(KPIs) for Retail:

Sales compared to budget/target: Actual sales $ divided by budget/target sales $. Sales compared to last year (or any other period): Actual sales $ for a given period divided by actual sales $ for the period you want to compare to. Sales per Square Foot: Actual sales $ for a given period (usually a month or a year) divided by the total floor area (in sq.ft.) of the store. There are variants of this indicator in terms of sales per square foot of merchandisable area of choice (like walls and display units.). Wage Cost: Actual wage $ paid for a given period divided by actual sales $ achieved for the same period.

Average Sale per Customer/Transaction: Total sales $ for a given period divided by the number of customers or transactions for the same period. Units per Customer/Transaction: Total number of units sold in a given period divided by the number of customers or transaction for the same period. Conversion rate: The number of transactions in a given period divided by the total number of customers who entered the store during the same period. Sales per Hour (for store or associate) selling hours only: Actual sales $ for the store divided by the number of selling* hours during the same period. *selling hours are used here rather than total labor hours Sales per Hour (for store or associate) total labor hours: Actual sales $ for the store divided by the number of labor hours used during the same period. Time Spent in the Store: Average time spent by customers in the store can be measured through sophisticated techniques utilizing RFID and wireless technologies or manually. Reason for this measurement: There is a direct correlation between time customers spend in a store and how much they buy.

What Is a KPI in a Retail Store?

A KPI, or Key Performance Indicator, is a metric used to measure performance. Retail stores use various KPIs to measure their activities. There is no particular set of KPIs that every retail store must use. Retail stores need to pick the right KPIs based on the outcome they want to achieve or their strategic goals. For example, one retail store might want to manage their inventory better, so they would use KPIs like inventory to sales ratios or inventory integrity. On the other hand, another store might want to enhance the customer experience, so they would choose KPIs like customer satisfaction and customer retention.

Choosing the Right KPIs

Retail stores need to choose the right KPIs when measuring their business processes or goals. Each KPI must have a specific purpose, must be measurable quantitatively or qualitatively, must have a realistic goal, must be relevant to the strategic direction of the store and should be measured within a specific time-frame. An example of this is increasing monthly sales volume by 10 percent by the end of the month. The retail store will then measure their monthly sales volume and compare the increase to the target of 10 percent.

Classification of KPIs
Each business unit has its own set of KPIs. For example, the marketing team in a retail store uses marketing KPIs like customer acquisition, while the HR team uses HR KPIs like staff turnover. KPIs can also fall into multiple sub-categories. Quantitative KPIs can be measured with a numerical value while qualitative KPIs can't. Input KPIs measure the inputs consumed in a certain business process and output KPIs measure the results of the business process. Leading KPIs predict the result of a business process and lagging KPIs present the outcome of the business process.

Sales KPIs
Ultimately retail stores want to increase their sales and make more money. While there are a vast number of KPIs related to sales, there are some basic ones that most retails stores use. Gross profit, sales and cost of goods sold are the three simplest ones. They directly measure the profits of the store. Average purchase value and sales per segment are also widely used. Sales per square foot help store managers determine the best way to place goods in the store to increase sales while conversion rates identify how many purchases are actually made for every customer who walks into the store. There are KPIs to measure the efficiency of the sales team, such as sales per hour and salary to sales ratio. Inventory KPIs such as inventory to sales ratio or out-of-stock items are important in improving inventory management.

Usage of KPIs
Ultimately, the usage of KPIs should lead to changes that improve the performance and efficiency of the store. There is no point putting so much effort identifying KPIs and measuring them if the data is not going to be put to good use. If there is a pattern arising in out-of-stock items, such as one particular item being out-ofstock with a higher than expected frequency, then it is time to increase the frequency or amount by which the item is restocked.

What are the basic KPI a retailer should adopt?

Not all the retailers adopt the same kind of KPI to meet the organizational goals. But having certain KPI in an organization has become mandatory for a retailer. There are certain basic KPI to adopt by a retailer are such as, Loss prevention Shrinkage loss, (stock loss or cash loss) Sales annual turnover, transaction made, basket spend, footfall - all against LFL and budget

Operational availability, inventory integrity Salary

Service Complaints that are made HR development training, coaching, staff turnover Variable costs any expenses made at an additional cost are avoidable

How does the KPI helps in increasing your sales?

Once the KPI is defined it gives the clear idea about the goals and the measure and finally what to do with them? It gives a clear idea what is important in the organization and for what they have to work for to achieve. The KPI can be used as the performance measurement tool. It helps in managing the performance of the organization. Also make sure that everyone exceeds or meets the KPI. There are many KPI set by retailers in order to achieving in their business. Giving a vague KPI such as Should have repeat customers will not help you to meet the organizational goals. The best KPI would be Employee Turnover which you help you in calculating the performance of an employee.

There are five top most KPI are set by the retailers such as,

 Sales per hour Statically compares one sales person with the other and determines who is efficient in selling and attending the customers. Average Sale Statically compares the average selling price of a sales person. The higher statistics shows that the person has a wide knowledge on the product and the less statistics reveals that he lacks in the product knowledge or effective description. Items Per Sale determines the ability of a sales person compare to sale. Conversion Rate shows how many customers they have made from the visitors of the store. Wage to Sales Ratio gives a graph comparing the hourly wages of a sales person to hourly sales they have made. This KPI determine their performance level and how effective they are.

 SKU An identification number assigned to a unique item by the retailer. The SKU (Stock Keeping Unit) may be an internal number to that retailer or may be tied to an item's UPC (Universal Product code) or EAN (European Article Number).(Major retailers use UPC or EAN barcodes)

 Order Quantity It is the quantity of merchandise that is ordered whenever the order point is reached. Shrinkage It is the reduction in inventory that is caused by shop lifting or due to damage/misplacement or due to poor bookkeeping.

 Visual merchandising: A display arrangement including the layout of store facilities and the placement of merchandise in the store to attract the consumers attention and stimulate customers desire. Basket Size: The number of units moving in one single bill e.g. if you have bought 2 shirts and one trouser from a store then the basket size is 3 pcs. Bin: Represents a physical place to store inventory. Normally used in the context of warehousing and generally refers to physical rows/shelves. Average Basket Size: Average number of units moving in one singe bill. It is calculated as Total units sold/ No of invoices.

Retail KPI Examples

Customer Retention Cost of Goods Sold Point of Purchase Customer Satisfaction Incremental Sales Average Purchase Value