The writing is on the wall. The question is whether you want to read it or not. Business is down, and it may be time to figure out why. Sure, the economy is to blame but are there other factors beyond the economy that are causing your retail business to be trending downward compared to last year.
Start by looking at your monthly retail metrics for some clues as to why your business may be down, then start working toward fixing them. First figure out your retail metrics:
Number of transactions
Average transaction (divide sales by the number of transactions) – tells you how much people spend each time they shop
Number of units sold – tells you how many items you’re selling
Units per transaction (UPT – divide number of units sold by the number of transactions) – tells you how many items are being sold in each transaction
Average unit sale (AUS – divide sales by the number of units sold) – tells you how much people are spending on each item
If you’d like a template with all the calculations so you just have to enter the data, just shoot me an email.
Now that you have the raw data input, it’s time to graph it and look at the trends.
Sales may be going down, but the question is why?
Number of transactions is going down
Issue: Either less people are coming into the store or converting those browsers into buyers isn’t happening
Fix: marketing is needed to drive more traffic, or sales associates need to be trained on engaging customers
Average transaction is going down
Issue: People are buying less expensive items or store staff isn’t selling
Solution: Customer engagement and relationship building will help “sell” customer
Number of units sold, units per transaction, average unit sale are down
Issue: Customers aren’t finding the merchandise they’re looking for, store staff isn’t selling
Solution: Figure out if inventory levels have changed, or merchandise mix has changed to the point where your old customers aren’t shopping at your store anymore
The only way to try to get a handle on your business and why it may be down is to analyze it. If you analyze, then you can address the issues and begin to solve them.
How are you using retail metrics to analyze and fix your business?
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