Trying to improve the performance of your retail business is similar to shooting archery targets in the wind on a stormy day. You’re focused on your objective, but various factors influence your chances of success – and those factors are constantly changing. If you want to improve your chances of success, you must constantly modify your approach while keeping your eyes on business reports and crucial data.
No matter if you are using a retail software system, an online POS billing software, or an inventory management system available, you may be tempted to get caught up in complex sales data. Retail metrics are critical for determining the health of your company’s operations. If you don’t understand the statistics, you’re losing out on the majority of the narrative.
Growing a retail company necessitates expansion, whether in additional physical shop locations or attracting more consumers. But there are many more methods to increase earnings, but most retailers frequently ignore them. And if you are not using online accounting software to manage your business finance, you are well behind in the race. As you must maintain statistics such as total sales, cost of the products sold, and overhead expenses, you may take control of the other aspects of your company by using the tabs provided by the following retail metrics that will eventually influence your profit margins.
In this case, the topic of debate is: If you own and run retail in today’s global world, you should have online POS billing software instead of a human accounting system to compete. And you should keep a watch on the ten metrics listed below to assist you.
To begin with here is an intelligent stat for online POS billing software
Based on data from Statista, the revenue of point of sale software was USD 12.23 billion in 2018. It is also projected to reach 17.66 billion $ by 2022, with the aim of 42.5 billion $ by that time. Revenue management, stock monitoring, inventory management, and other functions are included in the smart retail solutions for your business.
If you have all of the information at your disposal, it will be much easier to make informed decisions about online accounting software and POS software for businesses.
Ten retail metrics you absolutely need to track for your store
What metrics should you pay attention to? That is dependent on the situation. Due to the unique nature of each retail company, specific metrics may be more important to you than others.
We’ve collected a list of the essential retail metrics to monitor in your company and the formulas, techniques for calculating them.
1. Average purchase value (Average Sale)
Even a company with rudimentary technology may readily determine business reports like average sales, but this is something that most companies do not do. It is computed by dividing the total value of sales by the entire volume of payments made during the period under consideration. Keep in mind that a single consumer may start several transactions; AOV is used to calculate sales per order rather than sales per individual customer.
The following is the formula for calculating the average sales order value: The overall sales value divided by the total number of transactions. As a measure of the productivity of the sales system, this is by far the most potent and effective metric available.
If you do a little market research, you will know that an online POS billing software can generate business financial reports.
You attract more customers to your retail shop, and they make more purchases consistently, but your order average is declining? Consider the possibility of a valuable client driving away. More customers equals more trouble, which means you’ll need more sales staff, which means your shop may get congested.
On the other hand, if the average selling order value is not increasing, it may be considered to be just about acceptable. Selling more costly items or purchasing more inventory simultaneously is not always feasible in retail companies.
2. Customer traffic
Out of all the business reports, it is straightforward to track the number of clients you have for any retail firm. Even a young kid understands that a business that is crowded with clients must be doing something well. You wouldn’t usually go to a completely vacant restaurant, would you?
In your retail company, customers are the only source of revenue. According to Karl Marx’s theory, land and capital gain actual value due to human labor. In retail, the more prospective consumers you can attract to your store, the more money they are likely to leave behind in your bank account.
If you’re in the e-commerce business, tracking client numbers is very simple using online accounting software. It does, however, take some practice to understand how to interpret the analytics. Most likely, you’ll be utilizing wise business reports, but don’t forget that your e-commerce backend has at the very least some information on visitors to your site.
Keep an eye on the number of visits and the number of customers when you have a brick-and-mortar business. The latter may be determined from the history of your point of sale transactions from an online POS billing software. If your consumers can identify themselves at the counter because of loyalty programs, it will be much simpler to determine whether or not your retail traffic is increasing.
3. Retail conversion rate
To be sure, we’ve already had to differentiate between store visitors and store customers. Some visitors do not make any purchases. The phrase “customer conversion ratio” is often used in the field of e-commerce. Such business reports reveal how many visits a shop converts into paying customers. If you already know how much retail customer traffic there is, calculating it is straightforward.
Multiply the number of retail transactions by the number of individuals that came into your business to get the total number of transactions. If you want a percentage, multiply the result by 100. Conversion from wholesale to retail
The customer conversion ratio is the number of transactions divided by the total amount of customer traffic multiplied by 100.
The effectiveness of your retail business is highly dependent on the kind of retail industry you are in. Your customer transaction effectivity is likely to be between 18 and 25 percent if you own a brick-and-mortar retail shop and sell clothes and apparel. This implies that one out of every five consumers makes a purchase.
If you’re fortunate, one out of every four will be successful. It’s impossible to be 100 percent accurate. You can make such data available from online POS billing software.
4. Sales per square foot
When you calculate the sales per square foot report out of several business reports, you can see how much money your company generates for every square foot of sales space available. This may assist you in determining the effectiveness of new sales locations and provide you with suggestions for enhancing your product displays. A retailer’s sales per square foot are determined by dividing total sales by the total square feet of sales space available in the retail facility using online accounting software.
This figure may vary greatly depending on the industry in which you work. Due to the high cost of its goods, a jewelry shop, for example, will have much greater sales per square foot than a big department store, but it will also have a lower average conversion rate.
5. Inventory control and management
There is a monetary value associated with the inventory that stays unsold on the shelves. It may be worth considering replacing certain SKUs that are pretty expensive but have been sitting on your sales floor for a few weeks or months with items that generate more significant revenue.
Before the Great Recession, small business owners were seldom driven to enhance the efficiency of their operations. Sales numbers at the time more than made up for any inefficiencies in the operations department. Small companies received a wake-up call as a result of the economic crisis.
They realize that they can no longer concentrate only on their goods and consumers; they must also pay attention to the “geekier” aspects of business, such as data analytics and analyzing business reports.
Aside from the expenses of purchasing and maintaining an online POS software, the costs of software subscriptions may be a significant strain on your financial resources. If you want to avoid using numerous programs for inventory management, in-store analytics, customer data management, etc., consider adopting an integrated online accounting software or online POS billing software (such as ours).
6. Sales per employee
Your sales per employee ratio are calculated by dividing your yearly sales by the total number of workers in your company. This readily available information may assist you in gaining an understanding of the financial health and staff productivity of your company using an online POS billing software. Such business reports serve as an indicator of how costly it is to run your company’s operations.
For example, it is common for certain companies to split this statistic into categories based on how many consumers check out — for example, looking at particular sales figures per employee through your virtual terminal or card reader.
7. Gross margin return on investment
The gross margin return on investment, also known as the gross margin return on investment, or GMROI, of your company, is determined by dividing your gross margin by your average inventory cost.
In other words, it is a profitability assessment ratio that will provide you with insight into your company’s capacity to convert inventory into cash after deducting the cost of the inventory.
Your gross margin return on investment (GMROI) may assist you in increasing both your gross and net profits by enabling you to identify the products in your inventory that provide you with the greatest return on your operating costs.
8. Year-over-year growth
When you started your company, you envisioned expanding and being even more successful than it already was. Has that concept come to fulfillment?
Do you see yourself in a better financial and commercial position compared to past years’ business reports?
Measurement of year-over-year increases may give you the information you need using an online POS billing software. Briefly stated, you will be comparing your current year’s outcomes to the identical variables used in the prior year.
If your company has seen consistent (or fast) growth, it is evident that you are doing several things well. If, on the other hand, your company’s growth has recently slowed, some retooling is most likely required.
9. Break-even point
When retail analytics and intelligent business reports, the break event point is when retail sales exceed retail expenditures. Because it represents how a company begins to profit, the break-even point is an essential retail statistic for companies of all sizes.
In your retail company, this is the moment at which sales equal the number of expenditures. Break-Even is equal to the product of fixed costs divided by gross margin percentage.
10. Gross and net profit
After subtracting the expenses of producing and selling the goods, your gross profit shows you how much money you earned. Use the following formula to calculate it:
you how much money you earned. Use the following formula to calculate it:
Income From Sales Minus Cost Of Goods Sold
Your net profit is the amount you earned after subtracting your cost of products and all other company expenditures, such as administrative charges and operational expenses. To find it, use the following equation:
All Receipts – All Outgoings
Use online accounting software to manage the business finance and processes. Also, to generate such business reports.
There are many more indications and business reports that a retail company owner or management should keep an eye on.
Our online POS software simplifies financial reporting by allowing your company to get paid in the manner in which your customers choose to make their payments. A simple platform will allow for the easy tracking of every sale, monitoring of payments, and inventory management.
Furthermore, if you would like to test Moon Invoice’s online accounting software, don’t hesitate to contact us at email@example.com or +1-805-491-9393.