← Business Metric: Operational (all topics)
Conversion rate, basket size & shrinkage
What it is
The share of visitors who buy, the average value of what they buy, and the stock lost to theft, damage and error. Together with footfall they decompose retail revenue into its drivers
Shrinkage is a direct loss with no offsetting revenue
Impact on industries
- Decomposing revenue into footfall, conversion and basket size shows exactly where a sales change originated
- Conversion and basket size are addressable through layout, assortment, staffing and pricing without spending on traffic
- Shrinkage falls straight to the bottom line, and in low-margin retail a percentage point of it can exceed net margin
- Online and offline conversion rates are not comparable, since browsing behaviour differs by an order of magnitude