The People visiting your store have different motives in mind – which they don’t express quite often. Some have an urgent need and actually buy something, some visitors with the intention of buying but are distracted, or simply the ones who entered because they were intrigued.
Hence, people visiting your store have different intentions and you ought to know how you can sell to those who didn’t want to buy in the first place.
Simply put in words, the Conversion Rate is the proportion of customers who enter your store and depart after buying your products, be it party tableware, beauty, hardware or bulk cleaning products. This figure has a direct impact on sales and profit.
When evaluating the performance of each store, metrics like revenue per store and total foot traffic may be at the top of your priority list. However, one of the most crucial KPIs for determining the performance of your store is the retail conversion rate.
Questions like, “What is the typical conversion rate for my store? How can I make it better?” would be storming your mind. Read further to know the answers.
What does retail conversion mean?
The percentage of customers who convert in-store is referred to as the retail conversion rate.
It’s frequently confused with the percentage of customers who visit your online store and make a purchase.
Conversion rates there are typically higher for physical stores than eCommerce websites. This is because customers can easily access the website & buy whenever they want.
However, those who shop in-store get a more interactive experience. Brick-and-mortar stores account for 78% of all impulse purchases because shoppers can interact with store employees, handle merchandise, and see the actual objects they are considering purchasing.
Additionally,71% of in-store shopperswill spend more than $50, compared to just 54% of online shoppers, which indicates that in-store shoppers are likely to spend more during their shopping session.
Calculate Retail Conversion Rate
Here is a formula to determine your store’s conversion rate:
The conversion rate is calculated as sales / total visitors multiplied by 100.
(Note – The number of sales and the total number of items sold per transaction are two different things. The percentage of persons who convert is determined by the retail conversion rate. Therefore, even if one customer purchased five separate things, it would still be counted as a sale.)
Say you had 60 sales on a day when 300 people came into the store. As per the formula, 20% would be your retail conversion rate.
60 sales / 300 visitors multiplied by 100 equals 20%. (% conversion)
Average Conversion Rate Of Retailers
According to research, brick-and-mortar retailers often convert customers at a rate of 20–40%. That serves as a useful comparison point for yours.
It’s important to keep in mind, though, that there are various factors that can affect your retail conversion rate. For instance, if you have a flash sale over the weekend, you can experience an increase. On the other hand, if a staff member calls in sick and you are one person short, your retail conversion rate may drop.
By computing your conversion rate over a longer time frame, such as per week, month, or quarter, you may be able to spot those deficits. This will serve as a solid baseline for whatever improvements you make.
Why Computing Conversion Rate Is Crucial For Your Business
Improves your business decisions
Conversion rate provides information on the effectiveness of your retail stores.
Without making any adjustments, determine your average. In order to determine which adjustments encourage more customers to leave with an item in hand, evaluate the following against your benchmark.
- Store design: Do grid, herringbone, or geometric layouts result in higher conversion rates?
- Product mix: Does grouping similar products together—for example, coffee beans and mugs—increase sales because customers can get more things from a single store?
- Discounting: Do 15% or 20% discounts affect your conversion rate differently? If not, use 15% instead. While still presenting a compelling offer that persuades individuals to benefit from cost savings, you’ll boost your profit margins.
A reliable metric for performance
For each store they run, retailers should decide on key performance indicators (KPIs). KPIs serve as standards for what constitutes success. If you fall short of that KPI, you’ll be aware that more work has to be done.
Because conversion rates don’t vary greatly from day to day, they are one of the most reliable measures of retail store performance. Other KPIs, like foot traffic and gross income, customer conversion rate, for instance, can vary greatly based on the day of the week and local events.
What factors influence the rate of retail conversion?
Staff skills and performance
The conversion rate of a physical business is greatly influenced by the experience that customers have there.
Although it may not appear to have much of an effect on in-store conversions, sales and retail employees are the ones in charge of providing those experiences.
Leading fashion brand Gap tried gauging their staff’s performance. Retail employees had complicated and erratic schedules before the programme. In-store sales increased by 7% and productivity increased by 5% when those were swapped out for dependable weekly schedules. As a result, Gap made $2.9 million as stated by HBR.
Store Layout
The design of your retail business affects conversions, even if you have a little space.
Combining stock with often purchased items helps raise the average order value. However, browsing the store and hunting for t-shirts can be off-putting for those who simply came in to look.
The layout of your business can affect how many customers you convert. Approximately 62% of consumers claim that social distance makes them feel more at ease when they purchase in person. That will undoubtedly increase your profit margin.
Visual marketing
Did you know that in four out of every ten stores a buyer visits, they make three impulsive purchases? By using visual merchandising displays, you can literally showcase your products like gummy lollies, party tableware or others, enticing more in-store customers to the cash register.
Play around with the lighting, colour-scheme arrangements, and mannequin displays when displaying things. Even the tiniest alterations to your shopping experience can result in greater conversion rates, despite the fact that they may seem like minor adjustments.
How to improve the rate of retail conversion
1. Cover up the queue
Long lines are the reasons customers are put off and think of going somewhere else. You can certainly overcome this.
Invest in a POS system & go counterless – With simple checkout procedures, the customers would be able to complete the sales faster and not be stuck in long queues.
2. Improve Your Store Layout
Check the layout of your store – Where are the exhibits? How lengthy are the queues? Is the store clearly crowded or is it simple to find what you need?
You don’t want your store to look like customers will have to search through countless racks to discover items. Instead, create orderly displays that make it simple for customers to discover new & fresh products.
3. Educate and inspire your sales team
Did you know that67% of customersleave a store when they can’t find what they’re looking for? A further 39% departed due to bad customer service. By educating and inspiring your workforce, you can easily address both of those issues.
Invest in a retail training course that teaches employees how to provide exceptional customer service. That could incorporate:
- Playing a role in how to welcome clients to the store
- Teaching employees to recognise shopper body language clues
Your sales staff probably won’t go above and beyond to assist consumers if they are unmotivated (and therefore worsen your retail conversion rate). Always remember to motivate them. Promotions and sales commissions could provide them with the push they require to provide top-notch customer care. This will prevent customers from departing empty-handed.
4. Give away free samples
Free things are everyone’s weakness. Tap it to boost your conversion rate.
Giving away free samples of your items can enhance conversion rates. Because of this, 35% of peoplewho try a product will buy it on the same shopping trip. Suppose a new product of gummy lollies is introduced in your store. You can offer free tastings on that and encourage customers to buy them.
“When someone does something for you, you feel an unexpectedly great need to return the favour.” This kind of psychological response in customers is common and would compel them to buy from your store.
Costco is the most well-known instance of free samples. Each warehouse is equipped with pop-up stations where clients can sample the goods they are selling. To hold a four-day sampling station in one of its stores, it collaborated with Ziploc. The outcome? A rise in sales of 156%.
5. Highlight Your Reviews
Speaking of the psychology of buying, the need to belong to a group is another bias you may utilise to increase your retail conversion rate. Because of this, 97% of consumers utilise internet reviews to assist them to make purchasing decisions, and 93% of consumers find user-generated content to be helpful.
You can demonstrate that your products are selling well by using scarcity. 69% of millennialsreport experiencing the fear of missing out frequently.
Summing Up
Conversion rate should be a top priority when analysing the success of your retail store. It will reveal how many customers leave your store with your party tableware or other products in hand.
If you’re dissatisfied with your conversion rate, you must test strategies to increase it. Options for in-store pick-up, social proof, and sales staff incentives will have a greater influence than you might expect.
