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Every Retailer Needs a KPI Strategy

J.D. Associates
August 2011
www.jdapos.com

Summary:

Key performance indicators only tell you how well you are performing. To actually improve your performance you first have to know what KPIs mean and how to use them. In the first of three parts in this series we look at the role KPIs play in answering the big questions successful retail companies ask themselves to achieve outstanding results. To run a retail operation successfully, you must know
three things when it comes to KPIs:

1. what a particular KPI is
2. what it means relative to your bottom line
3. how to control it

In other words, a retail strategy requires a KPI strategy. Just like you’re limited in your retailing actions, you’re also limited in your KPI actions. And where retailing strategy is largely about where tospend money; KPI strategy is largely about where to spend time. You can’t possibly look at each piece of data, or spend all your time looking at data. You’ve got a store to run (or several). Nor is each KPI equally important all the time to every decision maker in the organization. Some KPIs are more relevant depending on the type of store, type of merchandise, time-of year, the role of the person managing the KPI, the choice of strategy and other factors. At the end of the day, it’s not the KPI that matters, but what it means to the business and what actions you take as a result.

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