How important is Productivity Measurement in Retail Stores?

So, you own a store right? Or, you are managing one. Probably that is the reason why this question means so much to you. It is quite natural to be concerned about all the factors that ultimately affect your business. It is always easy to start something but to keep it going and still make profits is a tough ask. This is what the real challenge is. You need thorough planning, study, analysis and actions to build a customer client relationship that runs a lifetime and wins your customer's loyalty. You often employ people expecting them to make just enough sales to keep your business going but forget to realize and understand their importance in the overall growth or failure of your business. You could think how much they sell, in what time but what is even more important is the fact that you need to understand what the total productivity of your store is, how much each individual unit contributes, whether there are any performance gaps, and what measures you need to take your business to a new high.

The benefit of productivity measurement. An efficient performance management system or n other words productivity measurement system is an ideal investment in this scenario. You first need to answer the reasons for measuring productivity, the plan how you will measure and after measuring what the desired course of action will be. Why you want to measure will answer what goals and objectives have been set by your organization. How you plan to measure will be your productivity metrics. And, the course of action will suggest the actions you will have to take to realize your goals and objectives. An assumption is made that the goals and objectives are clearly outlined before productivity metrics are implemented.

For any productivity metric to be implemented, it is important to first identify its contributing elements wholly. Elements of productivity metrics are name of the metric, metric description, measurement procedure and frequency, thresholds estimation, current thresholds, target value and units. Metric and metric description relates to what needs to be measured. Measurement procedure and frequency talk about how the metric is measured and how often the metric is measured respectively. Thresholds estimation means of how these thresholds are calculated. Current thresholds talks of the current value range that is considered normal for the metric. Target value is the best possible value of the metric and Units are the units in which the metric will be measured. After this technical dump of information let us understand this better with the help of an example.

The right example. Consider a scenario where you want to estimate the performance of your sales staff to understand who is a liability and who is an asset to your business and also to understand how much each employee or worker has contributed towards the growth of your retail store over a period of time. Here Name of metric will be Sales Performances. Metric description will define the purpose. In this case, metric description may be “Calculating the contribution of the worker towards the store's growth”. Measurement procedure will define the method that you will choose for measuring the work done by each worker. Here let's say it is formula that results in the number of sales made per person per day for a week. Measurement frequency is the duration for measuring and here it will be daily. Threshold estimation would mean the maximum number of expected sales that should be made by an employee per day. Current threshold would depict the number of sales made by the employee at present. Target value returns the difference between the expected and actual sales depicting the number of extra sales the employee will have to perform to meet the target goals. By tracking the daily sales information with the help of a productivity scorecard or a dashboard that helps you collect and organize data over a period of time you will be able to collect the data on single sheet. In our case these factors that we considered will be the Key Performance Indicators (KPIs) that will help you collect, analyze, and respond appropriately.

Doing this would help you not only identify your store's strengths and weaknesses but also will help you give a direction to your growth and also align your business principles and strategies to align with the same. And the result is that you understand and manage your business more effectively. Many a ready to use, customized store scorecard are available in the market for your consideration. So why wait to pick what suits your business the best because the success of your store is directly proportional to the performance of the people working in your store.