David Brown

Here’s Your Scorecard for Measuring Holiday Success

AS WE APPROACH the busiest time of year, it’s important to set key performance goals for the holiday season. When I ask a store owner what their target is, the most common answer is “better than last year.” While a worthy achievement, beating last year is not a quantifiable objective in itself — a 2 percent improvement in sales or profits in an environment where inflation is 8 percent or more is not moving forward; a 10 percent improvement is.

It’s important to “numbify” our objectives at this stage. This is best achieved by viewing the steps to the process rather than just the overall result. A successful sports franchise won’t just set the objective of winning the championship; they’ll break it down into how many wins they’ll need to achieve the objective, what each player’s numerical contribution will be to achieving those wins, then prepare their team to carry out their individual roles. Your business should approach it the same way.

Here are your key metric measures for this holiday season:

1. Total Sales: This speaks for itself. However, it needs to be broken down further

Units sold: How many items will you sell?
Average retail value: At what price will you sell them?

2. Gross Profit: An increase in sales combined with a drop in profit is not a successful formula! The factor that will determine whether you’ve been profitable enough is:

Mark-up Achieved: What percentage profit will you make on each sale?

3. Inventory Level: How much product will you need to achieve your objective? This will come as a function of:

Stockturn: How often will items sell through during this period? The faster you turn the items over, the less inventory you will need to achieve your objective.

4. Salesperson performance: What contribution do you expect from each staff member relative to your overall sales target? In the same way a successful basketball team will set a goal for points scored per player, you need the same objective for your sales team. This will then set the parameters for the training they will need. Again, this can be broken down by product category, units sold, and average retail on an individual basis to fit with your overall store goals.

The process of working through these questions is a key component of the sales plan we prepare for clients. If you have any questions around this process, please feel free to reach out to our team at inquiries@edgeretailacademy.com.

David Brown

David Brown is the president of Edge Retail Academy, a leading jewelry business consulting and data aggregation firm that provides expert business improvement plans to help with all facets of your business, including improved financials, healthier inventory, sales growth, increased staff performance, recruiting and retirement/succession planning, all custom-tailored to your store’s needs. They offer Edge Pulse to better understand critical sales and inventory data, to improve business profitability, benchmark your store against 1,200-plus other Edge Users, and ensure you stay on top of market trends with their $3 billion-plus of industry sales data. Contact (877) 569.8657, ext. 001, Inquiries@EdgeRetailAcademy.com or EdgeRetailAcademy.com.