According to the U.S. Bureau of Labor Statistics (BLS), 20% of businesses fail in the first year, 45% in the first 5 years, 65% in the first 10, and 75% in the first 15. Clearly, opening a retail store is a challenging feat. And growing the business is even more difficult.
But how do you improve store performance? What are the most important metrics to assess the health of your business? What are the key tools for evaluating your retail performance? This guide will walk you through some tips about improving retail performance and key metrics you should track to get the most out of your business.
Some Tips To Improve Your Retail Performance
1. Hire, And Train Employees Who Can Provide Great Customer Experiences
Happier customers mean more loyalty to your store. And more loyalty will lead to better sales. However, this is only possible if your retail sales associates provide an exceptional customer experience. Providing your customers with a great customer experience means hiring sales associates who are passionate and knowledgeable about the products you sell. This requires a significant commitment to the interview and hiring process.
Train these associates to create exceptional shopping experiences with every customer. Most retailers train their team on the most obvious tasks: closing the register, stocking shelves, and cleaning the floor. But training should go a little further than that. Sales associates must also be trained to identify a customer’s needs and wants, match those needs to a selection of products and show them the value of their options. Communication and sales techniques will allow them to leverage upsell and cross-sell, for example.
2. Use Product Returns to Your Advantage And Offer Free Shipping
Another way to improve your retail store’s performance is to implement lenient return policies. These policies encourage consumers to take a chance on products they would otherwise hesitate to purchase. Free shipping leads to more orders. And while shipping costs reduce the frequency of orders, they are likely to result in fewer returns and a higher profit margin, as customers are not only likely to keep their goods but also to cover the shipping costs themselves.
A clear and concise return policy gives consumers a sense of security that what they are buying is guaranteed to be what it is supposed to be. If a retailer does not provide this guarantee, consumers become suspicious and avoid purchasing the product.
3. Implement Loyalty Programs
Retaining an existing customer costs up to five times less than gaining a new one. A good customer retention program can generate significant gains in recurring revenue for your company by improving the return on your marketing and sales budget. And for the best development of a customer loyalty program, it is important to study the profile of your current customers. Prepare your customer loyalty program, set goals, and measure them with a CRM. Choose tactics that will encourage customer loyalty. Check out the resources below:
4. Streamline Your Inventory Management
Inventory management is one of the crucial elements that can directly impact your company’s bottom line. Excess inventory can lead to product spoilage and poor quality. If you have high levels of excess inventory, chances are you have a low inventory turnover rate, which means you need to rotate all of your inventory regularly. This will contribute to a loss of revenue for your business.
Likewise, when you run out of stock, you increase the risk of lost sales, as customers are more likely to look elsewhere for needed items. Streamlining your inventory is only possible with the right inventory management software. Good inventory software enables automatic ordering, shipment tracking, consolidated inventory, stock notifications, labeling and pricing, automatic minimum and maximum levels of your inventory, etc.
5. Make The Checkout Process Smooth
Checkout optimization can significantly improve retail store performance. For customers, the checkout is the moment of truth: they’ve already spent time browsing your store, choosing products, selecting sizes, and more, and now they want to finalize their purchase. Making the checkout process more efficient requires multiple payment options using fast POS software. If you have an eCommerce store, you can improve online checkout by allowing guest payments, using Google auto address, and reducing form fields. Online retailers who optimize their checkout process see fewer abandoned baskets, knowing that 17% of shoppers do not complete their purchase when the checkout process is too complicated.
6. Run a Sales Promotion
A sales promotion is a marketing campaign to increase sales, encourage customer loyalty, or build brand awareness. Some of the most common retail promotions types include flash sales, first-time buyers, subscriptions, BOGO, bundles, etc. The appropriate promotion depends on your goals, products, and customers. A generous percentage off may be a good solution if you want to attract traffic.
7. Eliminate queuing as much as possible
Long queue times drive away customers and kill sales. To improve retail sales performance, brick-and-mortar stores must get rid of long lines. First, keep your store well-staffed, especially during busy times. Review your store’s data to determine your peak hours, then make sure you have enough employees and cash registers to handle the rush. Always have extra checkouts ready to go.
Use a modern point of sale system that you can easily power up when business gets too busy. Also, you can opt for mobile POS solutions that allow you to untie the checkout process, so you can record sales from anywhere in the store (for example, when people are waiting in line or if someone just needs to get in and out quickly).
Key Performance Indicators to Measure The Efficiency of Your Retail Store
Now that you have empowered your store staff with more advanced technology tools to set up sales promotions and streamlined inventory, how do you measure retail effectiveness? Below are some essential metrics to assess your marketing efforts’ effectiveness and your business’s health:
1. Sales per employee
The sales per employee ratio is calculated by dividing the annual sales by the total number of employees. This data can easily help you get an idea of your business’s financial health and your employees’ productivity. Some companies divide this metric by the different methods customers use to check out – for example, by looking at specific sales figures per employee via the point of sale terminal or card reader.
2. Conversion rate
Whether you are an online or brick-and-mortar store, your retail conversion rate is a key metric to monitor. The conversion rate is the number of customers who purchase after visiting your store. In the eCommerce sector, it is the number of visitors a retailer turns into buyers. The conversion rate is easy to calculate if you know your retail customer traffic. Simply divide the number of retail transactions by the number of visitors to your store and multiply that total by 100.
A low conversion rate may indicate that it’s time to re-evaluate your marketing strategies and tweak them to be more responsive to your customers. Online businesses can easily track their conversion rate using an analytics platform like Google Analytics. Brick-and-mortar stores can measure their conversion rate by monitoring customer visits and purchases. These reports are all simple and convenient to pull straight from their retail POS system.
3. Inventory Turnover
The inventory turnover ratio refers to the number of times your bulk inventory turns over (or sells) in a specific timeframe. This metric is a great way to understand which inventory items are most affected by seasonality and help you determine how fast inventory is moving. After all, inventory that lasts too long will likely lose you money. And if you deplete your inventory too quickly, you may not be taking advantage of market demand as effectively as possible. Tracking this metric regularly allows you to understand your sales strategies’ effects on your store’s long-term profitability.
Tracking metrics such as sales trends, customer feedback, and inventory levels can help you reduce excess inventory and minimize spoilage. KORONA POS inventory management software has several tools to help you streamline your inventory.
If you own a retail store, chances are you generate minimum and maximum levels for your products manually through your POS software. However, you can automatically create these minimum and maximum levels with KORONA POS. In addition, the software’s ABC analysis feature allows you to see which items are selling the fastest or slowest. By understanding which products are selling well, you can order the right amount of stock and avoid overstocking or lowering prices due to a lack of demand.
4. Year-Over-Year Growth
Growth is the ultimate indicator of success. Year-over-year growth indicates how sales and profitability have changed this year compared to previous years. This is essential data for your store’s performance. As a retail business owner, the annual gross profit comparison will be the most useful KPI because it tells you about the financial health of your business but also its overall growth. Once again, your POS will allow you to compare your year-over-year progress.
Improve Retail Performance With KORONA POS
A POS system is a must for improving your company’s bottom line. And for that, KORONA POS is the perfect solution for your needs. KORONA POS offers a wide range of features to keep your business running smoothly. The software features robust inventory management tools unlike anything else you’ll see. Additionally, KORONA POS is capable of integrating with any processor of your choice. KORONA POS brings you a wealth of data you can use to improve your key performance indicators. It can help you measure your store’s performance with vital data, such as sales rate, profits, revenues, time comparisons, and much more. Are you interested in learning more about KORONA POS? Click on the link below for a demonstration with one of our product specialists.