Measuring retail performance helps companies track their monthly profits. It also shows the companies’ strengths and weaknesses and what needs to be improved. There are several ways to measure performance such as the number of customers, retail conversion rate, average sales, customer conversion ratio, gross margin, and gross profit
1- Customer traffic
This should be the first thing to measure, the number of customers coming into a store. But be careful to differentiate between measuring visitors and customers.
2- Retail conversion rate
This is about measuring how many visitors turn into buyers. Since some visitors don’t make any purchases and do window shopping, you should measure the customer conversion ratio separately. But bear in mind that customer conversion ratio effectiveness depends on what type of business are you in.
3- Average purchase value
Now is the time to measure how much a customer spends on their checkout, and start comparing how has this changed over time. Next, you should measure the average sales order value and see how you can get more transactions.
4- Items per order
It’s also known as items per transaction and measures the items one customer purchases in one transaction. Retailers should aim for high units per transaction, if not, they should start investigating the reason behind having low volumes.
5- Gross margin
Gross margin return on investment or GMROI is evaluating and measuring the company’s ability to turn its inventory into cash and how much profit can turn from inventory sales.
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