‘Retail is about lots of little things you do better every day’: One critical metric to measure success

How do you measure the health of your business? Do you look at profits, the level of staff retention? Is it the number of people who enter your store or ‘like’ the brand on Facebook?

Speaking on a new POS system implemented in jewellery store Pandora, the vice president, sales and business services Brien Winther said it was difficult to point to a specific percentage to demonstrate the impact the system had on increased sales.

“It’s hard to associate sales with something you change because retail is about lots of little things you do better every day. But one of the key measurements we look at is purchasing customers versus sales,” he said.

Purchasing customers versus sales is a critical metric that not many retailers think about, Winther said. In his own words, he explains the rationale behind focusing on this formula for success:

One of the things we measure very carefully is if we’ve got a customer who is purchasing in our stores what is the average sale transaction that we get from that customer?

If your purchasing customers are growing faster than your sales then you’ve got yourself a problem because you are operationally going backwards.

If my customers are up 10 per cent and my sales are up 5 per cent it means I am 5 per cent worse at servicing those customers. Now if my purchasing customers drop to zero as a growth, I’ve got negative sales growth. So we look very carefully at how our purchasing customer’s percentage is going against our sales percentage.

If we have a positive gap it means we are doing better in stores, if we have a negative gap we have an operational issue. (For example a lack of stock, not serving enough people, relying too heavily on discounting or not having enough people on the sales floor.)

What we have seen since we have had mobile [POS devices] in store is our own gap between purchasing customers and sales has got wider. We are seeing an improvement in the operational efficiency in our stores.

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