The most important retail metric
Nov 17, 2014 | Other | Comments Off on The most important retail metric
- Gross profit
- Net profit
- Stock turn
- Stock density
- Customer loyalty
- Average sale
- Transactions per sale.
If you don’t measure all of them, then you are probably missing something really important. But which one is the most important?
None of the above. (Sorry, trick question.)
All of those metrics are driven by an underlying variable that we fail to account for.
This variable is commonly known as the CF. Or more completely the ‘care factor’.
“I don’t care.”
“I couldn’t care less.”
All of these are attitudes, sometimes verbalised by owners and staff alike, reflect the care factor.
When you hear these phrases, it is usually a good indicator of a low CF in a business.
There is no quantified version of it, but the CF is the driver of all the other performance indicators.
In a business with a high CF, the stock will be ordered in the right quantities because someone will care enough to monitor accurately and respond appropriately.
The stock will be turned over at the right rate when someone cares.
The right levels of profitability will be achieved – and so on down the list.
The CF is a primary indicator. You can call it engagement or morale or anything you like, but without this, a business is guaranteed to perform sub-optimally.
The good news is that the CF can be increased at no cost – or very low cost.
You increase your CF not by doing different things (what you do) but by doing (the same) things differently.