KPI’s to watch for business in Retail Sector to keep your business humming!
Retail Business owners should regularly monitor the performance of their business in a competitive market. Programs like Square that link into MYOB and XERO are an excellent way to track the your sales trends. Here are a few retail KPI’s we suggest our client’s review regularly:
Sales and Gross Margin
The most important Retail KPI to continue to measure. In this case, you need to use this KPI to identify sale trends, best sellers and to help determine the markup of your products. However often it’s not just about what you can sell an item for the gross margin of an item it is also important e how well you have negotiated the purchasing of such articles.This will also impact on the Gross Margin.
Stock turnover rate
This Retail KPI’s refers to the number of time that an average stock is sold. A significant drop in this ratio is an indicator that stock is not selling or excess stock. More digging into which stock is not moving may be required. Decisions maybe require when to quit the stock well below cost rathert than continue to store it and worst still the ultimate trip to the tip for stock that you could not even give it away.
Sales per Square Meter
For retail businesses, rent expense can be a killer. Getting the best value from your space is important a low ratio indicates the ineffective use of space. A excellent KPI if you have a couple of stores that need monitoring for comparison
Average customer spend is important to see higher spend by the customer. But be careful that this KPI is reviewed with your Gross Margin. More turnover does not mean higher profits as the Gross Margin may not be that high. Finally, watch those discounts that may be offered. Are discounts an enticement, customer reward or just to seem like a nice person. Sometimes discounts are offered when they may not be required.
At Gartly & Associates we look after a number of retail businesses and franchises. Please call Geoff 95979966 if you would like to sit down and discuss the performance of your retail business.