When assessing the financial performance of a fashion retail outlet, what KPI's should one calculate and analyze?
Fashion Retail KPI's?
Answers
Conversion of foot traffic to sales
$ sales per representative
# new customers directly after a promotion
% of those who become repeat customers
Greatest sources of purchases: Word of mouth, promotions, proximity, ads
Customer concentrations
Profitability of different brands
The correlation of buying patterns with physical position in the store
Gross revenue per employee
Gross profit per employee
Time elapsed between customer entry and representative greeting
Time-of-day patterns
Mean, median, mode purchase per customer, per time of day, per representative
Adding to Jaime's list:
Sales per sq ft-trend.
Store lease % of revenues
Given that it's a fashion business, inventory markdowns/write-offs over time (from line launch to removal from shelves)
Adding to Jamie and Len's lists:
A) If it is a classic brick and mortar retailer:
Retail / Merchandising KPIs:
-Average Time on Shelf
-Item Staleness
-Shrinkage % (includes things like spoilage, shoplifting/theft and damaged merchandise)
-Coupon Breakage and Efficacy (which coupons drive desired purchase behavior vs. detract)
-Net Promoter Score ("How likely are you to recommend xx company to a friend or family member" - this is typically measured during customer satisfaction surveys and depending on your organization, it may fall under Customer Ops or Marketing departments in terms of responsibility).
-Number of trips (in person) vs. e-commerce site visits per month (tells you if your website is more effective than your physical store at generating shopping interest)
B) If it is an e-retailer :
Marketing KPIs:
-Shopping Cart Abandonment %
-Page with the Highest Abandonment
-Dwell time per page (indicates interest)
-Clickstream path for purchasers (like Jamie mentioned do they arrive via email, promotion, flash sales source like Groupon), and if so, what are the clickstream paths that they take. This should look like an upside down funnel, where you have the visitors / unique users at the top who enter your site, and then the various paths (pages) they view in route to a purchase).
-Clickstream path for visitors (take Expedia for example...Many people use them as a travel search engine but then jump off the site to buy directly from the travel vendor - understanding this behavior can help you monetize the value of the content you provide as an alternate source of revenue).
-Visit to Buy %
-If direct email marketing is part of your strategy, analyzing click rate is a close second to measuring conversion rate. 2 different KPIs, one the king , the other the queen and both necessary to understand how effective your email campaign was and whether it warranted the associated campaign cost.
Site
-Error % Overall
-Error % by Page (this is highly correlated to the Pages that have the Highest Abandonment, which means you can fix something like the reason for the error, and have a direct path to measure the success of the change).
Financial KPIs:
-Average order size per transaction
-Average sales per transaction
-Average number of items per transaction
-Average profit per transaction
-Return on capital invested
-Margin %
-Markup %
I hope this helps.
Filed Under:
FP&A