Small Store Strategy: How to Find the Cause of a Sales Decline and Make an Action Plan

To make a practical plan for developing a store, the owner needs to find out exactly where performance has worsened: in the number of purchases, product availability, prices, assortment, opening hours, or service. Compare equivalent periods, list several possible causes, and determine what data could confirm each one.

For the first 30-day trial, choose one problem with a noticeable impact on the store’s finances. Assign an owner, limit spending, and record the conditions for continuing or stopping in advance. Assess sales together with cost of goods sold, returns, additional expenses, and the cash needed for inventory.

Specify exactly which result has worsened

Write down the problem so another person can reproduce the calculation. Specify the store, product group, period, and metric. For example, a working note could use this format: “At this store, the number of purchases in the category declined during the selected weeks; the comparison uses the corresponding days of the previous period and accounts for returns.”

Next, break down the overall change into its components. Prepare separate rows for the number of purchases, units sold, average purchase amount, and returns. If you count store visits using the same method in both periods, compare them with the number of receipts: for example, calculate receipts per 100 visits. This metric does not show the share of individual people who made a purchase, since one person may visit several times. It will help identify which stage needs closer attention.

A decline in sales alone does not establish the cause. The owner may suspect that prices are putting customers off, but reaching that conclusion requires a separate review of prices, availability of the products customers need, and the circumstances in which purchases were not made.

Prepare comparable data

Ask the administrator or the employee responsible for record-keeping to prepare one table for the baseline period and the upcoming trial. The owner should approve the calculation rules before any changes begin.

• The same store and sales channel. Analyze physical stores and online sales separately. A change in the mix of stores makes it harder to explain the overall result.
• Comparable calendar conditions. Choose the same days of the week and account for seasonality, holidays, and promotions. If you compare the corresponding season of the previous year, account separately for changes in prices and assortment.
• Actual opening hours. Record the hours during which the store was open to customers. Alongside total sales, calculate sales per opening hour. Note any forced interruptions.
• Consistent treatment of returns. Deduct returns using the same rule in both periods. Mark returns of older purchases separately so you can see their effect on the current total.
• Product availability. Record the days or hours when key items were unavailable. To assess demand, compare periods when the item could be purchased; to assess the store’s losses, keep the time it was unavailable in the overall result.
• Price, discounts, and purchase mix. For identical items, compare the number of units sold and the actual price after discounts. Also check whether the share of higher- and lower-priced items changed.

If the store was open fewer hours or a popular size was unavailable, account for that before drawing conclusions about changes in demand. The total for the entire period is still needed: it shows the store’s actual performance.

Separate facts from possible causes

Create two entries for each explanation. In the first, record the observation, date, and counting method. In the second, state a hypothesis—a possible explanation that still needs to be tested. For example, the recorded unavailability of a size is a fact; the assumption that customers left without buying because of it requires additional observations.

Compare several explanations. Price may affect a customer’s decision at the same time as assortment or service. For the first action, it is enough to choose a specific obstacle whose impact can be assessed using the means available to the store.

How to talk with customers

The owner or administrator can offer a brief, voluntary conversation to customers who made a purchase and visitors who left without buying. Ask the same neutral questions:

• What were you looking for today?
• Did you find the product, size, or option you needed?
• What influenced your purchase decision?
• What was inconvenient while you were choosing?
• What time is convenient for you to visit the store?

Record the substance of the answers without names or contact details if they are not needed for the task. Also record the time of the conversation and whether a purchase was made. Count recurring answers and compare them with inventory, prices, and opening hours. The answers describe the experiences of the people interviewed; drawing conclusions about the whole store requires additional data.

Fill in the decision table

Below is a sample working plan. The “Fact” column indicates which observations to collect. Fill it in with your own findings, and agree on deadlines and criteria with those responsible before the trial begins.

Choose one problem with the greatest impact you can address

The owner should assess each hypothesis using four questions: How much money might the store be losing? How convincing are the observations? Can the team influence the situation? How much will the trial cost? Give priority to a significant problem for which there is sufficient evidence and an affordable action.

Also record which tasks you are postponing because of this choice. This will help account for opportunity cost—the benefit the store could have received by using the same money and time in another way. If buying a test batch would leave no funding for regular replenishment of popular products, reduce the batch or reconsider the priority.

Keep several possible causes in the working table, but choose one main change for the first trial. Changing prices, advertising, opening hours, and assortment at the same time will make it harder to explain the result.

Calculate contribution after expenses and cash requirements

For the decision, use a separate management calculation: revenue after discounts and returns, minus the cost of goods sold, variable selling expenses, and additional trial expenses. Variable expenses are costs that depend on sales volume, such as the fee for accepting a payment. The resulting amount shows the contribution toward covering fixed expenses and profit. Apply the same calculation rules in both periods.

Illustrative numerical example. The store trialed more frequent product replenishment. The baseline and trial periods have matching counts of each day of the week and the same number of opening hours, and the comparison covers the same product group. The revenue in the table already accounts for discounts and returns.

In this illustrative example, revenue increased by 10,000 UAH, while contribution decreased by 400 UAH. If the condition for continuing was an increase in contribution, the trial did not meet it. The owner should stop the additional spending or prepare a separate trial of a less expensive replenishment method.

Prepare a separate schedule of supplier payments, customer receipts, and inventory balances. Unsold additional inventory requires cash, even though its cost has not yet been included in the cost of the units sold in this calculation. The owner should make sure the purchase leaves enough cash for the store’s required payments.

Make a 30-day trial plan

1. Days 1–3: record the baseline conditions. The owner agrees on the problem, comparison period, outcome metric, minimum improvement, budget, and limit for acceptable losses. The administrator prepares the baseline data.
2. Days 4–7: prepare for implementation. The person responsible clarifies the steps, required products, and staff time. The team receives a short instruction explaining what will change, who will do it, and what must be recorded daily.
3. Days 8–27: carry out the agreed action. The person responsible records implementation, sales, returns, expenses, and circumstances that could have affected the result. The owner checks expenses against the limit each week.
4. Days 28–30: review the outcome. The administrator prepares a comparison using the agreed rules. The owner assesses the financial result, inventory needs, and workload for the team, and records the next decision.

Record three possible decisions. Continue if the agreed improvement has been achieved, the budget has been followed, and the team can maintain the new process. Stop when the spending or loss limit is reached, or when the outcome does not meet the agreed criterion. Run a separate repeat trial if implementation was incomplete or significant interruptions, supply changes, or other recorded circumstances interfered with the comparison.

If there were too few purchases to draw a confident conclusion within 30 days, the owner can approve additional time and a budget. Record that decision separately so that spending remains under control.

Inventory balances and purchase history in Torgsoft for store planning

To work with availability, open «Склад → Стан складу» (Warehouse → Warehouse Status). Here you can view product quantity, size, retail price, and cost. An accounting center is a store or warehouse in Torgsoft. To compare stores, enable «Усі склади» (All warehouses) and use «Вибрати склади» (Select warehouses) to specify the required accounting centers. The «Стан на дату» (Status as of date) filter shows the quantity on a selected date; to clarify changes, open the movement history for the selected product or its inventory record.

For a trial of a new replenishment process, the person responsible can set minimum stock levels for selected items and use the «Закінчується товар» (Low stock) filter. Before ordering, compare the recorded quantity with the actual stock and confirm that the correct store is selected. Supplement the current balance with daily records of unavailable products and unmet requests: to assess the causes of a decline, it is important to know when a customer could not buy the item they needed.

To prepare for a conversation with a regular customer, open «Маркетинг → Клієнти → Картка клієнта» (Marketing → Clients → Customer Card) and the purchases tab: it contains this customer’s accumulated purchases and returns. This history covers transactions associated with the customer’s card. It can help you ask specific questions about product choices; changes in behavior should be explored in conversation and compared with store data.