How to calculate your conversion rate in retail – and 4 ways to improve it
Retailers continue to face macro-economic pressures and headwinds related to global inflation, labor shortages, and supply chain issues. Due to these challenges, maximizing store traffic conversion is a top priority for retailers: revenue, same–store sales commitments, and strategic business imperatives are all under close watch.
In this retail conversion guide, we will be answering the following questions:
- What is a conversion rate in retail?
- How to calculate conversion rate in retail
- What’s the average conversion rate for retail stores?
- How brands can increase conversion rate in retail
What is a conversion rate in retail?
A retail store traffic conversion rate is the percentage of people who visit your brick-and-mortar location and make a purchase while there.
Retail store conversion rate is one of the most important performance indicators for brick-and-mortar success: without converting customers, additional key performance metrics like average basket size, average number of items per basket, and sell-thru rates are not important.
Best way to calculate conversion rate in retail
The conversion rate of a brick-and-mortar store is measured as a percentage (%). To calculate it, you need to take the total number of sales completed during a given period, divide that by the total number of visitors during that same period, then multiply the result by 100.
Here’s the formula written out:
Conversion rate = Number of sales / total number of visitors x 100
For example, if 600 people visit your store in one day and 60 make a purchase, your retail conversion rate would be 10%.
What’s the average conversion rate for retail stores?
While the average eCommerce conversion rates are around 2.5-3%, retailers see much higher sales conversion rates of around 20-40%.
Many factors can influence this benchmark and cause it to fluctuate, such as the store’s physical location (is it in a high foot traffic area?), time of the year (is it Black Friday or a weekend day?), if there are any promotions running at the store, etc.
For these reasons, if you want to paint an accurate picture of your retail conversion rate, it’s best to calculate it over a longer period of time. That way, it will smooth out any outliers related to seasonality or special events.
4 ways to help brands increase conversion rate in retail
1. Physical store layout
Many retailers have a physical store layout and merchandising strategy that aims to create a great in-store experience. Such strategies include setting up a “power wall” that makes a big visual statement, merchandising products in a way that makes it easy to find items on sale, and ensuring the store remains clean and uncluttered.
2. Cash wrap or checkout area placement
Some brands actually choose to place their cash wraps at the back of the store in order to increase the average ticket size. This strategy also serves to hide the length of the line so it doesn’t deter customers who are entering the store or browsing around.
3. In-store promotions and discounts
Retailers will use different promotional strategies that encourage customers to complete their purchase while they are inside the store. Additional bold marketing signage, balloons, outbound marketing communications, and even having an employee communicate active sales, promotions, and discounts to every customer as they enter the store.
4. Retail training
Brands should invest time in upskilling their employees’ customer service skills and ensuring frontline staff members are upholding brand values in-store. This can include how to greet customers as they arrive, how to read certain cues and detect when help is needed and running incentive programs to keep motivation high (like commission structures, prizes, or promotions).
A new way to increase conversion rate in retail
It’s now time to start implementing some conversion-boosting strategies for your own business. But how will you know which ones are working and which ones need improvement? How can you ensure you’re keeping up with customers’ evolving expectations?
A successful strategy all boils down to empowering the voice of the customer. If you’re constantly soliciting feedback in a way that’s engaging and insights-rich, you can shape the in-store experience in your clientele’s image, and close more sales as a result.
There’s no better time than the holidays to maximize your conversions and seasonal revenue. Our new e-book uncovers the hidden reasons why shoppers don’t buy – and how you can win back their purchases.