For many retail organizations, a store’s entire success is measured by one central metric: Revenue. While revenue is a crucial number, using it as your sole north star in evaluating regional or store-by-store performance might be inadequate when deciding to open or close locations.
A location with lower sales may look dire, for example, when overlooking other important metrics, such as average transaction value, that actually signal the store’s health. Or after a successful year of sales in a region, you could open a new store in the area only to discover the success is driven by store staff, not the location itself. This is why it’s important that you follow more than the money.
Foot traffic trends and other key metrics can point you to areas where further staff training, more marketing resources or other factors could save a store from failure. Here are the two steps to take before turning out the lights.
Audit all available data
Before deciding to close a location, it’s vital that you take all available preventative measures. We recommend a full data audit with every metric you have, asking these questions:
Foot traffic (Trends over time for when the store was busiest and slowest)
- What are the store’s busiest and slowest hours?
- Which marketing campaigns successfully drove traffic and which didn’t work at this location?
Conversion rates (Historically, how you’re converting foot traffic into customers)
- Is the store usually staffed to meet demand?
- Are conversion rates and foot traffic correlated, such as lower conversions during higher traffic?
- Can you make staffing or training changes to adjust?
Average transaction value
- How much do shoppers usually buy?
- Is this store’s team effectively upselling and cross-selling?
Customer acquisition cost
- How much does it cost to drive shoppers to this location?
- Is it above or below your average location?
- Is it above or below your other low-performing locations?
Invest in your pain points
After your audit, address the trends that emerge with your marketing and operations teams, in the same room if possible, and work together to reinvest in the low-performing location. It’s likely that your investment will fall into at least one of these categories:
Marketing: Driving more quality traffic to the store at the right time
Staffing: Making sure the right amount of staff is in the store to meet predicted demand
Training and resources: Equipping staff with additional skills needed to engage customers better and manage store more effectively
Let data be your guide
Use a healthy variety of metrics to inform your decision before opening or closing a location.
Download our latest eBook, The ultimate guide to opening and closing stores using foot traffic metrics, to read further about:
- What’s causing retail’s real apocalypse and how it affects you
- How to evaluate true store performance beyond revenue
- External factors that affect store performance worth paying attention to
- Best practices for closing a location
- When to open a new store