10 Retail KPIs & Metrics You Should Track in 2022

Retail KPIs

Retailers are facing an uphill battle in the digital age. With so many e-commerce sites to choose from, consumers no longer need to visit physical stores to browse products or make a purchase. As a result, brick-and-mortar retailers have seen their sales decline and have had to find other ways of differentiating themselves from online competitors.

In response, many retailers are revamping their in-store experiences and focusing on services rather than goods. This pivot toward experience has also forced businesses to track KPIs that go beyond standard analytics to measure performance and optimize processes. That’s why keeping track of key performance indicators (KPIs) and metrics is so important. By measuring performance on a regular basis, you can keep a finger on the pulse of your company.

Unfortunately, there are too many retail KPIs out there that aren’t useful for most businesses. The majority of them are either too simplistic or have a very specific use case. As such, we’ve compiled this list of the top 10 retail KPIs & metrics you should track in 2022 if you want to optimize your business.

1. Sales per square foot

One of the best retail KPIs is sales per square foot. It’s a gross metric that provides insights into your store’s profitability. You can calculate it by dividing your net sales by your square feet of selling space. This metric tells you how effectively you are leveraging your retail space. Ideally, you want to maximize your square footage by generating as much revenue as possible. That’s how you can make your store as profitable as possible.

With this metric, you can determine whether you’re making productive use of the space, layout, and merchandise displays and products by comparing the number of retail sales to the number of visitors. You can also determine whether you need to seek a more affordable location or diversify your business strategy by adding online sales to your physical store.

2. Conversion rate

The conversion rate is measured by dividing the number of sales by the number of visitors to the store or website. It’s a critical retail KPI for eCommerce retailers. In fact, it’s the most important metric for online retailers in general. If your conversion rate is low, it means you’re losing sales. A healthy conversion rate will help you generate more revenue. You can track conversion rates in your analytics software. It’s likely that you have a conversion goal set for your website.

The conversion rate enables retailers to understand the effectiveness of the new marketing efforts, and the changes in operational procedures have affected sales. If the conversion rate is low, retailers may alter the store layout, enhance their marketing campaigns, expand the selection of goods and products on the shelves, have friendlier and more convincing employees, or adjust inventory movement.

3. Inventory turnover rate

Inventory turnover rate is the amount of time it takes for you to sell your inventory. It’s measured by taking your cost of goods sold and dividing it by the cost of the average amount of inventory you have on hand. Your average inventory will depend on the type of retail business you run. For example, a retail store that sells perishable goods will have a different average inventory than a chain like Wal-Mart. What’s important is that you measure your inventory turnover rate. That way, you can understand how long it takes to sell your inventory. Ideally, you want the turnover rate to be as short as possible. If you have a lower turnover rate that cannot be explained by a seasonal low, you’ll know you need to take action.

4. Sales per employee: Retail KPIs

One of the most important metrics for retailers is sales per employee. It helps retailers to understand how efficiently they are utilizing their employees. You can calculate sales per employee by dividing net revenue by the number of employees. The sales metrics are also useful for retailers to plan employee shifts, allocate tasks, train employees, determine compensation, offer promotions and incentives, and recruit employees.

Retailers can use a POS system that can track the number of sales generated by each employee to keep track of employees’ sales. The best employees are identified, and sales targets are established based on this information. It also decides the training needs. That way, you can identify which factors are influencing your sales per employee. Whether they be positive or negative, you can take action to improve your sales per employee.

5. Foot traffic

Foot traffic is the percentage of customers who visit your store. It’s helpful to take note of your foot traffic. That way, you can compare it to your online sales. Ideally, you want your foot traffic to be higher than your online sales. That’s because it’s easier to convert an in-person customer than an online one. Keep an eye on your foot traffic over time. That way, you can also get insights into customer behavior and response to changes in retailers’ strategies and identify whether there are any major factors impacting your foot traffic. Whether positive or negative, you can take action to improve it.

6. Customer retention and Positive Reviews

Repeat customers are a key component of any successful retail business. As a retailer, you must inspire loyalty in your customers in order to encourage them to continue buying your products and services. In return, you get a positive review that signals to other customers who haven’t yet converted that you’re trustworthy. These two metrics are important indicators of customer satisfaction. If your customers are happy with your products, they will likely come back to buy more. That’s how you achieve customer retention. What’s more, positive reviews are crucial to increasing your brand awareness. That’s because they show up on Google and other review sites. They can help convince potential customers to make a purchase from your store.

7. Sell-through rate

Sell-through refers to the number of products you sell from the current inventory. It is measured by the total number of goods sold divided by the inventory at the beginning of the time and multiplied by 100. You can use it to understand how efficiently your inventory is moving. Ideally, you want your products to sell as quickly as possible. That way, you don’t end up with a lot of excess inventory.

What’s more, you want to keep track of your Return or Refunds Requested. That’s the percentage of items that are being returned. It’s important to note the return rate in your retail KPIs because it’s an indicator of customer satisfaction. You will obviously get to know the reasons for returns, so make sure you collect as much information as you can when processing a return. There may be quality issues, advertising issues, or sales staff problems that could account for a high return rate. Stores that sell high-quality products rarely see customers returning merchandise.

8. Year over year growth

Retail stores need to grow financially every year to make the business sustainable. This retail metric also calculates the percentage change in growth over the last year, meaning to check the continuous improvement of the business. Year-over-year growth enables retailers to identify long-term trends and make plans accordingly.

This metric can provide valuable insight. If there is a downward trend, you will know that you need to determine why and how you can recover. When you see a positive trend, knowing what percentage you’re growing each year can help you set realistic goals for the future. By keeping track of the year-over-year growth, you can see which parts of your business need improvement. That way, you can focus on the areas with the most positive impact. While some factors may be out of your control, such as an economic recession, there are many financial decisions you can make to improve your growth from year to year.

9. Gross and net profit

Profit measurement is the most common measure for any retail business. Gross profit is your retail selling price minus the cost of goods sold. And Net profit is calculated by subtracting all expenses from all revenue generated. Gross profit and net profit are critical key performance indicators to determine if your business is making or losing money and where you can tighten profit margins.

For example, if your gross profit is low, then you can explore other product sourcing options and try to reduce your cost of goods. If your net profit is not where you want it to be, you can rethink your staffing and infrastructure choices to reduce expenses. That way, you can use these retail KPIs to enable retailers to conduct proper planning for their resources. It also helps introduce cost-cutting measures and brings new business strategies.

10. Average transaction value

The average transaction is calculated by dividing the total value of all the transactions by the number of sales transactions. It’s important to track your average transaction value because it shows how much your customers are spending on products on average. What’s more, average transaction value can help you set financial goals for your business.

If many customers visit your online or a brick-and-mortar store, but their average purchase amount is low, you may need to change the product placement and layout of your store or train your sales associates to be more effective at up-selling and cross-selling. You can also offer product bundles, discounted tiered pricing, or monthly subscriptions to services. You can also use it to compare your performance over time. That way, you can identify the factors that are influencing your average transaction value.


Tracking KPIs gives you an overview of your retail performance – where you can streamline processes and what software solutions, you’re likely to need to improve sales and customer satisfaction. Now that you know which KPIs are essential for retailers to track, you’ll be better prepared to tackle monthly, quarterly, and annual reports.

The metrics and KPIs listed above will help them keep their finger on the pulse of their business. From sales per square foot to return rate, these metrics will allow retailers to optimize processes and generate more revenue. That way, you can keep your customers happy and your business profitable. Most importantly, keep an eye on your retail KPIs. That way, you can identify when things need to change. Once you identify areas of improvement, you can implement changes to improve your business.

There are hundreds of different key performance indicators (KPIs) that your retail store could monitor, but the intelligence is choosing the right retail KPIs for your store based on current business goals. There are dashboards and analytics tools available to track these indicators automatically. Use ChainDrive retail analytics software to measure these metrics on a regular basis so you can track performance in real-time and make smart business decisions. If you are exploring opportunities to grow your business, request a free live demo with our software experts.

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