Are your sales outperforming or underperforming at a given location? What is driving that trend? What actionable steps can be taken to support or improve that trend?
These questions can be daunting for any retailer to tackle but are central to strategic retail management. Thankfully Retail Toolkit makes it easy to identify these root causes and develop strategies to address. To go a level deeper, it’s important to remember that the total sales dollars are the product of a number of factors – namely the count of transactions, average number of units per transaction, and the average transaction value.
In diagnosing the root cause of a given location’s sales outperformance or underperformance, it is helpful to start with reviewing the overall number of transactions for that period and assessing how the variance compares with prior periods. In the RTK Sales Dashboard, you can select to view the Transactions trend for any location in the upper right corner. When viewing transactions, it is helpful to view the total transactions count for a period in question via either the Monthly summary or Year to Date against prior periods to gain better insights into the total count of customers being successfully converted to sales. In the example below, topline sales dollars are down for the year, while at the same time the total transaction counts are also down. This indicates either a lack of overall customer traffic to the store (marketing issue) or challenges with staff converting visitors into sales (training issue). Using RTK’s traffic reports, you can further review the traffic and sales conversion rates to answer this question and determine where to focus improvement initiatives.
Units per Transaction
The next helpful diagnoses step is to evaluate the Units per
Transaction average (“UPT”), which is a measure of how many items on average
staff are able to include per sales ticket via cross selling. The higher the UPT, the higher your sales are
likely to go. Once again, it is most
helpful to benchmark this metric against prior periods. In the illustrative example below, we see
that in spite of lower sales dollars and overall transaction count, the number
of Units per Transaction is stable and slightly above the 3-year average. This indicates staff are effectively
targeting cross sales and this is not an area responsible for sales declines. Ongoing training in this area can help lift
sales dollars, but will not address the core issue with declining sales dollars,
in this example.
Average Transaction Value
The final diagnoses step is to review the Average Transaction Value (“ATV”), which is the average dollars secured per sale. This, paired with Units per Transaction is a great staff efficiency metric that indicates sales staff’s expertise and capability of driving higher dollar sales for each customer that converts into a sale. In the example below, we can see that the Average Transaction value is below both prior year as well as the 3-year average. This is indicative that in spite of selling the same number of items per ticket as in prior periods, the items being sold are, on average, lower cost. While the variance is not large, it represents an area of opportunity for additional staff training to ensure they are armed with sufficient knowledge and have confidence upselling customers. In this example, if the ATV were increased back to the prior year average, that would represent an additional $188,970 in topline revenue!
Given the intertwined nature of these metrics and their ultimate impact on overall topline sales dollars, reviewing these metrics on an ongoing basis will provide your business with actionable insights that can lead to long term, sustainable revenue growth. These insights can be taken to another level by extending this research to sales by department and product category trends, via the Category Sales reports in Retail Toolkit.
We hope you’ve found this Tips and Tricks article helpful. Happy selling!