# Retail Metrics: 6 KPIs for Tracking Your Retail Business

Discover the essential retail metrics and KPIs for tracking your retail business. We show you how to calculate sales per square foot, retail conversion rate and more.
by Square Aug 08, 2017 — 3 min read

If you work in retail, you likely have a never-ending to-do list. Which means you’re always looking for ways to be more productive.

One of the best ways to do that is to make sure you have the most up-to-date information and insights into your business. Having the right sales, inventory, and employee data can help you identify the best use of your time and resources. It allows you to maximize your efficiency.

Of course, there are a lot of metrics you can use. But you don’t need to track everything, just a handful of key data points that help you judge efficiency and growth.

We recently partnered with Vend to write “Maximizing Retail Productivity”, a guide dedicated to helping retailers be more efficient. Here are six metrics from that guide that we recommend for you to get started:

## 1. Sales per square foot

Sales per square foot is your store’s average revenue for every foot of sales space, including non-selling space such as your stock room, fitting room, and receiving areas.

To calculate it, divide your sales by the store’s total square feet of sales space.

Your sales per square foot tells you how efficient you are with the use of sales space, and it helps you make smarter merchandising, inventory, and sales decisions.

## 2. Conversion rate

The conversion rate is the proportion of store visits to the number of customers who make a purchase.

To calculate it, divide the number of sales transactions by gross traffic.

Knowing your conversion rate helps you fine-tune your sales, marketing, and even staff-training strategies. For example, if you want to know if you should keep running a promotion, compare its conversion rate with a non-promotional period to gauge its effectiveness.

## 3. Sell-through rate

This is the percentage of units sold versus the number of units that were available to be sold.

To calculate this metric, use this formula: (number of units sold / beginning inventory) x 100.

You can use sell-through to evaluate a product’s performance and determine if you should continue to stock it (or whether you should only carry it in certain seasons).

## 4. Gross margin return on investment (GMROI)

GMROI measures your profit return on the funds invested in stock. Basically, for every dollar you spend on inventory, how many dollars do you get back?

The formula for figuring out your GMROI: gross margin / average inventory cost.

Like sell-through, GMROI is a good indicator of product performance, and it can help you make decisions about product marketing, ordering, and sales.

## 5. Stock turn/inventory turnover

Also known as inventory turnover, stock turn is the number of times stock is sold through or used in a given time period. In most cases, the higher the stock turn, the better it is for your store. It means you’re selling a lot of merchandise without stocking too much inventory.

The stock turn formula: cost of goods sold / average inventory.

Having data on inventory turnover helps you evaluate your product and sales strategies so you can make better decisions when it comes to things like which products to stock and how to showcase them in the store.

## 6. Sales per category/employee/department

If possible, drill down on your sales per category, employee, and department. Doing this gives you a more specific view of what’s generating sales and what isn’t.

Having insights into your top categories or departments might help you make decisions about purchasing and marketing. On the other hand, knowing who your top-performing associates are can help you better assign shifts or improve training.

Knowing these formulas comes in handy, but to save more time, think about how you can automate gathering and analyzing this information.

A good point of sale comes with reporting and analytics, so you can quickly get the data you need, whenever you need it — without manual calculations. So before you run off to crunch the numbers, take a closer look at your POS system to see if it can help you get the data you need.

Learn more about how to use data and automation to make your retail store more productive with Vend and Square’s “Maximizing Retail Productivity: A practical guide to running a more efficient shop.” It’s full of easy-to-replicate tactics, merchant stories, and even a handy checklist. Download the e-book now.

The Bottom Line is brought to you by a global team of collaborators who believe that anyone should be able to participate and thrive in the economy.

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