How can you identify opportunities for growth in retail sales?

1 Sales per square foot

Sales per square foot is a simple but powerful metric that shows how well you are utilizing your retail space. It is calculated by dividing your total sales by your total floor area. This metric can help you evaluate the efficiency and productivity of your store layout, your product assortment, and your visual merchandising. You can also use it to compare your performance with other stores in your category or location, and identify areas for improvement. For example, if your sales per square foot are lower than the industry average, you might want to consider redesigning your store layout, adding more impulse items, or creating more attractive displays.

3 Average transaction value

Average transaction value is the average amount of money that each customer spends at your store. It is calculated by dividing your total sales by the number of transactions. This metric can help you understand the purchasing behavior and preferences of your customers, and how you can increase their spending. You can also use it to segment your customers based on their spending levels, and tailor your marketing and merchandising accordingly. For example, if your average transaction value is high, you might want to focus on upselling and cross-selling more products, or offering premium or exclusive items.

4 Customer lifetime value

Customer lifetime value is the estimated total amount of money that each customer will spend at your store over their lifetime. It is calculated by multiplying the average transaction value by the average number of transactions per year by the average retention rate by the average customer lifespan. This metric can help you determine the long-term value and profitability of your customers, and how much you can afford to invest in acquiring and retaining them. You can also use it to segment your customers based on their loyalty and potential, and create more relevant and engaging communication and offers. For example, if your customer lifetime value is low, you might want to improve your customer satisfaction, retention, and referral rates, or offer incentives for repeat purchases or referrals.

5 Customer and product segmentation

Customer and product segmentation is the process of dividing your customers and products into groups based on their characteristics, behavior, and profitability. This can help you identify your most and least valuable customers and products, and allocate your resources and efforts accordingly. You can use various criteria to segment your customers and products, such as demographics, psychographics, purchase history, profitability, frequency, recency, and potential. By doing so, you can create more targeted and personalized marketing campaigns, optimize your merchandising strategies, and improve your customer service. For example, you can segment your customers into high-value, medium-value, and low-value segments, and offer them different levels of rewards, discounts, or exclusivity. You can also segment your products into best-sellers, average-sellers, and slow-sellers, and adjust your pricing, placement, and promotion strategies accordingly.

6 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?