How do you measure true retail performance?
Overview
Most charities measure retail performance by measuring sales and profits against the budget and last year. This is a good system, providing the true potential of each shop, including online sales and profitability is fully understood and used as the budget or depending on the gap, a stretch budget could be used. Knowing the true potential of every aspect of a charity retail business allows accurate budgeting and a detailed plan to be developed to close the gap between current performance and the true potential of every shop including online.
Insight
Uncovering the true potential is complex but it is definitely worthwhile. You can quickly check if the charity retail business is performing at close to its potential by doing one simple thing: Review the percentage of sales per shop of the ladies department in all but specialist shops.
Although the ideal percentage will depend on the range of categories sold in each shop, however, a shop selling the full range of categories Ladies sales should be around 40%. If any shop is below 36% there is a strong possibility it is not achieving its true potential.
A more detailed analysis can then be carried out that measures the performance of each individual shop and should include the following:
- Items sold a week.
- Average Ticket Price (Location, Shop Format and Donations are all contributory factors to ATP)
Note: There is a strategic relationship between items sold and average ticket price, so don’t just focus on ATP.
- Category financial return for space.
- Category ratio’s.
- Pricing strategy.
- Rotation policy.
- Level of fill.
- Customer journey.
- Shop ambience.
