1. Money

Measuring Retail Performance and Productivity

Tracking Retail Sales

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Your shop has customers steadily coming through the doors, employees are busy and there is the frequent 'cha-ching' of the cash register, but how well is your business really doing?

One simple way to know if business is good, is to compare this year's same-store sales data to last year's revenue. What if your store has been open less than a year?

It is critical for the success of your business to constantly work towards improving not only the efficiency of employees, but the productivity of the store's selling space and inventory as well. This can be achieved by using various retail math formulas and calculations based on sales.

Performance of Selling Space

Sales per Square Foot

The sales per square foot data is most commonly used for planning inventory purchases. It can also roughly calculate return on investment and it is used to determine rent on a retail location. When measuring sales per square foot, keep in mind that selling space does not include the stock room or any area where products are not displayed.

Total Net Sales ÷ Square Feet of Selling Space = Sales per Square Foot of Selling Space

Sales per Linear Foot of Shelf Space

A retail store with wall units and other shelf space may want to use sales per linear foot of shelf space to determine a product or product category's allotment of space.

Total Net Sales ÷ Linear Feet of Shelving = Sales per Linear Foot

Sales by Department or Product Category

Retailers selling various categories of products will find the sales by department tool useful in comparing product categories within a store. For example, a woman's clothing store can see how the sales of the lingerie department compared with the rest of the store's sales.

Category's Total Net Sales ÷ Store's Total Net Sales = Category's % of Total Store Sales

Measuring Productivity of Staff

Sales per Transaction

Also known as sales per customer, the sales per transaction number tells a retailer what is the average transaction in dollars. A store dependant on its sales clerks to make a sale will use this formula in measuring the productivity of staff.

Gross Sales ÷ Number of Transactions = Sales per Transaction

Sales per Employee

When factoring sales per employee, retailers need to take into consideration whether the store has full time or part time workers. Convert the hours worked by part-time employees during the period to an equivalent number of full-time workers. This form of measuring productivity is an excellent tool in determining the amount of sales a business needs to bring in when increasing staffing levels.

Net Sales ÷ Number of Employees = Sales per Employee

These are just a few of the ways to measure a retail store's performance. As retailers track these numbers month after month and year after year, it becomes easier to understand where the sales are generated, by which employees and how the store's merchandising can maximize sales growth.

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