It was very likely that I would write on KPIs in Retail or Store Analytics since my last post on Marketing and Customer Analytics. The main motive behind retailers looking into BI is ‘customer’ and how they can quickly react to changes in customer demand, rather predict customer demand, remove wasteful spending by target marketing, exceeding customer expectation and hence improve customer retention.
I did a quick research on what companies have been using as a measure of performance in retail industry and compiled a list of KPIs that I would recommend for consideration.
Customer Analytics
Customer being the key for this industry it is important to segment customers especially for strategic campaigns and to develop relationships for maximum customer retention. Understanding customer requirements and dealing with ever-changing market conditions is the key for a retail industry to survive the competition.
- Average order size per transaction
- Average sales per transaction
- Average number of items per transaction
- Average profit per transaction
- Number of trips per month
- Average shopping time
- Visit to buy ratio
Financial Analytics
Sales analytics is key to track trends in product demand and opportunities in sales. Marketing analytics can help us track effect of campaigns in sales and help us target customers and plan for promotions.
- Total Sales
- Gross Profit Margin
- Price premium
- Actual expenses
- Total payable
- Total receivable
- Return on capital invested
- Margin %
- Markup %
- % of revenue generated from non-house brands
- % of profit generated from non-house brands
- % of revenue generated from house brands
- % of profit generated from house brands
Store Analytics
Monitoring store operations is vital to measure management efficiency and how campaigns are working regionally.
- Sales per hour
- Sales per labor hour
- # of transactions per hour
- Sales per m2
- # of products per m2
- Revenue/Profit per m2
- Store conversion rate
- % of returning customer
- Fixed cost of opening per month
- Variable cost of opening per hour
- KWH per square foot
- % of not displayed inventory
- Average time on shelf
- % of expired products
- % of damaged products
- % of returned products
- Average # of employees
- Wage to sales ratio
- Average Inventory value
- Inventory Turnover
Other areas BI can impact in retail include supplier management, budgeting, planning, supply chain, logistics, branding, social analytics, merchandise management, market analysis etc.
Making your next or current Business Intelligence initiative in your organization fail-proof by staying on top of latest Business Intelligence trends and technology and learning best practices from leaders in retail industry, and covering your bases on are doing is the ‘key’ to avoid commonly faced challenges such as user adoption at later stages.
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