Retail Clinic: Measuring The Health Of Your Retail Business With KPIs – 2 (Sales Per Square Foot)

In continuation of our Retail Clinic discussion on “Measuring The Health Of Your Retail Business With KPIs”. In this session, we shall be focusing on an important KPI, Sales per square foot.


Sales per square foot

This key performance indicator is a good indicator of how efficient you are with the use of sales space and assets. Sales per square foot (or square meter) is your store’s average revenue for every foot of sales space.

To find it, simply divide your sales by the store’s total square feet of sales space.

  • For example, Retail XY sold N1 million worth of merchandise in its 1,800 sq. ft store, Retail XY’s sales per square foot would be:N1,000,000 / 1,800 sq. ft. = N555 per square ft.


Why it is important.

Sales per square foot is a good indicator of how efficient you are with the use of sales space and assets. It can help you determine which store layouts or locations are most profitable, and you can use it to make inventory, marketing, and layout decisions.

Where the sales per square foot for your retail business vertical, locations, and stores is available, you can compare the figure with that of your business to see how you are doing compared.

In addition, if you are looking to see how efficient you are in terms of shelf space, you can opt to measure revenue according to linear square foot. Linear square footage pertains to every 12 inches of rack or shelf space in a store. You can find this metric by using a tape measure or ruler to measure how much shelf space you have, and then dividing your sales by that amount.





How to Improve and Maximise Sales per Square Foot


  • Improve your store layout

If your store’s sales per square footage isn’t as high as you’d like, consider optimizing your shop’s layout. Start by de-cluttering the store. Spaces that appear messy or crowded can drive people away and they make it difficult for shoppers to find what they need. That’s why it’s important to stay on top of tidying up. Instruct your staff to straighten out untidy areas and ensure that items are always in their proper place.


  • Have a winning product assortment

Don’t waste precious floor space on products that aren’t selling. Keep an eye on your sales and product data and use those insights to make decisions on your product assortments.


Generate reports for certain time periods (i.e. monthly, weekly, hourly) so you can figure out when customers are buying from you. From there, you can drill down on what they’re purchasing, and then stock up accordingly.


  • Optimize your prices or promotions

See if there’s anything in your pricing strategy that can improve sales. Changes such as ending prices with the number 9 or introducing tiered pricing can make a difference in sales, so consider testing such strategies when pricing your products.

The same goes for your promotions. Test different types of offers and discounts to see what brings in sales (without cutting too much into your margins). There are, of course, various types of promotional tactics including BOGO offers, free gifts and more.

The only way to figure out what’s right for you is to test various actions, measure the results, and make changes if necessary.


  • Increase transaction / basket value

You can achieve high sales per square ft. One way to do this is to focus on loyalty. Set up a program that not only encourages customers to shop at your stores, but also to come back.


  • Invest in your staff

We’ve talked about the importance of retail staff training and motivation time and time again, for good reason: store employees can directly impact sales and customer satisfaction. Without great employees, your store performance will likely suffer.

In the context of increasing sales per square foot, some of the things you could do with your staff include:

  • Providing them with a strong background in your company and products
  • Educating them on sales tactics such as upselling, cross-selling, suggestive selling, etc.
  • Training them to get over their fear of selling
  • Role-playing with them to demonstrate different sales scenarios
  • Encouraging positive reinforcement and peer-to-peer recognition




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