It can sometimes feel like key performance indicators (KPIs) are dashboard tools that high-ranking financial institutions and management consultancies use, not clothing retailers. Even though these metrics benefit these industries, almost any workplace can see the value in them if they know what to use them for. From measuring stock turnover to identifying order sizes, here are some of the top reasons why clothing retailers can benefit from KPIs.
Establishing profit margins
Some of the best CFO KPIs available for clothing retailers and the textile industry are those that allow you to establish profit margins. The profit margin of each of your product lines is vital for determining your prospective returns. Seeing this measurable data also allows you to calculate a reasonable markup on a product while also maintaining a ratio of profitability and competitiveness.
Managing stock levels
Many clothing retailers find themselves having to guess how much of a specific item to buy. You don’t want to risk ordering too little, but you also don’t want to stock too much and tie up your operating funds. Striking a balance is critical, but not every retailer knows how. This is where KPIs come in. If you can measure how specific product lines sell, you may be able to forecast the sales potential of other lines. Over time, you’ll gain confidence in gauging how your seasonal lines perform, which may allow you to predict your working capital.
Managing shopper to staff ratios
Building staff rosters is no clothing retailer’s favourite task, even if it is a necessary one. Making it even more complicated is the risk that you might understaff or overstaff each working shift. While you may never accurately predict how busy each day will be, KPIs can go a long way toward establishing patterns.
These metrics allow you to work out your shopper-to-staff ratio to make sure profitability remains high. From this information, you may be able to determine if you need fewer sales workers, more sales workers, or targets and incentives to boost sales.
Analysing your turnover
One of the most common metrics that business owners look at is year-on-year growth. This KPI can determine whether you are growing, and if so, which channels are providing this growth. Turnover analysis may also be helpful for figuring out which parts of your business require investment and whether new areas of sales generation could be worth exploring.
Identifying order sizes
Just by looking at the figures at the end of the working day, it can sometimes be hard to determine how large each customer’s order was. All you see are numbers, and they could mean multiple small items were purchased, or one large item was.
However, it doesn’t have to be guesswork. KPIs allow you to measure the average order size on your website to determine the price point of sales. From this information, you can determine what people are willing to spend and how well your product promotions are working.
Many parts of your business can require guesswork, but that doesn’t have to be the case for everything. You may be surprised to learn just how many aspects of your business are measurable just by using KPI dashboards for CFOs with easy-to-read metrics.
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