Sales per Square Foot

What Is Sales per Square Foot?

The dollar value of sales per square foot has, for a long time, been a measure of outcome in the brick-and-mortar retailing industry. It is just the average revenue earned for each square foot of sales space.

In the age of "omnichannel" marketing, this number might be less applicable, essentially for large retail companies. Be that as it may, it actually can be a critical measure of progress for an independent neighborhood business.

Understanding Sales per Square Foot

The measure of sales per square foot is utilized by businesses and retail stock analysts to measure the effectiveness of a store's management in making revenues given the amount of sales space accessible to them. It is followed over the long run just by totaling sales revenue throughout some stretch of time and separating it by the total square footage of retail space accessible.

There is no absolute positive or negative number. The higher the sales per square foot, the better job the store's management is apparently doing in choosing, displaying, and marketing the store's products.

Studies show that this figure is dropping. As additional stores increase their presence online, traditional brick-and-mortar locations will undoubtedly feel the squeeze. The impact of problems like the 2020 economic crisis additionally impacts retail sales per square foot. According to Colliers International, sales per square foot in 2020 were $338.3, a reduction from the 2019 figure of $382.9. This will undoubtedly influence the physical retail space as analysts foresee that upwards of 100,000 retail stores could close by 2025.

It Varies Widely

There is a wide dispersion of this measurement in the retail industry. At the higher finish of sales per square foot, Apple Inc. (AAPL) produces around $5,500 per square foot, and Tiffany and Co. (TIF) creates roughly $3,000 per square foot. The two companies sell small, high-dollar value products in smaller store spaces. Paradoxically, sales per square foot for Walmart (WMT) stores is roughly $400 per square foot, while Target (TGT) is around $300 per square foot.

Analysts generally compare a retailer's sales for each square foot against that of its direct competitors in comparable retail environments. A retail analyst considering sales per square foot could compare Target negatively to Walmart, however he would most likely not compare Walmart ominously to Tiffany. They are in a similar business however unquestionably not in the equivalent sector.

Does Sales Per Square Foot Still Matter?

Sales per square foot may never again be as pertinent to management or analysts as a measure of proficiency as it has been in the past. "Omnichannel" is the new buzzword in retailing that portrays a hybrid approach to physical stores and online scenes. For instance, the Apple stores might be as much about marketing, customer service, and image creation as about direct sales volume.

Measuring Success as a Small Business Owner

On the other hand, sales per square foot could mean the difference among progress and inability to a small privately claimed business, regardless of a website. The number depends on many factors including product selection and display, staff performance, pricing, store location and design, and considerably more.

Keeping track of sales per square foot over the long haul may be incredibly valuable for a small business owner. A series of declines is an unmistakable signal that something is off-base, and a problem might should be distinguished and corrected. Consistently climbing numbers are an indication that the business is strong and getting stronger.

Features

• Sales per square foot is a key measure of outcome in brick-and-mortar retailing.
• Managers and analysts consider a higher number to be proof of greater proficiency.
• The measure is becoming less applicable in the present omnichannel marketing environment.