Retail Accounting

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Retail Accounting 101: Retail Sales Metrics

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KPIs (Key Performance Indicators) are a type of performance measure.They help you to evaluateKey Performance Indicator Chart how well your retail company is doing within a particular activity. You need to have a good understanding of what’s important to your retail company in order to choose the right set of KPIs. However there are some key KPIs that may be useful in your retail organisation:

 
Sales per Unit Area
Sales per unit area is a standard measure of success within retail stores. It’s often expressed in square feet but increasingly it is now being defined in square meters. It can measure your retail stores efficiency in generating revenue with the amount of space available to your retail store.  The higher the sales per unit area the better your retail store is doing at positioning products and marketing. Apple for example has twice the sales per square foot of any other US retailer.  It also allows you to benchmark your retail store against your competitors. Such information can often be obtained from trade unions, annual reports or Companies House.  Remember, factors such as location, layout and amount of inventory can have an effect on your retail stores results.
How to work out sales per unit area:

It’s a simple equation which is often expressed as follows:

£ Sales per period  e.g. £200,000 = £100 per sq ft
Sales floor area           2000 sq ft

It’s a very useful comparison tool, particularly if you have a number of different stores of varying size as it allows you to compare performance.

Sales per Customer/Transactions
You can work out the actual sales for a certain period such (month or year) and divide it by the number of customers/transactions.

For example:

Total sales               = Sales per transaction
No. of transactions

Sales per employee
This is helpful in comparing labour productivity between different retail stores.  It can also help in determining the number of sales your retail store will need to make if you take on new staff. When working out sales per employee you will need to account for anyone who is working part-time. So convert their hours to the equivalent full-time hours.

You can calculate the sales per employee as follows:

Net Sales         =   Sales per employee
No. of employees

Sales/Hour
Sales per hour tells you the speed at with each individual salesperson is selling a product to a customer within your retail store. It’s a great comparison tool to see how well each salesperson is performing in comparison to everyone else.

It’s easy to calculate:

Actual sales         = Sales per hour
Employee hours

 

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Author: retailaccounting

CounterBooks is an online retail accounting management suite which is used by retailers across the world.

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