5 Store Budgeting KPIs to Keep You On Target
When it comes to store budgeting, keeping an eye on key performance indicators (KPIs) is essential. Knowing where you stand on your own performance indicators daily will help your stores stay on target so that you can reach your goals and meet your budgeting expectations.
No matter what kind of retail store you manage, the following KPIs can help navigate you to a more effective and efficient store budget for all of your stores.
- Average Dollars Per Transaction (ADT) – Knowing the average spend per customer per transaction can help your management team know whether your sales associates need to focus on more upsells or cross-sells. To figure your ADT, take the gross sales for the period and divide by the number of transaction. For instance, if you sell $2,000 in merchandise one day and register a total of 100 transactions, that translates into $20 per transaction on average. You should figure ADT for year, month and day. Figuring ADT for each day helps you know which days of the week are your strongest sales days and which days are your weakest. You can use this information to plan store specials, promotions, and other activities.
- Average Units Per Transaction (APUT) – How many items does each customer purchase each time? This is a great metric that tells you if customers are buying just one item or several at a time. It can be very useful if you sell items you’d like customers to buy more of per transaction. This metric along with ADT can tell you whether customers are buying a few small-dollar items or purchasing more high-dollar items.
- Average Dollars Per Hour (ADH) – Another KPI useful in helping you better understand peak times is Average Dollars Per Hour (ADH). Take your gross sales for the timer period and divide by the number of hours your store was open. If you have a higher ADH on weekdays than on weekends, that will help you set your budget for those times.
- Wage Cost Percentage (WCP) – Wage Cost Percentage lets you know if you are spending too much on payroll. If you’re growing, it can be extremely important because WCP will tell you if an increase in sales revenue is worth the extra investment in payroll expenses.
- Weekly Workforce Hours (WFH) – This KPI helps you understand how many hours your total retail workforce is putting in to justify your revenues. It includes warehouse personnel and other non-sales personnel.
Store budgeting requires understanding how your revenues and expenses play against each other as you work toward achieving higher goals. KPIs help you manage the process better.
