What are the best merchandising metrics to track and improve store performance?

1 Sales per square foot

This metric shows how much revenue you generate for each square foot of selling space in your store. It helps you evaluate the productivity and profitability of your store layout, design, and fixtures. To calculate it, simply divide your total sales by your total selling area. You can also compare it across different categories, departments, or locations to identify the best and worst performers. To improve your sales per square foot, you can try to increase your average transaction value, reduce your inventory costs, or optimize your space allocation.

2 Conversion rate

This metric measures the percentage of store visitors who make a purchase. It reflects how well you convert your traffic into sales and how effective your merchandising and selling techniques are. To calculate it, divide your number of transactions by your number of store visitors. You can also segment it by different sources of traffic, such as online, offline, or referrals, to understand where your customers come from and how they behave. To improve your conversion rate, you can try to enhance your customer service, offer incentives or discounts, or create a sense of urgency or scarcity.

3 Sell-through rate

This metric indicates how fast you sell your inventory over a given period of time. It helps you assess the demand and popularity of your products and how well you manage your inventory levels. To calculate it, divide the number of units sold by the number of units available at the beginning of the period. You can also track it by different attributes, such as color, size, or style, to optimize your product assortment and avoid overstocking or understocking. To improve your sell-through rate, you can try to adjust your pricing, promotion, or markdown strategies, or use data analytics to forecast demand and replenish inventory.

4 Gross margin return on investment

This metric evaluates how much profit you earn for each dollar invested in your inventory. It shows how efficiently you use your capital and resources to generate sales and profits. To calculate it, multiply your gross margin percentage by your sales and divide by your average inventory cost. You can also benchmark it against your industry or competitors to see how you compare and where you can improve. To improve your gross margin return on investment, you can try to increase your gross margin, reduce your inventory costs, or increase your inventory turnover.

5 Customer satisfaction score

This metric gauges how happy and loyal your customers are with your store and products. It reflects the quality of your customer experience and the value you deliver to your customers. To measure it, you can use surveys, feedback forms, or reviews to ask your customers to rate their satisfaction on a scale of 1 to 10 or using emoticons. You can also analyze the reasons behind their ratings and identify the areas of improvement or excellence. To improve your customer satisfaction score, you can try to exceed your customers' expectations, resolve their issues or complaints, or reward their loyalty or referrals.

6 Basket size and composition

This metric reveals how much and what your customers buy in each transaction. It helps you understand your customers' preferences, needs, and behaviors and how to cross-sell or upsell to them. To calculate it, divide your total sales by your number of transactions to get the average basket size, and analyze the items, categories, or combinations that your customers buy to get the basket composition. You can also segment it by different customer groups, such as new, repeat, or loyal, to tailor your merchandising and marketing strategies. To improve your basket size and composition, you can try to offer product recommendations, bundles, or complementary products, or use suggestive selling or loyalty programs.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?