There are four primary types of retail KPIs to monitor, with each serving a different purpose:
Evaluation of Sales Data: Sales KPIs measure the effectiveness of the current sales strategies in place. Their end goal is to improve the processes to increase sales.
Evaluation of Customer Habits: Customer engagement KPIs are used to analyze and improve the customer experience to drive sales.
Merchandising: Merchandising KPIs indicate how the merchandise being offered to consumers is either helping or hurting the goal of increased revenue.
Financial: Financial teams utilize financial KPIs to keep track of progress toward a retailer’s goal.
Type #1: Retail KPIs for accurate sales data
Sales KPIs help provide sales teams and managers with the data they need to continue or alter their path to reaching the retailer’s goals. Like other retail KPIs to monitor, sales KPIs can also be used to identify new trends entering the market that may affect the strategy that is currently put into place.
KPI #1: Sales per Square Foot
Definition: Sales per square foot is a sales metric used by retailers to give insight into the revenue generated per square foot of a store.
Why you should track it: Sales per square foot is an important and useful store KPI to track because it measures the efficiency of a company and how well it uses its assets to achieve success. This can be used to compare to competitors and find areas of opportunity for growth.
Formula: Sales per Square Foot = Revenues / Retail Space
KPI#2: Year-Over-Year Sales
Definition: Year-over-year (YoY) sales are when a retailer compares sales of a specific period to the same period of the previous year.
Why you should track it: Monitoring YoY sales allows a retailer to have access to the financial data over an entire year and compare it to previous years. It determines the rate of growth or pinpoints the period that led to a decline in sales. This information helps retailers determine what strategies are working and which ones need an alteration to be more effective.
Formula: Year-over-Year Growth (YoY) = (Current Period Value / Prior Period Value) – 1
KPI #3: Average Transaction Value
Definition: The average transaction value, or ATV, is a measurement of the amount spent by a consumer per visit.
Why you should track it: Tracking the ATV allows a retailer to analyze the amount of revenue from each consumer. When the ATV is high, it means that customer engagement is high. Tracking this KPI will ensure that retailers are reaching high levels of customer engagement and increasing revenue.
Formula: Average Transaction Value = Sales/Transactions
KPI #4: Sales per Employee
Definition: Sales per employee is a metric found by dividing a retailer’s annual sales by the number of employees to find the financial productivity of each employee.
Why you should track it: This retail KPI to monitor is important for any business that invests in employees and relies on them to help reach revenue goals. Since most companies’ greatest expense is employee salaries and benefits, it is vital to ensure that employees are productive in increasing revenue.
Formula: Sales per Employee = Annual Sales / Number of Employees
Read more of the most important retail KPIs here.