Retail KPIs

KPI Performance Key

Your business may just be beginning to track this metric, perform this business function or identified this as a problem. Improved execution in this area should be a high priority.

Your business is competitive in this area, but there’s still room for advancement. Consider investments to improve related operations to achieve better results.

Your performance in this area is considered best in class and is superior to the average company in your sector. You’ve laid a solid foundation in this business function, and the next step is optimization.

You’re achieving the optimal results for this metric. Your business processes in this area are highly efficient and stand out against competitors. Keep investing in this area to maintain these results.

Top Performers

Sales Per Square Foot

Sales per square foot has been a common benchmarking metric in the retail industry for decades, and although the introduction of ecommerce has made it less so, it’s still critical for retailers offering successful omnichannel experiences that include brick and mortar locations. The metric helps retailers make the right resourcing decisions and understand the proper mix of ecommerce to physical location investments.

< $223
Foundational
$336
Competitive
$510
Best in class
> $595
Transformative

In-Store Personalization

Instore Personalization

42%

Consumers Willing to Pay More for Personalization

Source: Wakefield, NetSuite

Left Quote
32% of sampled retailers are using multiple currencies in their day-to-day operations.”

To learn more, check out this article.

Customer Satisfaction

Providing an exceptional in-store customer experience can make or break your retail business. More satisfied customers results in return visits and increased sales. To track these experiences, retailers are using new and innovative technology like QR codes on receipts linking to online surveys, survey kiosks, and the increasingly popular HappyorNot machines. Better access to this data gives you insight on how your customers view the in-store experience and provides suggestions on areas for improvement.

< 70%
Foundational
73%
Competitive
86%
Best in class
> 86%
Transformative

Inventory Turnover

Inventory turnover is a critical metric in determining a retailer’s inventory efficiency and sales effectiveness. A higher merchandise turnover indicates more sales in a given period, resulting in lower storage costs and more effective purchasing. Inventory turnover for retailers varies greatly depending on the type of product sold (perishable v. non-perishable, hard v. soft goods, etc.), and as seasonal demand changes. Another important component to consider when defining inventory turnover goals is the gross margin on the sale of your products. Keep in mind that lower margin items require more frequent turnover to meet revenue targets.

< 5.9 turns
Foundational
5.9 turns
Competitive
7.3 turns
Best in class
9 turns
Transformative

Gross Profit Margin

Foundational

< 28%

Competitive

30%

Best in class

41.4%

Transformative

> 58%

Sales Per Square Foot

< $223

$336

$510

> $595

Marketing as % of Revenue

> 4.2%

4.2%

2.9%

2%

Order Fulfillment Cycle Time

> 60 hours

36 hours

24 hours

< 8 hours

Spend Under Contract

Decentralized buying

40-60%

60-85%

> 85%

Warehousing Cost as % of Revenue

> 0.9%

0.9%

0.6%

0.3%

Inventory Turnover

< 5.9 turns

5.9 turns

7.3 turns

9 turns

Customer Satisfaction

< 70%

73%

86%

> 86%

SG&A Cost as % of Revenue

43.4%

25.3%

19.8%

14.3%

IT Costs as % of Revenue

> 2.5%

2.5%

2%

1.5%

Source(s): APQC, WERC, IR 500, Finlistics

Other Categories
Percentage of revenue after cost of goods sold. This metric signifies how efficiently your company uses its resources to deliver products profitably. The higher the percentage, the better.
The average revenue a retailer generates for each square foot of sales space. The higher the sales per square foot, the better and more efficient the retailers use of store space is.
Marketing is one of the largest expenses for retailers. Smart use of marketing dollars means efficiency and higher profit margins.
Represents the time from receiving and authorizing a customer’s sales order through the customer’s receipt of a product. This determines the amount of time a customer must wait in order to receive a placed order. The lower this cycle time is, the better customer satisfaction tends to be.
The amount of procurement spend managed by a contract. When you purchase goods and services, using pre-negotiated contracts covering a year or more typically allows for better price negotiation. The higher this percentage is, the more likely that your company is saving money on goods and services.
Percentage of sales that goes towards the cost of warehousing products. A reduction in warehouse costs will increase net profits without having to increase sales. The lower this percentage, the better.
Ratio showing how many times your company’s inventory is sold and replaced over a period of time. The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand. A low turnover ratio signifies weak sales and excess inventory, while a high ratio suggests either strong sales or large discounts.
Retailers capture customer satisfaction in a variety of ways including online surveys, survey kiosks, happy or not machines, etc. The higher the customer satisfaction scores, the more likely customers are to return to your store and purchase items.
General and Administrative Expenses as a percentage of sales is an indicator of efficient operations. The lower this percentage, the better.
Dollar amount spent on IT infrastructure and IT teams as compared to total revenue. The lower this percentage is indicates higher IT efficiency.
Sales Chat

Interested in growing your business with NetSuite?

Start chat