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Conversion Rate: What Does Conversion Mean in Retail?

As a retailer, you know that conversion rate is important. But what does conversion mean in retail? Read on to find out how conversion rate can impact your business and what you can do to improve it.

I remember when I first started my retail business, I had no idea what “conversion rate” meant. I just knew that everyone was always talking about it and that it was important. So, I did some research on what does conversion mean in retail and found out that conversion rate is the percentage of people who buy something from your store.

So then I started thinking about ways to improve my own store’s conversion rate. And there are a lot of things you can do! From improving your shop layout to offering more checkout options, there are plenty of ways to increase conversions in your store.

But why bother? Well, because a higher conversion rate means more sales for your business! And who doesn’t want that? By increasing conversions, you’ll be able to make more informed decisions about inventory levels, marketing campaigns, and even which products to carry in-store. Not only will this help boost profits, but it’ll also help keep customers happy by making sure they can always find

What Does Conversion Mean in Retail?

The retail conversion rate is the percentage of people who visit your store and make a purchase.

Because online shopping is so easy, online conversions tend to happen less often. People can easily browse a website, add items to their cart, and checkout in mere seconds.

One single, irritating popup is all it takes to make visitors leave your site.

In-person shopping at a store allows customers to physically interact with products and speak with employees. This increases the chances of making an impulsive purchase.

In-store shopping is more profitable than online shopping. 71% of in-store customers spend more than $50, while only 54% of customers who shop online do.

The number of people visiting your retail store and making a purchase is your conversion ratio. You can determine your rate by calculating the number of purchases divided by your total number of visitors, and multiplying that by 100.

While other key performance indicators (KPIs) such as revenue and total footfall are important, the most important KPI for retailers is their conversion rates.

So, what is the typical conversion ratio for retail businesses? And how do you improve it?

What is the Retail Average Conversion Rate?

The average brick-and-mortar store converts around 20-40% of visitors into customers. It’s a good idea to track this metric for your store.

But, your conversion rates can vary depending on the time of year, as well as other factors. For instance, if you’re running a seasonal promotion, you may see an increase in sales.

If your sales agent is ill, your conversion rates might drop.

To accurately measure your conversion rates, calculate the rate over longer periods such as a week, a month, or a quarter. This will help you track any improvement that is made.

Make Informed Business Decisions

The conversion rates of your stores can give you insights into how they’re performing.

Take your average conversion rate without making changes. Then, try testing out different changes against your baseline to see what works.:

  • Store layout: Does your company’s conversion rates improve when you switch to a grid, a herringbone, or a geometrical layout? 
  • Product mix: Does bundling products together—such as selling coffee mugs along with coffee—increase sales?
  • Discounts: Does offering 15% or 20% off make a difference in your conversion rates? If not, go with the 15% discount. You’ll be able to make more profit without cutting into your margins.

Accurate Indicator of Performance

To measure the success of each of your stores, you should have KPIs in place.

If you fall below your KPI, it’s an indication that you need to put in some extra work.

Conversion rates are more stable than the sales numbers, so they’re a better indication of how well a store is doing.

While foot traffic and revenue are important metrics, they can vary greatly depending on the day or local events. A concert or convention, for example, can bring in a lot of business. Is that good?

A nearby event might be a great way to boost sales for one day, but this isn’t something you should aim for as a long-term goal.

Your goal of reaching that sales goal will only lead to disappointment.

The conversion rate for retail stores is a reliable indicator of how effectively your salespeople are converting sales. This metric is less influenced by outside factors, making it less prone to fluctuations.

Staff Abilities and Performance

A store’s conversion rate is greatly affected by the in-store experience customers have.

Retail and sales associates are the people who are responsible for making sales happen. By being knowledgeable, helpful, and attentive, they can give their customers a positive experience that leads to more sales and higher profits.

Gap decided to test how more effective staff scheduling could be. Before the test, the schedules for retail staff were complicated and inconsistent.

When employees at the GAP were given consistent work schedules, they sold 7% more products and were 5% more productive. This ultimately resulted in $2.9 million in additional revenue for the retailer.

Store Layout

The layout of your retail location can greatly affect the number of customers that come into your store.

Do you combine your t-shirts with other apparel or accessories? Combining your merchandise with complementary products can boost your average sale.

But for people who just want to buy a t-shirt, wandering around and looking for them can be a real pain.

The coronavirus outbreak has forced people to change their buying habits and now 62% of shoppers are more comfortable shopping at stores. This is great news for your profits.

That is bound to have a positive effect on your bottom line.

Visual Merchandising

In 40% of retail stores, shoppers make an average of 3 impulse buys.

If you want to increase sales, then you need to make sure your products are looking their best. One way to do this is through visual merchandising displays. This will help convince more shoppers to buy your products.

Trying out different lighting and arrangement schemes, as well as using live models, can increase your conversion rate.

Inventory Management

Having too many products in stock can be a real headache. Not only is it hard to keep track of what you have, but you also don’t want to have products that have passed their expiration date.

Similarly, you don’t want to disappoint your customers by not having anything in stock for them to purchase.

A central inventory management system is key to ensuring you always have products available for customers. Shopify POS lets you track how many items are in each location so you can restock before running out.

Set up alerts to notify you when items need replenishing. This will ensure you never run out.

If you’re out of a product, you can set it up so that you get an alert when it’s available again. That way, you’ll never have to worry about turning away customers because you don’t have what they’re looking for.

Checkout Options

According to the National Retail Federation, 97 percent of shoppers have abandoned a purchase because it was too inconvenient.

Having to wait in line for a long time, not being able to use self-service checkouts, and having to write down your email address on a piece of paper are all examples of ways that can discourage customers from completing their purchases.

I find it really annoying because they often end up selling me unsollicited emails afterwards. It’s also obvious they don’t do it for convenience but simply to get leads. — Benjamin Houy (@BenjaminHouy) July 6, 2021

How to Calculate Retail Conversion Rate

Here’s how to calculate your retail conversion rates:

Number of sales / total number of visitors x 100 = conversion rate

Remember, that the number of people that buy an item is not the same as the number of people who bought that item in one purchase. The retail conversion ratio tells you how many people purchased that item. So if somebody buys five items, you would still say that they made one purchase.

If you made 75 sales on a day when 500 people visited the store, your retail conversion rate would be 15%.

75 (number of sales) / 500 (total number of visitors) x 100 = 15% (conversion rate)

How to Increase Your Retail Conversion Rate

If you want to increase your retail conversion rate, there are a few things you can do.

1. Offer Local Pickup

Not all customers will randomly walk into your physical store. Attractive retail signs and eye-catching windows can entice people to visit your store.

But some people go to your shop because they have a reason to do so.

One of those reasons is being able to pick up the item they had reserved online. 

As of April 2020, 35% of retail merchants fulfill local pickup orders—a figure accelerated by the coronavirus pandemic. Some 64% of consumers are now interested in this type of Buy Online, Pick up In-Store (BOPIS), or curbside pickup service.

So, how do these BOPIS services help retailers? It all comes down to impulse buying.

Product placements are smart because they persuade people to spend more money on products.

Lululemon, for example, found 20% of shoppers who collected an online order in-store made an additional purchase during their visit.

2. Offer Buy In-Store, Ship to Customer Order Fulfillment 

Stockouts can frustrate customers and lead to lost sales.

If you’re having issues with customers buying online and picking up in-store, try solving that issue by fulfilling orders from the store. This solves the issue of having to ship products from a central location.

You can now offer products you don’t have on hand by using a service that will fulfill orders for you.


What does conversion mean in retail? Conversion rate is important for retailers because it directly impacts sales. By increasing conversions, businesses can make more informed decisions about inventory levels, marketing campaigns, and even which products to carry in-store. Not only will this help boost profits, but it’ll also keep customers happy by making sure they can always find what they’re looking for.

If you’re looking to improve your store’s conversion rate, there are a lot of things you can do! From improving your shop layout to offering more checkout options, there are plenty of ways to increase conversions in your store.