Feb 1, 2023

The Top 7 KPIs Every Retailer Must Track

If you're confused about the state of your business, one of the first things you should do is examine your retail analytics and key performance indicators (KPIs).

A KPI or Key Performance Indicator is a statistic used to measure the success or health of a business. Companies often use it to measure the performance of their marketing strategy and product or service offering. It can help improve, test and analyze if a strategy is successful depending on how the business performance is impacted by that specific strategy.

In order to effectively measure a KPI's effectiveness, it is important for a company to have established, well-defined key performance indicators.

KPIs vary based on the sector and the business's growth phase. They also depend heavily on the business's aims and objectives. KPIs assist the team and their supervisors in determining if the strategic goals are being achieved in the appropriate way. Therefore, KPIs must be well-defined, measured, and shared throughout the organization so that they may serve as an analytical basis for making important choices.

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Here are the main retail metrics that retailers may follow to evaluate their store's success and choose their future steps. The leading retail KPIs consist of the following:

Gross and Net Revenue

Profits are the most prevalent metric used by businesses. Moreover, retailers must determine if their firm is profitable, and gross and net earnings assist them to do so. Gross profit is derived by subtracting the cost of items sold from sales revenues, whereas net profit is obtained by subtracting all expenditures from revenues. If gross profit is on the low side, they must work on reducing the cost of products or seek out new suppliers.

If net earnings are smaller, operations should be streamlined to reduce operational expenditures. Moreover, both of these retail KPIs assist retailers to do efficient resource planning and facilitate the introduction of cost-cutting techniques and fresh company concepts.

Foot Traffic

This Retail KPI estimates the number of individuals who enter a retail store. The primary objective of every retail establishment is to attract as many customers as possible.

As store foot traffic increases, the likelihood of making a sale increases as well. Moreover, foot traffic measurements may help retailers measure the efficacy of their marketing activities and provide insights into customer behavior and their responses to alterations in retailers' methods.

Conversion Rate

Conversion rate is one of the most prevalent and significant retail KPIs that many sectors use to determine if a potential customer becomes a customer. Many individuals frequent retail businesses. However, if these visits do not result in actual sales, they do not add to the profitability of the firm.

Therefore, businesses must employ conversion rates to determine how many of these visits become genuine customers. The conversion rate is calculated by dividing the number of sales by the number of shop visitors.

The conversion rate helps merchants to assess the efficacy of new marketing initiatives and the impact of changes to operational procedures on sales. If the conversion rate is low, merchants may consider modifying the store's layout, enhancing their marketing efforts, expanding the variety of products and commodities on the shelves, hiring personnel who are more personable and persuasive or altering the inventory movement.

Sales Per Employee

Sales per employee is one of the retail KPIs that retailers may use to measure employee performance. It also assists merchants in understanding and comparing the investment made by each person and the income earned by each employee.

Sales per employee may be calculated by dividing net revenue by the total number of employees. This statistic is also important for scheduling staff shifts, work distribution, training requirements, remuneration amount, promotions and incentives, and any hiring requirements.

Retailers can implement a POS system with employee-specific sales tracking. It assists merchants to determine the sales goals for each employee, identify the top-performing staff, and determine training requirements.

Customer Retention

It is crucial for shops to recruit new consumers. However, repeat customers allow you to determine whether the investment in recruiting new consumers is a one-time return or whether it results in future purchases from the client. The customer retention statistic counts the proportion of consumers who return for future purchases.

In addition, it provides information on product quality, customer service, and price. Customer retention helps gauge a customer's loyalty. Consequently, the inverse of the retention rate is the churn rate, which quantifies the percentage of consumers lost by a shop.

Inventory Turnover

The greatest worry of a retailer is maintaining an inventory that is “just right” at all times, which is challenging yet achievable. Retailers utilize inventory turnover as a crucial statistic to determine the ideal volume of inventory.

Inventory turnover is determined by dividing the cost of products sold by the average inventory level. It also quantifies the frequency within a given calendar period. If the figure is too high, it indicates that the shop cannot stock enough products for sale. Therefore, clients frequently confront "out-of-stock" situations. If the figure is too low, it indicates that retailers cannot accurately measure demand. Therefore, keep a large quantity of dead stock and reorder the items.

Average Transaction Value

The average transaction value is determined by dividing the total transaction value by the number of transactions. This retail indicator also helps to appreciate the average amount consumers spend on things. It is one of the key retail KPIs used to define price policies and product strategies, as well as to comprehend the retail store's connection with customers.

If the value of this measure is high, it suggests that the client is purchasing more or more costly things, whilst a low value shows that the consumer is purchasing fewer or less expensive products.

In addition, merchants are able to assess consumers' purchase patterns and improve their marketing tactics and promotional campaigns.


In conclusion, these KPIs are vital for any retailer and form the backbone of many companies’ business intelligence strategy. In fact, sales personnel should base their work on them, while the marketing team has to rely on it to come up with creative and effective marketing campaigns.

At Uncut Lab, we develop Customer Apps that allow retail businesses to keep a track of their KPIs. Our Apps are tailor-made for your business and allow you to monitor your business 24/7. Book a discovery call today to find out how we can improve the bottom-line of your business.

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