Look At Mean, Median, Mode, and Range

When analyzing your store statistics—especially the financial indicators—slice and dice the numbers in different ways depending on your objective. For example, consider the size of your typical retail sale. That helps you improve income when setting profit margins, cut losses by spotting cashier fraud, and much more. But don’t depend on just a statistic called the mean.
     Suppose it’s been a slow morning with only ten transactions. Two of those were for $100 and eight of them were for $5. The easiest way to calculate the average is to add up the total value and divide by the number of transactions. The total is $240, so the mean average for the ten transactions is $240 divided by ten, or $24. But $24 certainly isn’t the typical transaction. It’s $5, with two exceptions of $100 transactions.
     Instead of using only the mean, also look at the mode, the median, and the range. For the mode, group transaction amounts, such as everything from $10 to $19.99 into one bucket, everything from $20 to $29.99 into another bucket, and so on. Then see which bucket has the most entries. In my example, the mode is $0-$9.99.
     To get the median, line up the amounts from highest to lowest and then find the point where half the amounts are above it and half the amounts are below it.
     To get the range, look at the lowest and highest values.
     In real retailing life, don’t do the groupings, lineup, and calculations manually. Delegate to something like a Point-of-Sale system or Excel formulas. But the idea is the same: Retailers make more money when they aren’t deceived by looking at just the mean. Instead, planning is based on conclusions like, “Our typical transaction was $5, the lowest was $5, and the highest was $100.”