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What is KPI?
KPI stands for Key Performance Indicator. KPI is basically a measurable value that shows how a company can achieve its key business objectives. Any organization uses KPI to evaluate their success and target achievements. Higher KPI indicates the performance of the overall business activities while lower KPI indicates departmental performance like sales, marketing or human resources.
How can KPIs benefit the clothing retailers?
KPIs can help in establishing profit margins :
A CFO Key Performance Indicator or a metric is a quantifiable measure of high level financial performance. As a clothing retailer you can avail the CFO KPIs to keep track of and improve their profit margins. Evaluating your profit margin is crucial because it decides not only the prospective returns but also the inventory. Clothing businesses generally operate in a highly competitive market. Keeping tabs of your profits will help you to calculate reasonable financial strategies for your business.
Better management of stock levels :
Managing stocks is an important step in business. As a retailer, you would not wish to either run out of stock nor drown in a surplus. What you need is a balance between ordering too little and too much. The job becomes easy with KPI. With the help of KPI you can evaluate the sales of a specific line of product. Based on the analysis, you can predict the sales potential of different other lines. Once you follow the KPI analysis, you eventually become a pro in gauging the sales pattern every season.
Turnover Analysis :
KPI is an indicator of your achievements. A business is always keen about how far the company has achieved the set goals. Every year the growth is therefore evaluated. KPI helps you to know how much your company is growing. A turnover analysis helps in identifying both the strength and weakness of your company. Investments to strengthen a particular area of business may be planned accordingly.
Tracking and Analysing the orders :
This means you have to identify how large the orders from each customer are. This identification is important as you can analyze how much the consumers are willing to pay for your products. This in turn will help you determine the price level of your stocks. KPI helps you in measuring the average size of the orders. By analyzing the numbers you can evaluate the success of your promotions and business strategies.