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15 Crucial KPIs to Help Track Business Performance

The best way to avoid mistakes is by combining your gut instincts with data.

  • Here are the top retail metrics and KPIs to monitor.
  • You’ll learn about the formulas to use for metrics.
  • You’ll also find out why it’s so important to have a solid retail analytics and reporting platform.

Numbers don’t lie, so if you’re having trouble figuring out what’s happening in your business, it can be helpful to look at retail metrics and KPIs.

If you have a lot of sales data, take some time to look through it and see if any patterns can help you improve your business.



KPIs in Retail

The KPIs or key performance indicators are the most critical metrics in your business. These numbers show you if what you’re doing will work, and that’s why they should be monitored regularly.

What metrics should you be looking at? It all depends on your business. For example, some retail companies might care more about sales per square foot or average inventory turnover, while others may not need to know this information.

But to help you out, we’ve compiled the top metrics and KPIs that retailers should be tracking in their business.


How to use it?

Key performance indicators are called that for a reason. They help you measure your progress and decide what to do next, so it’s crucial they’re being used correctly.

KPIs help you see how well your company is doing in many different areas. 

You can track many metrics in your retail business, but here is a brief description of each one and how to calculate it. It’s important to note that there are plenty more out there besides these, so don’t be afraid if something doesn’t seem right for your company.

A lot of the time, when you’re running a business with retail roots, it’s best to use software that calculates metrics and KPIs for you. This saves your company valuable resources so they can focus on what matters.



Sales metrics and Tracking Key Performance Indicators

As the old saying goes, “money makes money.” So if you want to grow your business and become successful, you must keep a close eye on sales. One of the most effective ways is by tracking key performance indicators (KPIs). Here are some KPI examples:

1. Sales per square foot

This metric pertains to the number of sales you generate for every square foot that your store is.

Calculating sales per square foot is not as hard as it sounds.

Why your sales per square foot is essential?

Retail sales per square foot is a good indicator of how productive your store is, and it can also tell you if the space in your shop could be better utilized. It’s worth considering when designing layouts for stores. Click To Tweet

To measure how your business stacks up against the competition, you must know their sales per square foot. Here is a look at the average for different retail sectors:

  • Apparel – $300
  • Specialty retail – $285
  • Grocery – $620

Improve your sales per square foot

You’ll need a different strategy for every store regarding retail products. But here are some general tips that will help improve your sales per square footage. Keep the checkouts in clear view of other sections and promotions deals on display. Make sure there is enough variety when shopping from one section to another.

  • Layout – If you want to make your store more efficient, try reorganizing the structure.
  • Product Assortment – To succeed in the marketplace, it is essential to have a good product assortment.
  • Promotions – You need to do your research before you start getting creative with the pricing of your products.
  • Transactions – Increase the value of your transactions by adding more items to your cart or basket.
  • Training – Train your staff to make the most of their skills and be as productive as possible.
  • Find Interests – Find out the most common reasons people give for leaving your store and see if you can work on those things.

Retail stores have been trying to figure out how to increase sales per square foot and improve productivity for years. Recently, there has been a lot of buzz about specific new technology that could be the answer.

2. Sales per employee

Sales per employee is a measure that can be useful when you’re figuring out how to balance your staff’s time.

Why it is essential

One of the metrics that can help you make smarter employment decisions is an employee’s skill level. It doesn’t matter what kind of job; this metric will determine whether or not they’re a good fit.

One way to figure out who is the best salesperson in your company is you need a POS solution that tracks data like average ticket size and number of transactions per employee. You can use this information to set targets for each team member to know what needs improvement.

Increase Your Sales

One of the best ways to improve your metrics is getting associates to generate more sales. Depending on what you sell, this could include actions like:

  • Goals – It’s essential to set goals for your salespeople so that they can hit them.
  • Sales training is an excellent investment because it can give you the skills and strategies to get out of a slump. It’s never too late for salespeople to learn new tricks.
  • Motivation – Keeping your staff motivated is a challenge, but the good news is that there are many ways to do it.
  • Friendly competitions – One way to make your sales process more fun is by running friendly matches with prizes that help people succeed.
  • Give some tools – To better motivate staff members, provide them with tools like a good CRM.

3. Rate of Conversion

You can calculate the conversion rate by dividing how many shoppers purchased your store by the number of people visited.

Why is it important?

Your conversion rate is a good indicator of how well you turn visitors into buyers.

Improve your rate

To increase your conversion rate, you need to start with the most influential people in the equation – Your employees. Train and empower them by telling them what they can do to help improve sales.

  • Always try to establish a connection with your customers. They will be more likely to buy from you if they feel like they know and trust you.
  • Become a “likable expert” by sharing your knowledge and insights with others.
  • Know how to get people on board without being too pushy.

4-5. Gross and net profit

Your gross profit is the difference between what you made and how much it costs to make your product. You can calculate this by dividing revenue by costs.

One of the most popular financial ratios is gross margin. This measures how much revenue we make from the product minus what it costs to produce.

Gross and net profit

Your gross and net profit will tell you whether or not your company is making money. Sales are good, but it’s all about profits at the end of the day.

The knowledge you gain from these KPIs will help you make better decisions. For example, if your gross profit is low, then maybe it’s time to look into product sourcing and see what changes can be made there.

If you’re not making enough profit, it might be time to look at how much your operation costs are.

Improve your gross and net profit

You can test out different strategies for increasing your profits in the business. These tips will help you improve your gross and net gain:

  • Streamline your operations to save money.
  • You might be surprised at how much people will pay for your product. Don’t lower the price to match what others are charging.
  • The best way to increase your sales is by increasing the average order value. It’s not about how many orders you make, but rather what they are worth.
  • Always keep an eye on your money and how you spend it.
  • It’s essential to maintain good relationships with your vendors to provide you with the best possible service.
  • If you want to be more strategic with your promotions, then limit markdowns and plan for them in advance.

While many retailers and brands believe that increasing their margins is the only way to turn a profit, they often overlook improving profitability without changing margins.

6. Transaction value

The average order value is the number of dollars that customers spend on your store, and it’s calculated by dividing total sales revenue by the number of orders. For example, Google tone: know how much money people spend in your store before figuring out this metric.

To many, the more transactions they do in any given month means more significant revenue. But then again, not all sales are created equal.

Why is it important?

If you’re getting a lot of orders for your high-end products, people are spending more. If they’re buying bulk quantities, this could mean that the shopper is trying to buy something cheaper or has an ulterior motive.

If you have a low average dollar per transaction, then it’s time to reconsider your pricing. You can use this KPI to derive some insights and action steps.

But if you’re seeing this, it could mean that you need to change your tactics for getting customers to spend more. Offer upsells or bundles on certain products so they’ll buy something else too.

Increase Your Transaction Value

If you’re looking to improve your sales, upselling and cross-selling are both great options. Done right, they can help customers while also boosting the bottom line.

It’s essential to upsell or cross-sell the right product at the right time. If you’re pushy and sell a customer something that doesn’t make sense, then not only will they turn down your offer, but it might affect their original purchase decision too.

One of the most important rules for this job is always to provide value. Yes, getting someone to upgrade their purchase or buy an additional item will benefit you, but that customer must also get a good deal.

7. Items per transaction

How many items you buy per transaction is called basket size. It’s calculated by dividing the number of units sold in a given time by the total number of transactions made during that same timeframe.

So, the size of your basket is calculated by dividing how many units you’ve sold by the total number of transactions.

Vend found that the average order size is 2.72 items per basket, so you can see how close or far off your sales are.

This is different for every industry, though. For example, If you’re in the beverage manufacturing sector, with a basket size of 3.

It seems that, for some reason, shoe stores are the worst offenders. The average employee cost is 1.32 per hour.

Why is it important?

For retailers who sell across multiple categories, it’s essential to track the size of each basket.

If you’re selling products that go together or are frequently bought at the same time, try to create a corner in your store (or near the front) with both items on display.

If you’re running a special promotion and the basket size is increasing, it means that your customers are buying more of what they need. This can be an indicator to see if your initiative was successful.

So if you’re running a promotion where more than one product is being sold, then measuring the size of your basket makes sense.

Improve your items per transaction

Encouraging customers to buy more of your products is a no-brainer. You can do this with the following:

  • Scarcity Principle – Upselling and cross-selling are potent ways to increase sales.
  • Cross-merchandising your retail displays can be a great way to upsell and sell more products.
  • Use your customers’ impulse-buying instincts to get them hooked on the product.

8. Relative location

This is a new metric that will help omnichannel retailers.

Retailers are now facing the dilemma of balancing their focus on online and offline customers.

To measure the success of your brick-and-mortar stores, you need to look at analytics and see how much traffic or revenue is generated from those locations.

To think about, you say, “I’m going to open a new store in Austin, TX.” You can gauge the success of your brick-and-mortar location by looking at web traffic and sales from users within relevant zip codes.

Why is it important?

Customers today are using many different channels to shop, so you need to know how your physical store impacts the success of e-commerce sales. These days it’s not enough just crediting a deal with one channel because people interact with brands in various ways and places.

9. YOY Growth

“Gross Margin” is the measure of profit that a company generates on each dollar. This number can be calculated by subtracting costs from revenue and dividing it by total sales.

Why is it important?

Are we always looking for ways to improve your business? The best way is by measuring how it’s doing compared to the previous period. This will show you what needs improvement and where you’re prepared when a crisis hits.

It’s essential to be flexible when things are not going as well. If you find that your business is struggling, it might just take a bit of change for everything to get back on track.

Improve your YOY growth

The first step to improve this is to figure out why you’re not growing at your ideal rate. If it’s a simple fix, find the root of the problem and solve it.

Maybe it’s the market. Perhaps you’re not as up-to-date with trends as your competitors? Or perhaps a competitor is gobbling up all of your customers.

You need to find out and do something about it.

10. Stock Turn

When you start a business, it’s essential to be mindful of the cost per unit in your inventory. It can be hard to stay afloat if you don’t know how much money is coming in and going out on an item-by-item basis.

Stock Turn

Stock turn is a metric that reveals how often your inventory turns over. The lower the stock turnover, the more likely you have slow or dead stocks on hand.

Suppose you are constantly running out of inventory (and this is not a case where the demand exceeds your expectations, in which case it could be that you’re just stocking too little). In that case, the chances are good that customers have to deal with being unable to purchase from time to time.

Improve your stock turn

Depending on your inventory turnover, you might need to be more conservative with what products you buy. If it’s too low and the prices are high, don’t over-order because that will lead to excess costs.

Dead merchandise is the worst. It’s like a pet that doesn’t make any noise or eat anything, and you can’t even take it for walks because people think they’re looking at an abandoned baby bird.

When you have a high stock turn, it’s essential to optimize your ordering procedures to avoid running out of inventory too often.


If you’re looking for a way to measure the return on your investment, then GMROI is something that might interest you. It calculates how much money was made after assets were taken into account.

It answers the question, “How much did I make from my inventory investment?”

Why is GMROI important?

When it comes to inventory, you need to know how much money is being made. This metric will tell you if your stocks are turning a profit or not.

Sometimes, you might want to measure the retail mix of your store because it can tell you which types of products are worth carrying in your shop.

Improve your GMROI

To increase your GMROI, ask yourself what you can do to extract more money from the products that you’re selling. If you want to do that correctly, follow the rules:

  • If you’re looking to increase your prices, you must understand the potential impact of on-demand.
  • When making your company more profitable, you must look at how much money goes into producing the product.
  • To improve margins, you need to ensure that your company is as profitable as possible.
  • Reducing inventory levels and improving turnover has helped to increase profits.

12. Sell-through Rate

The sell-through rate is the percentage of units sold versus the number available to be purchased.

A simple way to calculate the average sale cost is by taking the number of units sold and dividing it by beginning inventory multiplied by 100.

Why is the sell-through rate significant?

Sell through is a great way to determine how well products are selling. It also tells you the speed at which they’re being sold so that when it’s time for inventory, you can know what merchandise needs replenishing.

Say you’re the boutique owner and saw that your store sold 80% of its inventory in just one week. You can use this information to figure out how much more stock to order, so it doesn’t run out prematurely.

Improve your sell-through rate

Figuring out how to increase your sell-through rate can be tricky. You need to figure out what you are doing wrong before making decisions about changing the store layout or products on shelves.

As an alternative, if your store is not selling the product quickly enough, you should either run a promotion or discount it. Again, these solutions depend on your situation and what other products are available in-store.

13. Shrinkage

Inventory shrinkage is a loss of inventory that does not occur due to sales. Employee theft, shoplifting, and administrative errors are common causes for it.

Why is Shrinkage significant?

It’s essential to keep an eye on your product and cash because it will help you stop theft or admin errors. Keeping track of Shrinkage is the best way to ensure that nothing shady happens within your business.

Reduce Shrinkage

It’s not easy to determine the cause of Shrinkage, but it is essential. If you think that your employees are responsible for most theft, you should consider hiring more guards or putting in tighter security measures.

The most important thing is hiring good people and setting up procedures that will help you avoid having inside jobs when it comes to employee theft. Also, ensuring your processes are tight can prevent admin errors or vendor fraud.

With Vend’s Excel inventory and sales template, you can quickly see what is selling in your store. You’ll know when to reorder products or restock shelves because of this handy tool.


Customer-Centric Metrics

14. Foot traffic

One of the most straightforward things to measure is foot traffic. This measures how many people walk into your store.

There are many different ways to measure foot traffic, like with people counters and analytics software.

Why is foot traffic significant?

Having a good marketing campaign is essential, but it’s also beneficial to see how many people are walking into your store. This will help you figure out if the movements that you’re running are working or not.

And this is a significant metric for judging the success of your window displays.

Improve foot traffic

You can get people to your store in a variety of ways. One way is by giving them something they want and then setting up an appointment with you when it works best for them.

  • Increasing your curb appeal
  • We use digital tools to better connect with customers, such as click and collect services, online business listings on Google’s Local Inventory Ads, etc.
  • Impressive events
  • The most effective traffic generation technique is to target existing customers.

In addition to their website, stores can also reach out and advertise on third-party websites. The retail industry is constantly changing with new trends that require a flexible approach.

15. Customer retention rates

You’ve worked hard to bring in new customers, so it’s only fair that you find out if they’re sticking around. There are several ways to calculate customer retention rates, but this formula from Inc is relatively simple.

((CE-CN)/CS)) x 100

The number of customers at the end of a period is CE, or “customer-equivalents.”

It turns out that just one new customer is enough to motivate the average salesperson.

When starting, never assume that high customer numbers would be enough to sustain a company.

Why is the customer retention rate significant?

Your customer retention rate measures how many customers you can retain. It’s also an excellent gauge for your product performance and loyalty to the store.

Improve your customer retention rate

To get people to come back, you need to manage your customer relationships. This can mean anything from understanding their needs and desires or accommodating when they have a problem.

  • We can better serve your needs and offer more personalized recommendations using the information you provide.
  • Offering excellent customer service and community-building programs, like classes or events, is a sure way to develop meaningful relationships.
  • The only way to keep customers coming back is by implementing a killer loyalty program. The more perks you offer, the better your customer service will be.

Suppose you want to know more about KPIs, download Vend’s Retail KPIs guide. It gives a deep look at the numbers that are important in your business:

  • Google can help you make brighter forecasts and decisions because it knows the best metrics to use.
  • Figure out your key performance indicators, and then track them to figure out how you can improve.
  • Track metrics that are important to you and measure them accurately. It’s not just about whether or not the numbers look good.



Which KPI is the best?

Tracking year-over-year growth is not relevant for new businesses because they haven’t established themselves yet. The metric of sales per employee would be good if you have a lot of employees, but it’s irrelevant to small business owners like me.

It’s also essential to think about what you want from your interest. For example, if your company has increased sales or is looking for new marketing strategies, you might need to focus on those things instead of other tasks.

If you’re trying to improve your inventory, tracking shrink is a good way of doing so.

Maybe you’re trying to motivate your team members. If this is the case, sales per employee might be a good metric for evaluating how they are doing.

A company’s key performance indicators can vary depending on the industry. One retailer might focus more heavily on one metric than another, so it is essential to examine your business practices and goals before deciding what metrics to measure.

One way to make your metrics easier is by automating data and metric-tracking in your business. You can use formulas, but it’s more efficient to automate.

You want to invest in a retail solution that will give you deep insights into your business, so instead of spending hours doing manual calculations and trying to find what’s wrong with the numbers yourself, let the software do it for you. Click To Tweet

After you find out your metrics, the next step is to take action. You can’t just know what they are and not do anything about it.

Take a step back and analyze your strategy. If you do not see the results you want, make some changes to suit better what’s going on in today’s market.