Essential Store Metrics Begin at the Front Door

Ray Hartjen
Ray Hartjen
Guest Contributor

Increasing sales is the common “what” among all retailers, but the “how” can be elusive, particularly if stores don’t accurately calculate the most fundamental shopping metric, shopper traffic.

At the end of every day, there’s a singular, almost-universal ritual throughout the retail industry. It’s the tallying of the day’s sales, and it’s immediately compared to goals, the day prior, the week prior and the year prior.

Experienced managers then quickly begin breaking daily sales down by associate, by hour, by department, etc., and every manager starts plotting and strategizing around retail’s common goal. Yes, despite being such a wonderfully diverse industry what with its mixture of segments and niches, varying targeted customers and the like, retailers of all ilk have a common goal: Increase sales.

Increasing sales, of course, is the “what.” The hard part is the “how,” for if everyone already knew how to increase sales they would have already jumped on those tactics like a duck on a June bug.

You simply can’t effectively manage your retailing business in this uber-competitive era by issuing the rather lame edict of “increase sales.” Sure, it’s a target to shoot for, but to identify the best levers to push and pull upon to operate your business and drive results, it’s essential to calculate “stepping stone” metrics that pinpoint strengths and opportunities for improvement.

Retail’s balanced scorecard

The best store managers deploy a balanced scorecard of key metrics driving total sales, one that includes conversion, average transaction value (ATV), units per transaction (UPT) and sales yield/sales per shopper.

Total sales, ATV and UPT can be quickly determined by a query of your point-of-sale (POS) system. But, those metrics alone aren’t enough to identify opportunities. For a complete look into your store’s performance and opportunities for improvement, you have to fully understand how shoppers shop your store, and that begins, of course, with … shoppers.

Shopper traffic counts are fundamental to operating your retailing business, and if you don’t count shopper traffic, you can’t calculate the single most essential metric of store performance, conversion.

At its simplest, shoppers represent opportunity for service and sales. Generally, the more shoppers you attract and engage with, the more opportunity you have.

Now, a lot of store managers and sales associates cannot impact the level of shopper traffic, but they can impact their ability to serve the traffic they do get, and conversion is the very best way to measure effectiveness. Everything else equal, the higher the conversion rate, the better.

Putting shopper traffic to work for you

An ages-old cliché in brick-and-mortar retail is, “When traffic goes up, conversion goes down.” It’s based on the premise that shoppers substantially outnumber sales associates during peak busy times, and as their needs go underserved, shoppers leave without transacting (converting).

Now, why, in this day and age, is this still “a thing?”

Would you run a promotion without inventory on hand to sell? Of course not. You’d stock to handle anticipated demand.

Why wouldn’t you do the same thing with staffing and staff to anticipated traffic peaks?

With shopper traffic counting, over time and at scale, you can identify your peak traffic hours and staff accordingly, with overlapping shifts, adjustments to breaks and lunch schedules and so much more. Staffing optimization is the lowest hanging fruit of a traffic counting deployment, and retailers often see an immediate 6-8 percent increase in sales within the first 90 days of traffic counting simply by adjusting staffing to shopper traffic.

Staffing optimization isn’t the only benefit from shopper traffic counts. Traffic counts also enable you to calculate conversion, and with that, you can better ascertain what you need to do to reach your sales targets. For example, if your sales are short of your goal, how much of an increase in conversion rate would you need to achieve your sales goal? One point? Two points?

Once you determine the improvement you need, then it’s time to action plan and begin to close the gap. Perhaps your staff needs sales and/or product training to raise conversion. Better signage in and outside the store might alert shoppers to special assortments or promotions. Maybe it’s time to work your “book” and proactively reach out to loyal customers and invite them into the store to view new merchandise, etc.

With the data, you can begin to use your retailing experience and hard-earned judgment to make a difference for your shoppers, your staff and your store. And, it all starts at your front door.

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