Do You Know the Importance of Sales per Square Foot in Retail?


Do You Know the Importance of Sales per Square Foot in Retail?

What is meant by Sales per Square Foot?

Sales per square foot is a metric commonly used by retail organizations to calculate the amount of revenue generated per square foot of retail space. Sales per square foot can be used to determine the sales efficiency of retail outlets.

What is the formula for Sales per Square Foot?

Sales per Square foot = Revenue Generated / Total Retail Space


Revenue Generated refers to the amount of sales generated over a defined period

Total Retail Space is the total area of all retail outlets, whether self- or franchise-owned, used by the organization

e.g., an apparel brand generated $45,000,000 in sales revenue through 15 retail outlets last year. The average square footage of each outlet is 100,000. Therefore, the sales per square foot for the last year will be,

Sales per Square Foot = $45,000,000 / (100,000 x 15) = $30 per square foot

What is the importance of the Sales per Square Foot metric?

Sales per square foot can be used to determine the efficiency of a brand/company’s retail shops. A higher sales per square foot indicates a retail store that demonstrates greater efficiency and performance. For example, a retail company that generates $90/square foot would be deemed much more efficient than a company that generates $30/square foot.

Like many other financial ratios, sales per square foot too should be used in relative terms. The ratio should be compared to the figure for similar competitors and evaluated along with other metrics.

What can retailers do to increase Sales per Square Foot?

1. Improve the store layout

A weak sales per square foot figure could be due to poor utilization of the available retail space.

For example, there may be a retail space that is cluttered with damaged goods or unnecessary equipment. As such, improving store layout by removing the spoiled, inoperative or unnecessary assets from the retail store could help to increase sales per square foot. Creating an engaging environment inside the store that allows your customers easy and adequate access to well-lit trial rooms, installing clear and informative signage, prices and way-finding to reduce retail shopper confusion, simplifying display units, and establishing appropriate atmospherics to suit the industry type and customer preferences within that sector are all key components that can lead to increased sales.

2. Improve the planogram of the store

A planogram is a schematic drawing or plan for displaying merchandise so as to maximize sales. It can be a diagram or model that indicates the placement of retail products on shelves, as well as the layout for the entire store. Planograms are important for optimizing the visual merchandising for your brand, organizing and tracking an item’s placement on shelves, analysing retail performance, and identifying the potential reasons for changes in your sales and marketing strategy.

When done right, planograms can do wonders for your brand. Combining your planogram with store level sales data, you can use sales numbers to identify high-selling and low-selling products at each store. You can then either tweak your planogram to have your most popular items in your brand’s most valuable shelf spaces or adjust your shelf positioning to boost the performance of products that may be lagging, and start seeing new levels of retail sales.

3. Carry the latest products

Every buyer today is a digital customer with ever-increasing expectations for quality and a hassle-free and unified shopping experience across their digital and in-store activities. An important aspect of this experience is the ready availability of the right products and the right variants of colour, size, model, or style/pattern. Stocking up on what sells is a sure-fire way of increasing sales. Additionally, being able to present your entire virtual and warehouse inventory in a single screen to your customers avoids lost sales due to stock-out situation at a store. Contrariwise, carrying too much stock of products that are unappealing to customers could lead to poor sales per square foot

4. Invest in employees

Employees are drivers of sales in a retail store – store employees directly impact customer satisfaction and sales. For example, employees with a strong knowledge of company products are in a better position to cross-sell and up-sell the company’s products. As such, providing employees with adequate training (product knowledge, up-selling and cross-selling tactics, etc.) goes a long way in improving sales per square foot.

5. Invest in the right tech

Retail is an industry that never stops moving and must adjust to evolving customer expectations in real-time. Growth projections estimate that by 2023, retail sales will exceed $29.7 trillion worldwide. Modern retail technology is changing everything about shopper expectations and retail operations. The customer journey is becoming increasingly varied and personalized – customization that shoppers have come to expect. Implementing the right technology solutions enables you to maximise the retail experience for your customers by offering them a range of benefits such as personalized promotions, endless aisle functionality, freedom from sluggish checkout lines, secure and contactless payment transactions, click and collect or doorstep delivery options, instant earn-and-burn of loyalty points, being able to share their feedback across channels, and many more.


With the advent of e-Commerce, even though consumers can now order products of their choice from their phones and have them delivered to their home/preferred location easily, the importance of sales per square foot analysis in the overall business performance optimization cannot be denied or ignored. It can not only help improve store productivity, but also turn your customers into brand loyalists leading to higher sales revenues.
For companies that utilize online as well as physical stores, it is important to gauge the efficiency of the company correctly as the sum of sales per square foot area of their physical retail space and their online conversion rate.

Grow Your Omni-Channel Retail Business with ETPs Omni-Channel Retail Software

ETP’s omni-channel retail software is here to simplify and accelerate your retail processes. It has been successfully enabled retailers across various verticals to drive traffic to stores, increase sales per square foot and reduce operational costs in the long term, thereby creating an excellent value for retailers and end customers.

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