Understanding and closely monitoring your supermarket KPIs, or key performance indicators, is incredibly essential for grocery business success.
Grocery store metrics help you gain valuable insights into various areas of your business — such as your financial health, customer engagement, sales performance, and operational efficiency, among others.
There are many different KPIs to consider, but the bottom line is that they all aim to provide valuable insights to help you make informed decisions and formulate better strategies.
Whether aiming to optimize your operations, increase sales, or improve customer satisfaction, monitoring your KPIs can help you pinpoint strengths and areas for improvement.
Understanding supermarket KPIs
KPIs, or key performance indicators for grocery stores, are helpful metrics that allow businesses to measure their success in various areas. The most commonly used KPIs in the grocery industry are:
- Average order value
- Conversion rate
- Customer retention rate
- Net promoter score.
Supermarket KPIs take on a more important role for online platforms because of their different shopping experiences and the resources involved in ecommerce retail compared to in-store.
However, there are similar metrics that may apply to both in-store and online retail groceries. Let’s take a look at the top supermarket KPIs that you should look out for if you have an online grocery business.
Sales and revenue metrics
Online sales growth rate
This metric measures the rate at which your business increases revenue from online sales within a specified period. Understanding your online sales growth rate is essential in making informed decisions.
For example, if this metric decreases compared to previous periods, it may indicate that your sales strategy has to be revisited to boost revenue growth.
On the other hand, having a high sales growth rate can be a good sign that you’re on the right track.
Average order value (AOV)
Average order value (AOV) is a metric that measures the average dollar amount that is spent every time a customer places an order on your website or mobile application.
It is considered one of the most critical metrics for retail businesses, especially online stores, as it can affect key business decisions — like how you spend your advertising budget, lay out your online storefront, and how you price your products.
Conversion rate
Conversion rate refers to the percentage of visitors to an online grocery store website or app making a purchase.
It is also a crucial metric as it directly indicates how well a store is converting site visitors into actual customers. High conversion rates are indicative of a robust marketing, merchandising, and sales strategy.
Conversely, low conversion rates may indicate poor user experience, problems in pricing, or gaps in your marketing strategy.
Customer engagement and satisfaction
Customer retention rate
The customer retention rate metric measures how many customers remain loyal to your online store over a specific period.
If you have high customer retention rates, it indicates that you have a loyal customer base and high customer satisfaction.
This metric is important because it says a lot about the user experience you provide, as well as the quality of the products that you carry.
Net promoter score (NPS)
This metric measures customer loyalty and satisfaction and points toward the likelihood of customers advocating for your brand or recommending your store to other people.
The net promoter score is calculated based on how customers respond to the question, “How likely are you to recommend our store to a friend or colleague?”
Customer feedback and reviews
Customer feedback and reviews are metrics that directly measure your online customer feedback quantitatively.
This can usually be processed by artificial intelligence solutions trained to understand customer sentiment and come up with a quantitative interpretation of whether overall sentiments are negative or positive.
Operational efficiency
Inventory turnover
This KPI measures how often your online grocery store is able to sell its entire inventory over a given period.
It is an essential metric for measuring how efficient your operations are and can help analyze product demand, pricing, inventory purchases, and costs.
Monitoring your inventory turnover can be crucial, especially if you have a lot of highly perishable goods where the potential for waste is very high.
Order fulfillment time
The order fulfillment time metric measures the time it takes from the customer ordering the product to the time it is received.
This metric provides powerful insights into how efficient a retail business’s supply chain and inventory management are
It can also help highlight improvement areas and assist in weeding out unnecessary processes that add to total fulfillment time.
Stockout rate
Your stockout rate refers to the percentage of times a product is unavailable in your inventory whenever a customer orders it.
It is indicative of your performance in terms of meeting the demand of your customers, as well as how efficient your inventory management system is.
A high stockout rate equals lost sales opportunities, lower customer satisfaction, and a lower market share. It also means that you may be losing money on inventory holding costs.
Contrarily, a low stockout rate means that you are meeting the demand of your customers, have an optimized inventory, and are increasing your revenue accordingly.
Marketing and acquisition
Cost of customer acquisition (CAC)
Customer Acquisition Cost, or CAC, measures how much your business spends to acquire new customers.
It is an important business metric that reflects the total cost of your sales and marketing efforts, equipment and property, and everything else you need to convince a customer to purchase your products or services.
Return on advertising spend (ROAS)
Return on ad spend (ROAS) is a KPI that measures the revenue you earn for every dollar spent on a campaign. ROAS is based on the return on investment (ROI) principle, showing the profit a business has made for every advertising expense.
It can be measured both on a granular and high level, meaning that you can look at an entire marketing strategy or zoom into the performance per ad level or campaign.
Website traffic and conversion
Website traffic refers to the number of visitors to your ecommerce site. Website conversion lets you know how many people took your desired action—clicking an ad or making a purchase.
In the context of online grocery stores, however, conversion typically means buying products or services from a merchant. Both KPIs are valuable, but website conversion rates hold a more significant weight as they directly translate to sales.
Conclusion
KPIs are valuable indicators of your overall business performance and can help propel your retail business to greater heights if observed correctly.
Alongside a robust sales, marketing, and operational strategy, implementing and refining KPIs depending on your targets is essential to sustainable growth.
Check out Wave Grocery to start optimizing your online grocery store’s success today!
