Many of the metrics that retailers track today are the same ones that they have been tracking for years. They are looking at the number of people who walk through the door, the size of the average sale, and overall profits and losses.
Those metrics have endured so long because they are still informative and instructive. What has changed is that retailers are now able to monitor and track data from lots of touchpoints and analyze it in detail to uncover valuable insights. This means aspects of performance that were previously invisible are now clearly expressed through real-time metrics.
As brick-and-mortar stores adapt to an omnichannel future, they must update their understanding of success. Focusing on new retail metrics will give these stores a much deeper understanding of their true strengths and weaknesses, so it is well worth taking the time to work these metrics into their strategic reports.
Sales Per Square Foot
[Total Sales Per Store / Size of Selling Area in Square Feet]
This metric reveals how well a retailer is making use of the store’s space and signage by calculating the average amount of revenue earned per square foot of a retail space. Maximizing the number involves more than simply packing in the largest number of products. Tracking how this metric changes as stores implement digital signage or interactive displays allows them to create effective sales spaces and calibrate their product mix. As such, calculating sales per square foot really offering valuable feedback on your store’s visual merchandising strategy.
Total Shopper Value
[Total Sales / Total Shopper Traffic]
This number basically reveals the monetary value of every customer who walks through your doors, which is informative for several reasons. First, it helps stores forecast how much they could raise revenue by increasing store traffic or conversion rates. Second, it helps stores compare the value of in-store consumers vs. consumers on other channels and then adjust their marketing spend accordingly.
Size of Average Shopping Cart
[Total Number of Products Purchased / Total Number of Transactions]
Looking at the number of items included in the average sale reveals how successfully a store is upselling. Going a step further and looking at the specific kinds of supplemental items that get upsold most often also helps improve inventory and marketing messaging. Ideally, stores will have a POS in place that automatically records and segments data from every transaction so that these trends can be easily monitored.
Year Over Year Percentage Change in Shopper Traffic By Time Period
[((Traffic for Time Period This Year / Traffic for Time Period Last Year) -1) x 100]
This metric looks past changes in sales to explore how many more or less people are actually coming through your door. If the number is falling yet sales are the same or stronger, it suggests that consumers are shopping for different products or through different channels. If the opposite is true, it suggests that your store is not adequately capitalizing on foot traffic. Shoppers do still enjoy shopping in-store, so if your store is experiencing a steady flow of consumers through your doors, it’s important that these opportunities are not wasted.
Total Lifetime Value of a Customer
[(Average Purchase Value x Average Number of Visits Per Customer) x Gross Margin]
As retailers invest more in new channels, they must remain focused on the cost of customer acquisition. Knowing how much lifetime value (LTV) each customer is likely to deliver determines how much the store should spend to acquire that customer. This metric also informs how much the retailer spends on retention and engagement in the form of loyalty programs or targeted offers. Retailers need to balance a profitable acquisition cost with a growing LTV to optimize their potential revenue.
When retailers have a platform that collects more data from more sources, they gain new perspectives on their operation. If that platform also makes it easy to organize and analyze this data, retailers are empowered to track almost any metric for any reason. Accessibility leads directly to transparency and certainty, which is an asset in every store. If your POS isn’t providing you with a range of insights about your store, your customers, and your products, then it might be time to look for an alternative.
iQmetrix turns retail data into actionable insights. Contact us to explore our innovative suite of data-drive solutions.
Photo Credits: Shutterstock / Dean Drobot, Shutterstock / Tooykrub, Shutterstock / Hadrian