Sales per square foot

What is sales per square foot?

Sales per square foot is a major retail KPI that explains the efficiency of a retail store in making sales from its physical selling space. Sales per square foot is calculated by dividing total net sales by the total sales area in square feet.

The formula to measure sales per square foot is Sales Per Square Foot = Total Net Sales / Sales Area (in sq. ft.).

By measuring sales per square foot, businesses can find the most profitable stores, product categories, or layouts and use it to optimize other regions.

Sales per square foot vs sales per employee

Sales per square foot is the revenue generated per square foot of store area and sales per employee is the revenue generated per staff. Both are retail store KPIs, but the first one is used to measure store efficiency and space utilization, whereas the second is for labor efficiency and productivity measurement.

Should eCommerce sales also be part of sales per square foot?

No. Sales per square foot metric focuses only on store performance and hence eCommerce sales cannot be a part of it. On the other hand, you can include in-store pickups, assisted in-store digital orders, and eCommerce orders fulfilled via store to the sales per square foot metric.

What is a good sales per square foot in retail?

The average value of a good sales per square foot in retail is $300–$600 per sq. Ft., globally. But, the score changes, especially for high-performance and high value products, sales per square foot goes beyond $1,000+.

For example, sales per square foot of Apple stores is $5000+.

Sales per square foot in retail in India is Rs. 10k to 20k, changes based on location, product, brand value, and more.

You can use sales per square foot calculators to find out the value and measure the store performance.

Sales per square foot by industry

Sales per square foot also changes based on industries. Here are the average values based on retail sales reports.

How to calculate sales per square foot?

You can calculate the sales per square foot in three steps.

1 - Measure the net sales area, which includes aisles, shelves, product displays, minus the storage and warehouse space. 2 - Find out net sales for any period, without taxes, discounts, and reimbursements. 3 - Use the formula of sales per square foot, Total Net Sales / Sales Area (in sq. ft.). 4 - But measuring sales per square foot manually can be difficult. You can use retail dashboards to automate the process and compare across locations, different time periods, and stores.

How to increase sales per square foot?

Factors that affect sales per square foot

Sales per square foot might be less due to many reasons: store layout and aisle arrangement, seasonality and promotions, shop location, online reviews, brand reputation, staff engagement, demand for the product in the locality, and more.

Increasing sales per square foot

The major way to increase sales per square foot for any mortar-and-brick store is by tracking it regularly. Tracking manually or with the help of retail analytics solutions bring real-time visibility into this process and help you understand more into this—time of the day when the sales per square foot increases, when it decreases, which stores have good performance, and when. This is how you could make the most out of your store space and improve space efficiency.

Other ways you can improve sales per square foot

Optimize product placement. Get help from AI inventory optimization and dynamic placement tools, which suggests best places to stock high-demand items and so on.

1 - Integrate CRM with POS, which allows you to personalize floor support for different customers. 2 - Implement AI-based recommendation tools, which helps users find more relevant products and thereby increase their basket size.
3 - Other than measuring sales per square foot, monitor footfall and heatmap data, which gives indepth insights to understand under-performing and over-performing pages. 4 - Use strong analytics and visualization solutions with periodic reporting enabled, which could notify everyone when the store traffic value demands attention. This can be especially useful for retail companies with multiple branches across the country and global locations.

Is sales per square foot alone a good retail metric?

Sales per square foot is a relevant retail KPI, but it comes with its limitations too. Here are some reasons why sales per square foot alone cannot help.

1 - It might not be relevant to large stores, showrooms, and service-heavy stores, all of which have large square foot, dominating and suppressing the final sales per square foot value. 2 - Sales per square foot is not a good indicator of how profitable a store is or how great the customer experience is.
3 - Can be complex for retail companies with eCommerce models, buy online-pick up from store options, as they cannot be included in sales per square foot.