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Gartner reports $14B dollars is spent on business intelligence (BI) software each year, highlighting the importance of data to business’ aiming for success. Retailers have access to a huge amount of data, everything from their supply chain, sales information, customers data, financials and more. It’s hard to keep track of all the raw data and know what data is valuable and how to interpret it to make better, informed business decisions.

Accurate data and BI software tools which can help you interpret your data is necessary for savvy retailers to glean real insight into business operations and to stay competitive. A business that turns their data into useful, actionable knowledge is expected to make decisions 5x faster than it’s competition.

What is BI Software?

All businesses generate data on a day-to-day basis. This is captured in a number of systems and in a number of ways dependent on how you run your business. Simply, a BI software tool is a system that helps a business transform its raw data into useful information that can help improve its business outcomes. A business aiming for success will track key performance indicators (KPIs), these measurements - if monitored and utilized - are an invaluable form of BI.

There’s increasing pressure to base strategies and business decisions on accurate data and for good reason, it’s better than guesstimating, you can set benchmarks and track how you business is doing.

Successful retailers use BI software to analyze and predict customer buying patterns, optimize inventory levels, track marketing efforts and to maximize revenue and profitability. There are hundreds of different KPIs for retailers to keep track of, and whilst each business should tailor these to their own business, some are essential no matter what you do.

Discover more retail KPIs you should be tracking.

The following 10 KPIs are measurements every retailer should be keeping track of to help make business decisions to improve business outcomes.

Top 10 KPIs every retailer needs to measure:

1. Revenue
Why?/The Business Decision:

  • Are you performing to your budget/expectations?
  • What actions do you need to take if you’re overspending, or not meeting expectations?
  • Does your revenue support your cash flow requirements? Are you cash strapped? If so, how do you free up some cash?

2. Product profit £ and %
Why?/The Business Decision:

  • Are your products achieving the correct level of profitability to support your business?
  • Have you been offering too much markdown on sale items and offers?
  • Do you need to achieve better cost prices?
  • Which products should you stop selling, which to buy more of?

3. Stock cover
Why?/The Business Decision:

  • Have you purchased too much stock in relation to sales?
  • Do you need to markdown some of your products to generate sales and turn stock more effectively?
  • Do you need to buy more stock as your business is over performing? Target fast turning lines for possible re-orders.

4. Sell Through %
Why?/The Business Decision:

  • Is your stock selling through at the correct rate to ensure you are reaching your terminal stock targets for your business? If not you may need to slow down reordering rate or take earlier discounts and sale.

Find out more about sell through reporting and optimizing your inventory season to season it this white paper.

5. Markdown %
Why?/The Business Decision:

  • How much money are you giving away compared to your original planned price?
  • Can you afford to markdown some products but not other?
  • There may be too many promotions running and you losing your profit margin

6. New customers vs existing %
Why?/The Business Decision:

  • New customers cost more to acquire (are you utilising your existing database?)
  • Have you found the correct balance between new and existing customers?

7. EBITDA (earnings before interest, taxes, depreciation, and amortization) £ and %
Why?/The Business Decision:

  • Sales for vanity and profit for sanity!
  • Always track your bottom-line profitability and keep a handle on the general business costs

8. Conversion rate %
Why?/The Business Decision:

  • Are you converting your customers to buy?
  • If conversion rate is low what is stopping them? Product images on site? Problems with the add to basket? Unhelpful sales agents or assistants?

Did you know 75% of shoppers will abandon their carts before purchase? Learn how to reduce shopping cart abandonment and optimise your conversion %.

9. Returns £ AND %
Why?/The Business Decision:

  • You may be selling the goods but you need to ensure they are not all coming back. Reverse logistics are expensive and faulty returns can damage your reputation.

Read our ‘Can You Learn to Love Returns’ post which offers some tips on how to make your returns policy a differentiator and help you stand out from your competition.

10. Cash in the bank
Why?/The Business Decision:

  • Cash flow. Cash is king.. always make sure you have enough and you have clear visibility of what needs to leave your account next.

This is by no means an exhaustive list of the KPIs which retailers should be tracking but by measuring these KPIs you will gain the insight you need to make crucial adjustments to your business strategy and budget.

BI for SMB retailers

In the past, SMB retailers could not even consider traditional BI due to the high costs and implementation requirements involved. Various spreadsheets and numerous versions of the truth were the only source of data to inform important buying, pricing, marketing and other commercial decisions.

Brightpearl reporting provides powerful data analysis across your business data so you can take actions to drive revenue and profitability. 

Instead of defining your KPIs and building your reports from scratch, you can use a set of best practice ecommerce reports and dashboards that live in the cloud, available from anywhere, automatically kept up-to-date with your latest trading information to give you the metrics you need to run your business successfully.

To learn more about how Brightpearl resporting can assist you in operating a more efficient and profitable business, contact us.

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About the Author

Grainne is the Head of Campaigns at Brightpearl and leads the execution of Brightpearl's global campaign strategy. Having worked in the retail tech space for five years, learning more about how technology can help retailers grow is a huge topic of interest.