Important KPI in Retail Analytics

 

Important KPI in Retail Analytics

Retail key performance indicators (KPIs) enable retailers to monitor the health of their business. If you’re not tracking your KPIs, you’re at a severe competitive disadvantage.

There are the top three key performance indicators for retail businesses. These three KPIs are relevant to both in-store and online businesses.

KPIs provide much-needed transparency into retail operations. Retailers place great value on KPIs because they help them make more informed, strategic business decisions.

Data-backed decision-making helps retailers thrive in their respective markets. And increasingly, your competitors—whether they’re small mom-and-pop businesses or giant online retailers—are closely tracking their KPIs and becoming much more formidable competitors, vying for customer attention.

 

What are retail key performance indicators?

Retail key performance indicators are measurements of business success. The measurements are made from key retail data sources including sales metrics, customer metrics, product data, inventory, and marketing data.

The 3 Must-Monitor KPIs for Retailers

There are a lot of KPIs that your retail business could be monitoring, but we’re going to look at the three most important retail metrics. These are:

  • Total sales
  • Store traffic
  • Net profit margins

These KPIs offer detailed insights into the retail business and help businesses monitor more detailed KPIs and metrics. Insights gleaned from all this analysis lead to better business decisions, customer service, and competitive advantages.

 

 

Let’s take a deep dive into each of these valuable KPIs.

Total sales

 What is it? This KPI tracks all the sales you’ve completed across your business. It offers a snapshot of business performance that can be compared to prior performances.

 Why is it important? By monitoring your total sales KPI, you get an essential snapshot of business performance. Total sales can be filtered by various classifications to provide more granular insights into specific business performance. For example, total sales can be filtered by:

  • Date/time: Compare total sales of one day/week/month/year with another.
  • Products sold: Monitor what products (or combination of products) are top sellers.
  • Location/employee: See where sales happen. This could be an in-store location or an online site/marketplace.

Store traffic

 What is it? Store traffic refers to the number of visitors to your retail business. It’s easier to measure traffic for online shoppers visiting your site. But brick-and-mortar retail companies can, and should, measure actual pedestrians walking into a store.

 Why is it important? Monitoring retail store traffic metrics enables retailers to get an accurate count of e-commerce shoppers and/or pedestrians visiting a store, each a potential customer. Retailers can compare store traffic numbers and total sales to unlock more detailed KPIs.

For example, retail metrics can show the total number of transactions during a given time along with the total customer count. This gives an average value for each visitor. With this in hand, retailers can say “if I want to increase sales by x, I need an x increase in visitors.” This is hugely important for setting actionable, achievable goals.

Gross profit margins

 What is it? A gross margin is the difference between the cost of the product and the amount it sold for. These margins are represented as a percentage. For example, if a product costs your business $60 to make (or acquire) and you sell it for $100, the difference is $40 and the profit margin is 40%.

 Why is it important? It’s essential to monitor profit margins because you need a healthy overall margin to stay in business. Retailers have to achieve a favorable revenue margin while maintaining competitive prices.

Say you have a popular product that’s flying off the shelf at your retail store. Given that demand, you may be able to raise the price by 5% to 10% to boost the revenue margin during the hot streak.

Conclusion:

In retail analytics, choosing and monitoring the appropriate Key Performance Indicators (KPIs) is essential to evaluate performance, guide decision-making, and promote continuous development. The KPIs chosen should be unique to the aims and priorities of the store, and it is crucial to continuously assess and adjust KPIs in light of evolving business requirements and market trends.

Reference:

https://www.softwareadvice.com/resources/retail-key-performance-indicators/

Aniket Shukla

ISME Student Doing an internship with Hunnarvi under the guidance of nanobi data and analytics. Views are personal.

# Important KPI Retail Analytics # analytics #nanobi #hunnarvi #ISME

 

 

 

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