One of the first steps towards increasing retail efficiency is identifying the KPI for your business. For many retailers, the success of performance is measured by tracking key KPIs such as sales per square foot. Understanding how to apply retail math formulas can help you monitor when the operations are running most efficiently and when they have gone off track. Using the space available effectively can help generate more value from your existing limitations.
Below are nine ways you can get started on improving your retail business efficiency.
- Measure Performance with Retail Formulas
Aside from sales per square foot, you can also consider sales per linear foot of shelf space when you have a large number of wall units. Categorizing sales by department and measuring inventory turnover can provide insight about which items are overstocked or understocked. For better accuracy than inventory turnover, consider measuring the gross margin return on investment. Calculating the sales per customer and sales per employee helps retailers make hiring decisions and determine the average total of each transaction.
- Develop a Merchandising Plan
Developing a merchandising plan first helps retailers ensure that their space works effectively. Analyzing sales data can help retailers determine if departments should exist, where to position them and how to organize the space. By going over the data, retailers may learn whether they are dedicating enough retail space to the largest profit generators or not. Having a detailed plan together beforehand can help retailers avoid accumulating too much inventory or overlooking opportunities to improve profits.
- Increase Sales Per Square Foot
Sales per square foot is defined as the average revenue for each foot of sales space available. Dividing total sales by the square feet of selling space available is a quick way of determining sales per square foot. Use data to identify and display items that are actually selling and avoid products not performing as well. Pricing should be optimized based on a strategy designed to improving your sales. Focusing on high-ticket items or subscription-based models are also effective ways to improve sales per square footage. Another critical factor for maximizing sales per square foot is improving the layout of the store.
- Simplify and Improve the Store Layout
The layout of the store should be designed around making it easier for customers to navigate. Clearly designated departments, strategic displays and an organized space is far more effective than a random assortment of products all over. Use signs that clearly label where to find items, and add appealing merchandise by windows to help attract potential customers walking by. Tidy up any areas that seem cluttered because this type of disarray typically drives away customers. Try to eliminate items that don’t directly impact sales, while paying close attention to traffic flow throughout the location.
- Lead with Prominent Brands
After determining which departments customers prefer, begin developing strategies around products that can serve as anchor tenants and increase profitability for the entire department. Anchoring departments with leading brands can help improve the perception of credibility associated with your business. Brand retailers’ credibility helps to improve margins for the other products that do not have an established brand. Small retailers may be able to double department revenues by finding the right brand to use as an anchor tenant.
- Embrace New Tech: Software and Hardware
Upgrading your IT infrastructure to modern retail softwares helps employees start their computers twice as fast, load Google Chrome seven times faster and load Microsoft applications up to nine times faster. Leveraging the customer data available through the Internet of Things and Big Data applications can help retailers create new sales opportunities from within their current construct. In addition, arming employees with mobile POS devices creates quicker checkouts, better customer service and more opportunities for upselling and cross selling. Embracing new tech innovations keep you at the forefront of finding new ways to improve retail efficiency on-site and online.
- Take the transaction to the customer
Nothing makes shoppers abandon purchases faster than long, slow checkout lines. Implementing a mobile point-of-sale (POS) system—where tablet-toting sales associates bring the point of purchase to the customer—is one of the easiest ways to speed up the checkout process. But the strategy has benefits beyond line busting. Armed with a mobile POS device, staff can check item pricing and inventory for a shopper without leaving the sales floor. The ability to check out customers in the aisles also gives retail staff more opportunity to make product recommendations, employ up-sell strategies, and generally provide more personalized customer service.
- Embrace analytics
Who are your customers? How often do they come in? What products are they most interested in? You can answer these and other questions by using a retail analytics solution. These programs analyze data collected from video camera feeds, Wi-Fi, POS systems and other components of your store’s infrastructure and organize and present it in easily digestible reports and graphs. With the insights you gain, you can improve everything from your marketing to your staffing strategies to provide a more satisfying customer experience.
Whether you are targeting new tech to ramp up retail sales, new strategies to support business trends, or new equipment to streamline the office, success in business today is all about innovative solutions.
- Invest in your staff
The importance of retail staff training and motivation cannot be overemphasised, for good reason: store employees can directly impact sales and customer satisfaction. Without great employees, your store performance will likely suffer.
In the context of increasing sales per square foot, some of the things you could do with your staff include:
- Providing them with a strong background in your company and products
- Educating them on sales tactics such as customer profiling, upselling, cross selling, suggestive selling, closing techniques and tactics etc.
- Training them to get over their fear of selling
- Role-playing with them to demonstrate different sales scenarios
- Encouraging positive reinforcement and peer-to-peer recognition