Everything You Need to Know About Retail KPIs

Everything You Need to Know About Retail KPIs

KPIs or Key Performance Indicators are an important set of metrics to track, whether you run an e-commerce business or have a brick-and-mortar retail store.

There are several different types of retail KPIs that you can use to maximize the efficiency and profitability of your business. They allow you to collect specific and objective data on your business, help you to make better-informed business decisions, and ‘course correct’ where necessary.

As an e-commerce fulfillment services provider, it is our job at Phase V to support our clients in their success so that we can, in turn, provide the best possible service. In this article, we will explain the five key retail KPIs to track in order to enhance your business. 

What Is Retail KPI?

A retail KPI refers to a measurement or formula that enables you to gauge and evaluate the effectiveness of your business. By utilizing different KPIs, you can calculate labor expenses, costs of commercial real estate, and the average value of orders. You can then compare these metrics to your business’s profits to determine how well your business is performing. These KPIs are vital tools that help you streamline your business operations and ensure they run efficiently.

Why Is It Important to Track Retail KPIs?


KPIs give business owners hard data about the real-time success of their business, which can be much more informative and specific than outside impressions. KPIs use mathematical formulas to calculate exact figures and reveal data trends. 


KPIs can help with essential financial planning by examining supply and demand and helping to figure out which areas of a business need augmenting and which need scaling back moving forward. They can also be great indicators of retail and customer trends

Customer Behavior

KPIs can track customer behavior and habits, such as basket size and browsing time, which allows businesses to improve their customer interfaces and user experience. Studying how customers interact with your website, advertising, and products is essential to pre-empting potential problems and augmenting their experience. This can lead to better customer retention and conversion into higher sales.


You can choose the most critical retail KPIs to track for your particular business and hone in on your personal goals for growth and success. KPIs are particularly useful in e-commerce as it moves much faster than in-person retail, and having up-to-date information means business leaders can pivot quickly when needed. 

5 Retail KPIs to Track 

  • Conversion Rate 

In a poll by databox.com, the conversion rate was voted as the number one most important KPI to track for a successful business. A conversion rate refers to a business’s ability to convert site visitors into paying customers who complete a transaction rather than just browsing. 

Tracking the conversion rate KPI can accurately measure how well marketing attracts customers to your e-commerce venture and whether they feel further enticed to buy once on your website. 

Numerous factors affect conversion rate, including

  • Website’s speed and ease of use;
  • Layout of products;
  • Check-out process;
  • Shipping options and cost. 

Converting website traffic into actual sales is the final hurdle for e-commerce businesses. Once you have mastered the art of attracting customers, you need to ensure you turn those clicks into profit. 

  • Customer Acquisition Cost (CAC)

Customer acquisition cost is a retail KPI you can track to measure your spending on marketing and promotion against your conversion rate. Using this data, you can calculate the exact dollar amount spent for each customer that completes a sale. Based on these figures, you can then decide whether it is time to scale up or scale back your customer acquisition efforts.

This is an essential KPI to track to ensure you are not spending more to ‘buy’ customers than they are buying themselves. 

  • Return on Investment (ROI)

Return on investment is a useful KPI for any business as this data shows which components of your marketing strategies and which products are most profitable.

You can then use this information to build a robust reinvestment strategy to boost returns. As a business owner, making investments in the winning areas of your business and eliminating unnecessary costs is essential. 

According to Jonathan Aufray of Growth Hackers, the best way ‘To get a positive ROI, keep improving your conversion rate while decreasing your lead costs.’

  • Inventory Turnover 

Monitoring inventory turnover through KPIs is crucial to perfecting the alchemy of inventory levels in your business. It is essential to have enough readily available products to fulfill your orders while avoiding holding too much stock, which can be costly to store. 

There are a couple of formulas to calculate this retail KPI. You can either divide your sales within a certain period by the average inventory of the same period or your cost of goods sold by your average inventory for a broader picture. According to market research, a good turnover ratio is between 5 and 10 ‘for most industries’.

  •  Year-Over-Year Growth

Year-over-year growth is probably the most important KPI to track for longevity. This data can be used for a big-picture analysis of the continuing success of your business. You can directly compare financial quarters against each other and against those from previous years. 

Likewise, you can compare year-over-year growth data against other KPIs to analyze whether increased/decreased marketing spending or inventory changes, for example, are having an overall effect on your profit margins. If you want an e-commerce business that knows where it is going, you need to know where it has come from. 

Where We Come In

In addition to tracking your retail KPIs to gather essential data, it is imperative that you choose partners who have your business’s best interests in mind. 

We at Phase V were voted the top fulfillment company for four years in a row! We offer centralized order fulfillment, which helps to standardize your customer experience, reduce labor costs, and eliminate errors. We are specialists in e-commerce fulfillment, and our service slots seamlessly into your operations. 

It is our business to ensure your business keeps running smoothly. Let us do the heavy lifting. 


Reach out for a quote today!

Related Posts