Measuring your Performance

Understanding KPIs

There’s no doubt about it; running a liquor store is a tough job. In between the main tasks of balancing your inventory, increasing sales, controlling your expenses, holding events, and looking after your staff, there are a thousand other tasks that, if neglected, can seriously impair your success. In fact, there are so many jobs to do that it can be hard to set goals, never mind track your performance. The secret to doing this lies with Key Performance Indicators (KPIs).

KPIs evaluate the success of a particular activity or of an organization as a whole. Sometimes they are geared towards an operational goal, for example 10/10 customer satisfaction or increased sales per sq. ft., but they can also be used to make progress in strategic goals. Choosing the right KPIs involves an in-depth understanding of what is important to your store.


Your key performance indicators should follow the SMART criteria. What does this mean? It has to have a Specific purpose for your liquor store, it has to be Measurable to really get a value for the KPI, it has to be Achievable, any improvement in the KPI has to be Relevant to the success of your business, and it must be Time bound, meaning that the outcomes are shown for a defined and relevant period of time.

In order to be evaluated, your KPIs should be linked to target values so you can figure out if they are meeting your expectations.

Examples of Liquor Store KPIs

Sales per Sq. Ft.

This KPI is one of the best metrics to find out your efficiency in using your sales space and assets. Simply put, it’s your store’s average revenue for every sq. ft. it occupies. It can be found by dividing your sales by the total number of sq. ft. of sales space.

Determine which part of your store gets the most traffic, and if there are any bottlenecks that disrupt the flow.

It’s important to know as it’s an indicator of how efficient you are with your sales space, and it can help you figure out which store layout is the most profitable for you. This in turn can influence marketing and inventory decisions. Some public liquor boards, like the BC Liquor Distribution Branch (BCLDB), make this information publicly available through annual reports, so you may be able to compare your figures to those statistics. As an example, in their fiscal year 2016/17, the BCLDB reported average sales of $1380/sq. ft.

This KPI should be reviewed on an as-and-when needed basis, e.g. comparing your store’s performance from last year, renegotiating rent, or evaluating your store’s layout.

Foot Traffic

Tracking foot traffic can give you a lot of insight into many aspects of your store, and can help you make important decisions about marketing, staffing, and layout. It refers to the number of people who come through your doors during a specific period.

The easy way to measure is with people counters, but things can get more advanced with mobile tracking technology and video surveillance. These tools can also track other aspects, such as dwell time and shopper behaviour.

A foot traffic KPI can help you discover which store displays bring in the most customers, or if window shoppers are enticed into walking into your store. You can determine which part of your store gets the most traffic, and if there are any bottlenecks that disrupt the flow, enabling you to improve your layout. Finding out your store’s peak hours can help you make staffing decisions too; should your peak time be 6:00 pm, you can decide to place more sales associates on the floor to ensure the correct staff-to-customer ratio.

This is a KPI that should be measured as often as necessary, but be aware that manually counting customers is an intensive job that takes a great deal of effort. You may get more accurate results with an in-store analytical tool to automatically track shoppers. “Retailers who are capturing insights about the in-store customer journey via shopper traffic and movement analysis are seeing a tremendous lift in sales,” says Ravinder Sangha, marketing manager at Halo Metrics. “The key is to action the insights. Use a solution that not only gives you the data, but helps you create actions to better your business!”

Conversion Rate

The conversion rate KPI is the percentage of customers who made a purchase. It helps determine the performance of various in-store elements, such as merchandising, customer service, and more. The figure can be found by dividing the number of sales by your gross foot traffic. So, if your store has 200 visits and 90 of those shoppers completed a sale, your conversion rate would be 45%.

High foot traffic with a low conversion rate may indicate that while you’re doing a good job at bringing people into your liquor store, your customers are not quite connecting with the products you’re offering them. Armed with this information, you can begin to tweak your formula, such as changing your product mix, improving your merchandising, retraining your staff, or improving the in-store experience.

This KPI should be measured regularly, but also whenever you make any changes. Be sure to track your conversions before and after to make a valid comparison.

Sale Count

This is a fundamental KPI that tells you how many sales you made within a given time period. The data should be readily available courtesy of your POS software. Not only is it a good indicator of how busy your liquor store is, but it can help you plan ahead. With enough raw data, you can predict what periods your store will be busiest, and staff accordingly. You can also predict the demand for products, so you can order only as much as you need in advance, saving time and money. By combining the sale count KPI with others such as foot traffic or sales (revenue), you can derive further KPIs such as dollar amount per transaction.

Average Transaction Value

Tracking transactions provides granular detail on how much people are spending, what products are popular, and the quantity of items sold. Calculate the average by dividing your total revenue by the number of transactions. You can derive a lot of insights from this information. For instance, a high dollar amount could mean that your customers are purchasing more expensive products, or buying in larger quantities. A low dollar average transaction value could mean that it’s time to rethink your pricing strategy, or that you need to focus on upselling or new offers to get your customers to spend more.

Tracking this KPI on a weekly or monthly basis will yield some useful data, but some retailers choose to do it every day to enable them to be more agile in predicting what will generate more sales.

Profit Margin

This KPI is the foremost measure of how much money is going into your pocket. It tells you how much revenue is earned after deducting costs such as labour. This is important to help you determine if you need to lower costs or increase your efficiency in other areas since it’s possible to make more sales but lose money. If making those sales costs you more than you’re making, you will need to take measures such as tweaking your pricing.

A low dollar average transaction value could mean that it’s time to rethink your pricing strategy.

Every liquor store should measure their profit margins, and it should be done at least quarterly.

Sell Through Percentage

When you want to measure the performance of any product, you can calculate the sell through percentage. It’s the percentage of units sold versus the number of units that were available to be sold.

Imagine you have 500 bottles of wine, and you sell 95 after a month. Dividing the number you sold by the number you had in stock, then multiplying the result by 100, gives you 19. Therefore your sell through is 19%.

This KPI can help you decide if a product should be put on sale, or if you should re-order it in the future. Many liquor stores use this KPI on a monthly basis.


Gross Margin Return on Investment is a KPI that indicates how your store is doing overall. In other words, it answers the question: “For every dollar I invested in my inventory, how much did I make back?”.

This figure can be arrived at by dividing your gross margin by your average inventory cost. So, if your gross margin was $70,000 and your average inventory cost was $30,000, your liquor store would earn $2.33 for every dollar in inventory.

This KPI can give you a good idea about how your store is doing as a whole, and gives you a platform from which to tackle particular issues affecting your sales. For example, let’s say you added a new beer to your store and after a month the ROI isn’t as high as you expected after applying the GMROI formula to it. With this knowledge, you can decide on the best course of action, such as putting it on sale or removing it from the floor entirely.

Some liquor retailers run this KPI every month, but others prefer to do so every quarter.

These are just a few of the KPIs you can use to measure the state of your liquor store. There are many others, but ultimately, you decide which data points make the most impact on your business.