your retail sales and profitability.

Average Sale / Average Check

This report shows the value of each customer that day. If you have a lot of part-timers, they might not have the highest retail sales because they work in the "off" shifts. Average sale shows you when they do help a customer, how much - on average - a customer purchases from them. This can help you spot the bright stars who might be hidden.

This is the most immediate report you can use to grow retail sales because this report measures how well your sale crew can move your products. The more people like your employees, the more trust employees will be able to create and use to upsell each order. This is what raises your average sale.

Every business calls it a different thing, from average ticket in a restaurant to the average daily rate in hotels.

Whatever you call it, it is the closest we can get to how many sales you received in a day. Careful Analyticals don’t get caught up thinking of exceptions that can bring your average down like ringing up a piece of candy vs. your usual sale. Using your POS report averages everything so you have a true number to work with.

How To Increase Your Average Sale

Prioritize retail sales, not stocking. In the restaurant business there is a saying, “If you can lean, you can clean.” In the retail business I think it should be, “If you can stock, you can sell.” Too often we let employees think stocking the store shelves with product is more important than moving the product out the door. Displays are supposed to get messed up, products are supposed to look almost out. Your employee training has to explain this or your well-meaning employees will fail you.
Hire more employees so there is time to upsell during busy times.
Increase add-ons through impulse items displayed strategically around your store. We’ll cover that in our next chapter.
Raise sales of higher ticket goods by using both features and benefits and add-ons through improved sales training. We’ll cover this extensively in Chapter 4.

Average Number of Items

This is your total number of items sold divided by number of transactions. 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.

The higher you can move this, the more profit you will make. You make profit on the second item so your goal should always be an average of two.

For example, if you are having a big sale, employees should be suggesting, “Since this is such a good price, how about getting two?” That simple suggestion builds the unit sales without any additional marketing costs.

When managing your retail sales crew, you must utilize your computer printouts religiously to monitor how your crew is actually doing, not just your merchandise. What tips do you have to increase average sale or average number of items?