Key Performance Indicator (KPI) refers to a measurable value that helps an organisation assess how effectively it is achieving its business objectives. In retailing, KPIs are used to measure the performance of different activities such as buying, merchandising, sales, inventory management and customer service. KPIs provide managers with clear information about what is working well and where improvement is required. In buying and merchandising, they are especially important because retailers have to manage large quantities of products, changing customer preferences, limited selling space and financial risks. A KPI should be specific, measurable and related to an important business objective. For example, sales revenue is a KPI because it measures the value of products sold during a particular period. If a store has a target of ₹10 lakh in monthly sales and achieves ₹12 lakh, the sales KPI shows that the store has exceeded its target. Similarly, inventory turnover measures how quickly the retailer sells and replaces its stock. A high inventory turnover generally indicates that products are moving quickly, while a low turnover may indicate overstocking or weak demand. Some common examples of retail KPIs include sales turnover, gross margin, stock turnover, sell-through percentage, markdown percentage, stock-to-sales ratio, average transaction value, conversion rate and return on investment. These indicators help retail managers make decisions based on actual performance rather than assumptions. Buying and merchandising are closely connected functions in retail. Buying focuses on selecting and purchasing products in the right quantity, quality, price and time. Merchandising focuses on presenting and managing those products so that customers are encouraged to purchase them and the retailer earns a satisfactory profit. Therefore, KPIs in these functions cover sales performance, profitability, inventory productivity and product availability. One of the most important KPIs is sales turnover. It represents the total value of sales generated during a specific period. Sales may be measured for a store, product category, brand or individual product. For example, if a fashion department sells products worth ₹20 lakh in a month, its sales turnover is ₹20 lakh. Buyers and merchandisers compare actual sales with planned sales to identify whether the merchandise assortment is performing according to expectations. Sales growth is another important KPI. It measures the increase or decrease in sales over a particular period compared with an earlier period. For example, if sales increase from ₹10 lakh to ₹12 lakh, the business has achieved 20 per cent sales growth. Sales growth helps merchandisers understand whether a product category is expanding or declining. Gross margin is a key profitability indicator in buying and merchandising. It shows the difference between sales revenue and the cost of goods sold. A retailer may achieve high sales but still earn a low profit if its buying cost is high or excessive discounts are given. For example, if a product is sold for ₹1,000 and its cost is ₹600, the gross margin