Author: Donna Brown

I think the most basic math in a retail store happens at the cash wrap and I don’t just mean checking out customers and adding their bills and their change. In my store we have to track and record our “Hourly Sales Report”. This hourly sales report tells us weather or not we are on track for our daily sales goal. We have several hourly and daily goals that we are required to meet, UPT, ADS, Actual Sales, and Conversion. I know that is a lot of acronyms. So I will start by explaining those
What is UPT?  UPT stands for “units per transaction” and it means for every sale how many items were purchased? 
What is ADS? ADS is an acronym for “average dollar sale” in other words how much money we made for every sale. 
 What is Actual Sales? Actual Sales is our overall monetary goal based on the traffic and sales on the same day of last year. 
What is Conversion? Our conversion rate is how many of the customers that came through the door actually purchased something.   These goals all work together. If we meet our UPT and our ADS consistently throughout the day, and we have the traffic, we will make our actual sales goal. Although it is stressed upon every employee that it is vital that we meet every goal, not just the actual sales goal. If we are making our ADS because someone is buying our most expensive products but not our UPT then we need to be showing the customer more items and getting them in the fitting room. Or if our UPT is high because customers are shopping in the clearance section but our ADS isn’t high enough we need to be putting more clearance items in the fitting room with our customer and even sneaking in some full price items. That way our ADS and UPT are where they should be and we are making as much as we can for the company. 

Have you ever walked into a store and heard an electronic bell sound announce your presence? You may have thought that this was just to let the associates know a new customer had come into the store, and while thats not entirely wrong the main purpose of this is actually to keep track of the store traffic, or how many people come into the store. Later those numbers are compares to the purchases made to come up with a “conversion” rate. The conversion rate is a percentage made of how many customers come into the store vs how many are “converted” into paying customers. “Retail Conversion rate is fairly easy to calculate – it’s a simple matter of dividing the number of transactions that are made within a period of time by the footfall for the store in that same time period. (Ipsos)”We have a goal set for how many of the customers that come in MUST be converted into paying customers. If that goal is not met we have a short meeting to discuss what went wrong and what we need to do to fix the issue. Every time a large group of people wandering around the mall some through the door only to turn right back around my stomach drops. Those numbers really hurt us. Lets get to the numbers. Our conversion fluctuates daily. Lets say 300 people come into the store but only 75 of them are actually converted into paying customers then the conversion rate of our store for that day would be 25%.  

All of these goals our UPT, ADS and conversion are integrated into the way we run our store. Most importantly the way we run the fitting rooms. If we get a fitting room started for a customer we must makes sure they have at least 6 items in the fitting room with them at all times. We are encouraged to pick out items that complete outfits based on the items the customer has already picked out. Our company says they completed a study saying that people buy about half of the items they try on in the fitting room, if we can get six items in the fitting room statistically they should buy three items (our UPT goal) the average price of the clothing in our store ranges from 20 to 30 dollars, if they buy three items the purchase should come out to about 60 dollars and voila we have met our (ADS) goal as well! Not to mention that according to Custom Retail Group Worldwide “Customers who make it into a store’s dressing room are almost 7 times more likely to make a purchase than those shoppers that only browse the sales floor.” Statistics like that make it that much clearer why it is important for sales associates to get customers into the fitting rooms with as much product as they can. Converting our customers from the door, to the sales floor to the dressing room can make all the difference in our conversion rates, UPT and ADS. 

Many retail stores have incentives and loyalty programs that encourage customers to shop with them more often and spend more money. “These programs track and incentivize purchasing behavior, rewarding customers for their loyalty to a particular brand. The premise is simple: The more you shop and spend the more you receive in return (Sheehan)”. Our store is no different and as both managers and associates, we are expected to get more loyal customers every week. These customers are among our best. Our company calls these customers redeemers. Loyalty Redeemers do spend on average $369 dollars more annually than our average customer. Our average customer spends $105 annually, compared to our Loyalty redeemers who spend $474 annually. That is a lot of money. Our monthly loyalty signup goal is 10. So let’s do some math! 10 new Loyalty Redeemers a month multiplied by 12 months is 120 new Loyalty Redeemers! If Loyalty Redeemers spend  $369 more a month then lets multiply that number by our 120 new Loyalty Redeemers that is $44,280 more dollars annually for just our store. Just to recap Loyalty Redeemers annual spending of $474 – Average Customers annual spending of $105 = $369 dollars more$369 x 120 Loyalty Redeemers = $44,280 

Our store calls our credit card the VIP program and our credit card holders “VIP Redeemers”. There are some great incentives for customers to sign up for it, 10% off every time you shop with it, and a $10 dollar off coupon emailed to you as soon as you are approved. GE Capital once ran a study on retailer-branded credit cards that found customer visited stores more often when they had a credit line open with the store. In our store we have a goal of 15 new VIP Redeemers a month. We already know how much more our Loyalty Redeemers spend annually so how much more do our VIP Redeemers spend annually? Once again the average customer spends $105 annually. A VIP Redeemer spends $578 annually, That is $473 dollars more annually than the average customer. Time for some more math So 15 new VIP Redeemers a month multiplied by 12 is 180 new VIP Redeemers. If VIP Redeemers spend $473 dollars more annually then we multiply that by our 180 new VIP Redeemers. That comes out to $85,140 more annually for just one store. Just out of curiosity lets see how much money that is across all of our stores. If there are 1,016 stores and we multiply that by $85,140 we get more than 86 million for all stores combined!!! It is no wonder they push us so hard for credit cards.   

Thanks for joining me! In this blog, I will be posting about my job as a retail associate at a women’s clothing store and the mathematics “behind the counter”. There is a lot of math that goes into our companies policies for the way we behave and interact with our customers.