Guide to Utilizing Retail Analytics for Store Profit

To develop a strategy to increase profits. Retail analytics can help you figure out which products make money and which ones don’t. This helps you decide how much of each product to have in stock and when they sell best.

McKinsey & Company’s research found that successful apparel retailers boosted their profits by 2-10% through the use of analytics. It’s important to analyze retail sales because your business’s profit depends on how well you respond to changes in what customers like.

Why Analyze Sales in Retail?

retail analysis

Analyzing sales volume provides insights for tactical actions. Additionally, it offers valuable insights for strategic activities. Identifying profitable product positions helps in evaluating the marketing team’s utilization of the marketing budget. Meanwhile, identifying weak product positions aids in assessing the performance of the sales team.

Analysis of trading activities solves several tasks:

  • Determining how effective management and marketing decisions have been
  • Detecting product groups that are the most and least profitable
  • Planning the range of purchases and schedule
  • Identifying seasonal fluctuations in demand
  • Sales market analysis helps to identify the most critical market segments. Based on the obtained data, you can adjust the ways of sales or outline new, more promising ones. Profit analysis makes it possible to determine the factors affecting the volume and structure of income received by the company.

    What is Included in Analyzing Sales

    Sales analysis in retail includes such indicators as:

  • The volume of products sold
  • The volume of products delivered
  • Number of customers
  • Unit cost of goods without markup
  • Level of sales by category and by region
  • Retail analysis is essential for managing ongoing changes, pinpointing promising product positions, and accurately segmenting the market. In some cases, businesses choose to automate retail analysis tasks due to the sheer volume of data involved.

    Types of Retail Analytics

    Distinguish the following types of retail analytics:

  • Structural retail analysis: It becomes essential when your product assortment includes multiple items. It often combines with ABC analysis, helping you identify the most profitable products that should receive active promotion. Consequently, these profitable products can replace the unprofitable ones in your inventory. It analyzes the average check to create better promotions, decide product shelf placement, and understand customer preferences more accurately. It will improve customer experiences.
  • Analyzing retail dynamics: It focuses on how sales volumes are changing. We collect information over several periods for comparison. The result helps to determine when the product is in demand among the consumer audience. It allows you to decide when to eliminate outdated products that could be more interesting to a targeted audience.
  • Control analysis: It involves tracking the fulfillment of the intended plan. The volume of sales is compared with the established targets. This tool can not be independent but helps direct employees’ activities.
  • Analyzing sales in retail through factor analysis helps you pinpoint issues in sales trends and understand their underlying causes. The following formulas help to conduct it:

  • Change in sales volume = (Actual volume – Planned) * Planned price
  • Change in price = (Actual – Planned) * Sales volume.
  • Demand Equity Analysis. XYZ analysis helps determine buyers’ interests’ stability and allocate working capital accordingly.
  • Conversion analysis: Buying behavior allows evaluating personnel performance and overall customer experiences with the existing outlet.
  • To evaluate the profit of different chain stores, analyzing their size and sales volume is a valuable method for assessing the efficiency of fixed and current assets.

    In addition, retail research will also be in use. In this case, the activity of a particular retail store is considered, including the work of employees. The volume of sales, sold items, and the average check are studied. The results help create a suitable assortment and build a motivation system for the staff.

    Methods of Retail Analytics

    Online retail makes analytics processes easier. Now, let’s discuss several methods in the arsenal of retail analytics.


    The method is based on the Pareto principle. According to it, 20% of the product assortment gives 80% of the profit, and the remaining items bring only 20%. As a result, the following product categories are as shown below:

  • A – models that bring the primary income
  • B – goods of average demand
  • C – leftovers
  • Each category brings 80, 15, and 5% of profit. ABC analysis of retail implies the possibility of excluding C-category goods to optimize sales.


    KPIs evaluate a specific employee, the entire staff, and the retail store’s work. The efficiency of work is influenced by:

  • Sales volume
  • Visitor Traffic
  • Average revenue
  • Number of sales
  • Average check
  • Return on investment
  • Conversion
  • SWOT

    Assess the internal organization of the company:

  • S – assessment of the company’s strengths
  • W – address analysis of weaknesses
  • O – opportunities for development and growth of production capacity
  • T – the threats should be considered
  • It will allow you to look at the retail store from several angles and deal with the challenges that arise.


    Analysis of sales of goods by XYZ is needed to assess the demand for the product range:

  • X – goods of stable demand, showing a coefficient from 0 to 10%
  • Y – goods of average stability with a coefficient from 11 to 25%
  • Z – unstable commodity groups with a coefficient of variation of more than 25%
  • Most retail assortment is represented by goods to which buyers’ interest does not weaken. They include the first group with a low coefficient of variation.

    How Do You Do a Retail Analysis Correctly?

    For a retail analysis to yield results, it is necessary to:

  • Calculate revenue to determine whether sales were growing or falling during the selected period
  • Analyze internal indicators, namely the dynamics of growth and decline
  • Analyze profits and factors that motivate people to buy
  • Evaluate the work of the head of the retail business and identify their effectiveness
  • Analyze the plan fulfillment through the KPI system
  • Analyze the effectiveness of internal communication
  • Analyze the sales funnel
  • Study the customer audience, its preferences, and tastes
  • Analyze sales by trade groups
  • Analyze retail strategy
  • Conclusion

    When analyzing retail performance, the main mistake will be to apply only one method. In addition, it is required to choose a suitable period, for example, the season, to make the indicators more visible. Analyzing sales figures in detail and only occasionally can lead to losses. If you want to increase your sales figures or revenue then try using apps like iCart in your store.

  • Collect data, thanks to which it is possible to study the ongoing processes. This information is from secondary internal analytics.
  • Find data demonstrating retail effectiveness and data points for analyzing retail sales methods.
  • Analyze store performance using the selected methods and evaluate the results obtained.
  • Determine what factors influence the trading activity of the company.
  • As you can see, retail analytics is a complex process. Only regular assessment will help to achieve efficiency.

    Vanessa Friedman

    About the author

    Vanessa Friedman is a content marketing professional who helps companies attract visitors, convert leads, and close customers. Previously, Vanessa worked as a marketing manager for a tech software startup company. In case of any inquiry or suggestion kindly feel free to write her at [email protected].

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