Published July 29th, 2016 by

Retail Math for SMB Retail

retailcloud KPI for SMB

Retail math for SMB retail should not be complicated

Most SMB retail owners are primarily focused on store operations in terms of are customers being  helped is inventory in stock are the displays presentable, and dont have the luxury of analyzing all the analytics and retail KPI metrics available to them.  Here are 4 metrics to monitor on a monthly basis for the operator who just doesn’t have enough time. This data should be available on your POS solution

Inventory to Sales ratio

This is a simple calculation and if you see it rising that means either that you are buying too much or your sales are decreasing, it suggests potential strain on your cash flow. A decrease in this ration would mean that either your sales are increasing, or could mean more critically that your inventory levels are low and that you have missed sales opportunities.

Units per Transaction 

How many units are being sold in each transaction, do you have sufficient complementary product to drive additional purchases. Is this number trending upwards or downwards,  do certain associates positively or negatively impact this number?

Margin minus labor

What is your margin after considering labor costs, does it vary dramatically by day or by hour. Do our hours need adjusting, can you create experiences to drive traffic to those off peak times. I have a customer who was successfully able to reduce his staff and drive high margin and units per transaction traffic to what had previously been high loss time slot for him (more about that on another post)

Product Returns

These are a huge drain on resources, as well as creating a negative experience for your customer. Are there certain brands or sales associates that cause the most returns? Run reports on your POS system to see the impact of returns at a customer level.

Together with managing your margin numbers at a category and supplier level, which I know every retailer does these 4 overlooked metrics will provide you a return on your cash flow and operational efficiency that far outstrips the effort you have to put in.   Ideally you would want much of this data to be served up on a mobile application from your POS provider like  nGuage

Jordan @ retailcloud
Jordan @ retailcloud

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