How Can Independent C-Store Operators Use KPIs?
Remember, “You can’t manage what you don’t measure. “
Key Performance Indicators (KPIs) are a vital resource to manage your operation. Rather than relying on old adages and “I think” statements, KPIs help identify the main drivers of your store and focus your future actions to meet specific needs. This simple change can make a big difference in the bottom line for small independent retailers.
Let’s look at a controllable expense like “labor” for example. Labor is typically expressed both in dollars and as a percentage of sales. Without KPIs to further dissect what contributes to excess labor, a store may try to fix their labor issues in the wrong areas. Tracking KPIs within the job category to include overtime percentages; deviation from labor cap hours; rate of pay for manager, assistants and associates per shift, the operation gains a better understanding of pressure points within the workforce.
The discipline of monthly KPI reviews helps keep store finances on target compared to last year or this year’s budget.
Provides clarity: KPIs are the most important factor in managing: clarity. With KPI development and management, the store (s) specifically target areas of the business that need to be addressed – and most importantly, don’t mess up the areas that are buzzing very well. Rather than general anecdotal conclusions, a KPI management system helps to explore the main problem and focus on solving it.
Tangible action items: Knowing precisely the challenges and the gaps to be filled, the stores can develop concrete actions to be implemented during the next quarter that will have a measurable impact on the results. This allows the store to re-forecast the results with a focused action plan.
Comparative analysis : KPIs allow results to be measured against similar time periods with real data, not with anecdotal comments to remember the past. Plus, with the right level of detail, the operation can get to the root of the issues rather than tackling those categories with overall adjustments.
Makes budgeting manageable: Annual budgeting becomes easier with KPIs as the budgeting process becomes an ongoing quarterly forecast. Market dynamics that are wreaking havoc on your plans and budgets now face a counter-plan.
Cross train teams: Finally, team members can discuss and share KPI results in a concrete and disciplined way with action items to follow. Store managers who are intimately involved in the KPI process have the opportunity to supplement their stores with additional action items that increase rather than conflicting goals.
KPIs take the guesswork out of your business. Put in place correctly, KPIs can take a store from an anecdotal upfront review to a fact-based forward planning exercise. Check out the video slideshow below for more tips.
John Matthews is the President and CEO of Gray Cat Enterprises and is responsible for managing all consulting activities for the company, which include retail consulting for multi-unit operations; interim executive leadership; and project management. Prior to founding his own business in 2004, Matthews held leadership positions as President of Jimmy John’s Gourmet Sandwiches and as Vice President of Marketing, Merchandising, Facilities, Corporate Communications and real estate at Clark Retail Enterprises Inc. In addition, Matthews worked for nine years in Marketing Management as National Marketing Director of Little Caesars Pizza Corp.