The most important metric in retail

Most businesses will find it difficult to significantly cut costs to the bottom line so what often is better is concentrate on the revenue side. Increased sales immediately can reduce the percentage fixed costs of a business.

When I discussed stock turns here on how to get your stock turns, the main purchase is to see where you are moving the stock.

Here is the sample I produced that shows the stock turns by department.

Now beside just going through each department, also consider the most important key metric for almost all retail stores which is the overall profit of goods sold divided by the stock on hand. If this rate is too low, you are probably overstocking, if it's too high, it's probably not good either as you are almost certainly losing sales because you are understocking.

It has to be overall as the shop is a single entity some departments, for example, may be a loss leader, whose main use is to bring people into the shop.

What is high and what is low is a question only experience can tell you in your shop?

What I would suggest you do is take this above report and export it into excel like this.

Now multiple the sales by the margins to give you a profit. I would suggest you next add in everything, lotto if you have it, phone cards, etc. and divide by the stock onhand figure. This will then give you your metric.

Now compare it to last year and see what happened. Now check to see what delighted you and what disappointed you.

Let me know the result. If we get significant interest, I will see about automating the process.