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Key Retail KPIs and Metrics

Apr 05, 2020 3 min read

Retail KPIs offer a whole lot of benefits to retail businesses. One of these includes helping you to determine the metrics to assess your business, thus setting your footsteps in the right and accurate direction.

KPI Retail Metrics

It serves as a useful tool for making proactive decisions that’ll benefit your business. If you can carefully monitor your KPI metrics regularly, you’ll be able to get some insight into the essential aspects of your business.

What are KPIs in Retail?

Key Performance Indicators, also referred to as KPIs are the metrics that are most important to your business. These are numbers that are crucial for you to monitor to ensure the growth of your retail business.

What are the metrics to examine? How do you analyze these metrics? Of course, retail businesses differ from one to another. There is a need for specific measures, and one may be more significant than another.

In any event whatsoever, the metrics we’ve provided here are the ones that will generally fit in for any organization. Furthermore, we have also provided the calculation formulas for your utmost convenience. With that, you’ll be able to kickstart the implementation of these KPI metrics into your business. 

Sales Per Square Foot

Firstly, one of the things retailers should track in their business is the sales per square foot. This simply refers to the average revenue of every square foot of sales space.

This is one of the vital Key Performance Indicators you need to track as it significantly helps in understanding the efficiency of your sales space.

Sales Per Square Foot specifically helps to understand the most profitable area of your store. Apart from that, it also provides you with the opportunity to align your efforts in sales and marketing based on the revenue by location.

Whenever you feel there is a need to determine your store layout, you need to analyze the metrics while also optimizing the method of arranging your products.

Calculation: Total sales/total square feet of sales space = sales per square foot.

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Average Purchase Value

As a retailer, one of the things you need to verify is the average amount each customer spends in your store. If you want to do this, the best approach is to analyze your average purchase value and then determine the average dollar amount per transaction.

This can be calculated in a specific period, perhaps yearly, quarterly, monthly, or daily.

The average purchase value is a vital KPI as it helps you to optimize your sales and pricing strategies. Some of these include bundling items and an increase in the prices on items with low dollar amounts.

Calculation: Total revenue (for a given period)/ number of transactions = average purchase value.

Product Returns

When it comes to identifying problems with the product’s quality, you should critically track your product returns.

Apart from that, you’ll also be able to identify other issues such as customer service and sales or marketing promises. For instance, one of your sales representatives made a promise that concerns your product, and such promises were, in fact, not fulfilled.

With a critical analysis of the nature of your product returns, you’ll be able to have an open eye on the areas in which your retail business is being affected negatively.

Simply put, product returns refer to the mean percentage of products that are returned within a specific period.

Calculation: (Number of returns/number of sold items)* 100 = percentage of returned products.

Gross Margin Return on Investment (GMROI)

Without any doubt, GMROI remains one of the most crucial retail KPIs to help track the progress of your retail business.

This is because it provides a clear view of the performance of your retail store. GMROI simply measures your returns on the value of dollars invested in your retail business.

How much do you make per dollar spent in your retail business? This seems like a difficult question to ask. This is because it is critical when it comes to tracking this metric as it provides you with the avenue to critically analyze your business in its entirety.

Apart from that, it also helps you to measure how you analyze your inventory, pricing, and merchandising on specific products.

Calculation: Gross margin/average cost of inventory = profit return.


There you have it! Perhaps a few of the Key Performance Indicators you should assess in your business. Other metrics include the profit margin, sell-through percentage, total sales count, inventory turnover, foot traffic, and many more.

Now that you have learned that analyzing your retail metrics is vital to your business, there are certain things you need to do.

Firstly, you need to figure out how to measure these metrics efficiently regularly. Of course, formulas are essential and useful, but you’ll save more time if you can automate data and metric-tracking in your business.

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Secondly, you need to take the right action. Knowing your metrics is ideal, but you need to take a step further by using the data you’ve derived. The information you’ve gathered can help you identify specific areas. With that, you’ll be able to take the right action to level up your game.

Written by Mike

Former data analyst and the head of Whatagraph blog team. A loving owner of two huskies, too.

Key Performance Indicators (KPIs) are one of the essential tools at a business's disposal. Though the idea has been around for a long time, it wasn't until the Internet that its true potential was discovered. This is especially true when it comes to measuring online engagements such as sales or user acquisition. Several different kinds of KPIs calculate vastly different metrics, ranging from free tools like Google Analytics to incredibly advanced software. Here we gathered all the information you need to know about KPIs and how to make the most out of it. Enjoy!
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