How to Develop Your Own Performance Benchmarks

Retail Performance Benchmarks

One of the simplest tools that you can create for use in managing your retail organization is a list of business benchmarks (or often called, business metrics) that can be used as productivity goals. Few small retailers take this step; however, if done properly, the data you will create can be used for performance goals to help your employees attain higher levels of performance.

The “business metrics” concept is very basic. Essentially, it suggests that you identify each unique task that is performed in your firm. Let us take merchandise receiving, processing, and merchandising as examples of three tasks we must perform to run our retail operation. These tasks are often composed of the following key steps:

• Prepare the area where the merchandise will be received and processed
• Meet the inbound truck and place the incoming merchandise in an appropriate area for either immediate or later processing
• Count and sign for the received cartons
• Open the cartons and remove the goods, placing them on either a processing table (if more steps are required like removing packing material) or place the items directly onto either wheeled carts or wheeled hanging racks
• Mark the goods with the correct price
• Stage (store for later movement) the merchandise or move it directly to the sales-floor
• Move the goods to the sales-floor and place the merchandise in the correct location on the sales-floor in an attractive fashion to attract customer attention

The time it takes to perform those tasks can be measured easily. Assume it took 3 hours in total and you used three people to perform the work for those three hours. That means your team used nine total hours (or 540 minutes) to perform those tasks. Now, divide the number of items that were received, processed, and merchandised (let us assume 2000) by the 540 minutes used in order to calculate your productivity ratio for those tasks 2000/540 = 3.7 . That means your team averaged receiving, processing and merchandising 3.7 items per minute (for each person).

Now that you know that productivity number, you can do a few things with it. First, use it to calculate the amount of time you will need for future receipts and the related processing /merchandising. If you have been scheduling too much time for your team to get the job done, then consider scheduling less time. Second, look for ways to improve the efficiency of the tasks and measure it again. You may be able to reduce the total time needed by implementing improvements and then you would be able to calculate how much time you were able to save by doing so.

Your team may wish to consider creating productivity benchmarks for the following tasks in your business by tracking the following :

• Receiving - using cartons received per minute (or hour for large shipments)
• Processing - using units per minute
• Merchandising - using racks or carts moved/unloaded per minute
• Price changes - using process changed per minute
• Floor recovery - using aisles or store zones (areas) recovered (neatened up) per minute
• Cashiering - using items sold (or number of transactions) per minute

For more information, contact us at www.AtlantaRetailConsulting.com.