How to Calculate Retail Conversion Rate: +7 Tips

Store owner smiling

A retail conversion rate is the percentage of people who visit your brick-and-mortar store and leave with a purchased product. 

It’s calculated by dividing the people who purchase by your overall foot traffic and multiplying by 100.

Retail metrics like revenue per store and total foot traffic might be high on your priority list when determining the success of each store. However, retail conversion rate is one of the most important KPIs for telling you how successful your store is. 

So, what is the average conversion rate for retail stores? And how do you improve yours? This guide shares exactly that.

What is conversion in retail?

Retail conversion rate refers to the percentage of people who convert in-store. 

It’s often confused with ecommerce conversion rate, which is the percentage of people who visit your ecommerce store and purchase. 

Online conversion rates tend to be lower (around 2.86%), because it’s easier for people to window shop. Potential customers can start and finish their shopping experience in a matter of seconds. Just one annoying pop-up is enough to drive people to close their browser. 

In-store shoppers, however, have a more hands-on experience. Because customers can speak to store associates, touch items, and see products they’re thinking of buying in the flesh, brick-and-mortar stores claim 78% of all impulse buys

It also means in-store shoppers are likely to spend more during their shopping session: 71% of in-store shoppers will spend more than $50, compared to just 54% online. 

How to calculate retail conversion rate

Here’s a formula to calculate the conversion rate of a brick-and-mortar store:

Number of sales / total number of visitors x 100 = conversion rate

(Remember that the number of sales differs from the number of individual items sold per transaction. Retail conversion rate calculates the percentage of people who’ve converted. So, if one person bought five individual items, you’d still use one as the number of sales.)

Let’s put that into practice and say you made 75 sales on a day when 500 people visited the store. Your retail conversion rate would be 15%. 

75 (number of sales) / 500 (total number of visitors) x 100 = 15% (conversion rate)

PRO TIP: If you’re using Shopify POS, view the Retail sales by Point of Sale location report and choose the date you’d like the sales data for. Next, select Orders under the Edit column's drop-down menu to see the total number of sales each store processed that day.

What is the average conversion rate for retailers?

Research shows that the average conversion rate for brick-and-mortar stores is around 20-40%. That’s a good benchmark to compare yours against. 

However, it’s worth noting that your retail conversion rate can fluctuate on different variables. If you’re running a flash sale on the weekend, for example, you might see an uplift. On the flip side, if your sales associate calls in sick and you’re one person down, you might see a decrease in your retail conversion rate. 

Account for those fluctuations by calculating your conversion rate over a longer period of time—like per week, month, or quarter. That will give a good benchmark for any improvements you try to make. 

Why is store conversion rate important?

Make more informed business decisions

Conversion rate gives insight into how your retail stores are performing. 

Find your average without making any changes. Then, test the following against your benchmark to see which tweaks influence more customers to leave with an item in hand:

  • Store layout: Does your conversion rate increase when you use grid, herringbone, or geometric layouts? 
  • Product mix: Does pairing items with related items—such as coffee beans with mugs—cause more people to buy because they can purchase several items from one store?
  • Discounting: Does your conversion rate differ if you offer 15% or 20% discounts? If not, go with 15%. You’ll increase your profit margins while still making an attractive offer that convinces people to take advantage of cost savings.

More accurate indicator of performance

Retailers should have key performance indicators (KPIs) for each store they’re operating. KPIs are benchmarks for what good looks like. Should you go below that KPI, you know some extra work needs to be done.

Conversion rate is one of the most accurate indicators of retail store performance because it doesn’t fluctuate massively day to day. 

Other KPIs, like foot traffic and gross revenue, for example, can differ significantly depending on days of the week and events happening around town. 

A festival happening around the corner from your store might bring $20,000 in retail sales that day. Is that sustainable? Probably not—you won’t increase sales to meet that benchmark consistently. Using that as your goal sets you up for failure. 

Retail conversion rates are less affected by dramatic variables. It’s a KPI to help understand how the in-store experience you give to shoppers influences their decision to buy—regardless of how big your sample size is. 

What factors impact customer conversion rate?

Staff abilities and performance

A brick-and-mortar store’s conversion rate depends massively on the experience customers have in-store. 

While staffing might not seem like it has a huge impact on in-store conversions, sales and retail associates are the people responsible for giving those experiences. 

Gap tested this with its staff scheduling study. Prior to the experiment, retail staff had complicated and inconsistent schedules. When those were replaced with reliable weekly schedules, in-store sales increased by 7% and productivity grew by 5%. HBR estimates Gap earned $2.9 million as a result.

Store layout

Even if you’ve got a small location, the layout of your retail store has an impact on conversions. 

Do you pair t-shirts with other t-shirts, or different items of clothing that go with each individual shirt? Mixing stock with frequently-bought-together items can increase average order value. But for the people who enter looking to just browse t-shirts, walking around the store and searching for them can be off-putting. 

The space inside your store can have an impact on its conversion rate, too—especially after the COVID-19 pandemic changed in-store shopping habits. Some 62% of consumers say social distancing makes them feel more comfortable shopping in-store. That’s bound to have a positive effect on your bottom line. 

Visual merchandising

Did you know that the average shopper makes three unplanned purchases in four out of every 10 stores they visit? Showing your products in their best light (literally) with visual merchandising displays could convince more in-store shoppers to head to the checkout desk.

Experiment with lighting, arrangements by color schemes, and showing items on mannequins. They might sound like small tweaks, but the smallest of changes to your shopping experience can drive higher conversion rates. 

Inventory management

Managing inventory is one of the hardest things about running a brick-and-mortar store. You don’t want to have too much stock and nowhere to store it (or worse, have it pass its sell-by date). Similarly, you don’t want customers to visit and have nothing available to sell them. 

Having a central system to track inventory solves that problem. With Shopify POS, for example, you’ll see how many items are available in each location. As soon as items are running low, set up an alert to restock. 

That way, you never have to turn in-store away because you don’t have a product they want in their size or color. 

Checkout process and options

Data by the National Retail Federation found the vast majority (97%) of shoppers have backed out of a purchase because it was inconvenient. 

Most of those inconveniences happen at the point of sale. Long queues, no self-checkout options, and spelling out an email address in return for a paper receipt could put people off their purchase.

How to increase your retail conversion rate

  1. Offer local pickup
  2. Provide buy in-store, ship to home
  3. Leverage email cart functionality
  4. Train and motivate sales staff
  5. Use shopping technology
  6. Offer free samples
  7. Highlight social proof

1. Offer local pickup

Not all visitors to your brick-and-mortar store will visit by chance. Sure, attractive window displays and retail signage can convince passersby to impulsively drop in. But some people shop in-store because they have a reason to do so. 

One of those reasons is local pickup, where customers can buy or reserve items online. They visit the location to collect and pay for the item. 

As of April 2020, 35% of retail merchants fulfill local pickup orders—a figure accelerated by the coronavirus pandemic. Some 64% of consumers are now interested in this type of buy online, pick up in-store (BOPIS) or curbside pickup service:

BOPIS statistics

So, how do these BOPIS options increase retail conversion rate? The secret lies within impulse buying. Smart product placements convince people to buy more items in-store.

Lululemon, for example, found 20% of shoppers who collected an online order in-store made an additional purchase during their visit.

2. Offer buy in-store, ship to customer order fulfillment 

Stockouts are a retail conversion rate killer. Not only do you lose out on the sale, but customers can get frustrated if the item they’re interested in is out of stock.

Solve that problem by providing buy in-store, ship to customer order fulfillment. With it, you can complete sales in the store and send orders from either their warehouse or another store location that has inventory. You're no longer limited to selling only what your store has in stock. 

💡 PRO TIP: Use Shopify POS’ buy in-store, ship-to-customer feature to complete transactions in store, ship orders to shoppers from your warehouse, and give your store credit for making the sale.

3. Leverage email cart functionality

The sad truth is that not everyone visiting your brick-and-mortar store will convert. There are tons of reasons behind it; some are outside of your control. But that doesn’t mean you have to lose one-time store visitors forever. 

Point-of-sale (POS) systems like Shopify have email cart functionality that helps recover abandoned in-person sales. Store staff can add items to a customer's cart and send it to them via email. If the shopper buys any products via the email, the store staff (and retail store) is credited with the sale. 

This is a double win: customers can purchase items they were interested in when they’re ready to do so. Retailers also collect contact information for future email marketing campaigns. 

Bedding retailer Sheet Society uses Shopify POS in its Melbourne store to collect customer information. From there, it emails a list of recommended products to complement the item each customer was interested in.

The result? Sheet Society has a 50% in-store conversion rate (compared to 2.4% online). Almost a quarter of those customers return to shop again.

We chose Shopify POS because of the unified customer experience it offers. All the data needed is there on customers, on inventory, and it works across multiple locations. It’s seamless. We’re spoilt, I think, because we never used anything else.

4. Train and motivate sales staff

Did you know that 67% of people left a store because they couldn’t find the product they needed? Another 39% left because of poor customer service. Both of those elements can be easily rectified by training and motivating your shop floor team. 

Invest in a retail training program that helps associates deliver outstanding customer service. That might include:

  • Role-playing how to greet customers when they enter the store
  • Training staff to pick up on body language cues from shoppers 
  • Demonstrations of how to use your POS to take payment away from busy checkout desks

Motivation is another important factor to consider when developing your training program. If your sales associates are unmotivated, they likely won’t go above and beyond to help customers (and therefore worsen your retail conversion rate). 

Incentives—such as sales commission and promotions—could be the nudge they need to deliver A+ customer service. That will stop shoppers leaving empty handed.

5. Use shopping technology 

The majority of in-store shopping experiences aren’t as tech-free as we might expect. Research shows that once entering a store, 34% of shoppers continue to interact with the brand through a mobile device.

Help those shoppers make their purchases through retail technology such as:

  • Contactless checkout. 70% of shoppers say the checkout experience influences their perception of a store more than anything else. If they see long queues or human checkouts, some may turn away. Use contactless payments hardware and a mobile POS system to accept payments anywhere in store quickly and prevent shoppers from having to wait in line to pay for their items. 
  • QR codes for product descriptions. 69% of shoppers would rather use their mobile device for product reviews than ask a sales associate. Help them do that with QR codes that direct people to product pages or landing pages for the products they’re interested in.
  • AR/VR technology. If a customer wants to see what an item looks like, use virtual fitting rooms to remove friction. Queuing for a changing cubicle, changing clothes, and worrying about whether clothing has been sanitised are all concerns you’ll eliminate.

6. Offer free samples

People are wired to love free stuff. 

Professor Dan Ariely ran a study that tested how people react to free chocolate samples from two brands: Hershey and Lindt. The latter has a higher price tag and perceived value. Yet when people were asked to choose between a free Hershey chocolate and a dramatically discounted Lindt chocolate, most people chose the free option.

Free samples of products can increase your conversion rate because it appeals to reciprocity. It’s why 35% of product samplers will purchase the product in the same shopping trip. 

If somebody does something for you, you really feel a rather surprisingly strong obligation to do something back for them.

Dan Ariely, a behavioral economist at Duke University

The most famous example of free sampling is Costco. It has popup stations around each warehouse so customers can sample products they have for sale. It partnered with Ziploc to host a four-day sample station in one of its stores. The result? A 156% increase in sales.

7. Highlight social proof

Speaking of the psychology behind purchasing, there’s another bias you can use to increase your retail store’s conversion rate: the pressure to be involved in a group. It's why 93% of customers feel user-generated content is helpful when deciding to buy something, and 97% use online reviews to guide their purchase decisions. 

The simplest way to appeal to this is through social proof from well-known or well-respected people. For example, highlight dentist endorsements for a toothpaste you sell, or images of social media influencers wearing your jewelry. 

Retailers can also use scarcity to show products are selling well. The fear of missing out is a phenomenon that 69% of millennials experience regularly. 

If shoppers hear that an item has been bought by several people the same day, it could be the nudge that convinces them to be in the same group—especially if there’s a risk of the in-demand product becoming unavailable.

Boost your retail conversion rate

When you’re evaluating the success of your retail store, conversion rate should be up there on your list of priorities. It’ll show you how many people who visit your store leave with a product in hand. 

If you’re not happy with your conversion rate, test tactics to improve it. In-store pick-up options, social proof, and sales team motivation will have a bigger impact than you may think.

Increase conversion with Shopify POS

Remove the friction from in-store sales with a POS system that helps store associates give a better customer experience. Serve shoppers and accept payments anywhere in your store, and say goodbye to lineups at the cash register once and for all.

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Retail conversion rate FAQ

What is a conversion rate?

Your conversion rate is the percentage of website visitors or in-store shoppers who actually make a purchase.

What is a good conversion rate for a retail store?

The average conversion rate for retailers falls between 20-40%. A good conversion rate is closer to that 40% figure.

How do you measure the conversion rate for a retail store?

To measure your retail conversion rate, you’ll have to track your foot traffic. You can get a tracker at your store’s door to help automate this process. Then, you’ll divide the number of people who made a purchase by your total foot traffic then multiply by 100 to discover your conversion rate percentage.

How can you improve your conversion rate in retail?

Increase your retail conversion rate by providing a great in-store shopping experience for your customers. Use scent marketing to create a soothing environment, make sure your products are organized and easy to find, employe helpful and caring store associates, and provide free samples to increase trust.