Jackson Miller

One thing I have learned from being a partner in a retail store is the importance of measuring performance. The “one true metric” for a small business owner is “how much money is in the bank”. Unfortunately, if you only watch that metric you don’t see problems until it is too late. You have to find other ways of measuring performance, and if you pick the wrong ways it could do more harm than good.

First we track overall sales and the cost of goods sold (COGS). This gives us our gross profit and our gross margin. Next we look at our inventory and how much we are spending on inventory. This gives us an idea of cash flow and correlates to potential best-case sales volume for the near future.

As we measure these metrics over time we are able to get some idea about our weekly and annual sales distribution. The sales distribution is important because people’s shopping habits follow weekly and annual patterns (i.e. people shop more on weekends. not much shopping in Jan-Feb, back to school shopping 1-2 months before school starts, gift shopping in Nov-Dec, etc). Because of seasonal sales trends, comparing month to month (i.e. October to September) numbers is pretty much a worthless venture in retail. Year over year sales are the comparative metric that matters in retail. I need to know how this October is doing compared to the previous October. By calculating a year over year percent increase, the retail industry is able to compare performance with each other. This gives an idea of how you are doing “in the market”.

I just found a great retail sales reportsresource from BusinessWire. As I look at the September retail sales report, my eyes shoot straight to the right 4 columns. From looking at the month over month percent increase for retail brands like Gap Inc and Target I am able to compare the numbers to our store to get an idea for how we are doing in the market (we are doing great).

The bad news is that the retail market in general is not doing too good. For a surprising number of companies, the percent increase is actually a percent decrease. Wal-Mart is essentially flat. Target (who had been experiencing solid growth) is showing slightly more than 1% growth. Gap Inc (The Gap, Bannana Republic, Old Navy) is down. Dillard’s is down. All-in-all September sucked for retail. The year-to-date numbers aren’t much better.

While it is nice to be able to define a metric that can easily be shared and compared across the industry is nice, it is far from the most informative way to measure performance. Once a business has been around for a while, self-referential comparison is incredibly informative. By measuring the average amount of a sales transaction and the number of transactions that we do in a given month, we are able to get a sense for how our advertising and customer service is doing. This also let’s us know more finely where our growth is coming from.

You cannot run a business by measuring and analyzing the business. A retail business is successful by having a good product and great customer service. Still, analytics can help you make a business better.

This is why I am doing statzen. I want to know how my blog is doing so that I can make it better. Any statistics service can give hits and visits, but that is the equivalent of knowing sales and COGS; it just isn’t very helpful. I want statzen to answer more in-depth questions like “which topics are people most interested in?”, “What attention does an average post get? How does this post measure up?”, “Is my blog growing or declining?”

Really, statzen is about bringing “business intelligence” to the conversational web. Our experience as retail store owners is definitely influencing how we think about measuring performance on blogs.

Somehow this turned into a long post and I hope it makes sense. The original intent of the post was to say “Hey, look at these cool retail sales reports that I found.”