Sales per Square Foot is terminology used by retailers to assess the amount of revenue generated in terms of sales, per square foot of used space in a retail store or outlet. This metric is designed to determine the sales efficacy of stores.
The figure is estimated by dividing the total sales revenue by the actual store footage of the store space. The exact process involves the following steps:
- Determine the time period of calculation.
- Collect the overall sales revenue data in that fixed period of time.
- Measure the selling space.
- Calculate the Sales per Square Foot.
- Analyze the results and use it make strategic retail-oriented decisions.
- Monitor the metric consistently, and alter as and when required.
How does Sales per Square Foot help retailers make strategic decisions? There are multiple answers as to why. The metric is a good assessment of the store's overall efficacy and identifies infrastructural components such as which areas are under-performing or over-performing, the efficacy of product placement, and the optimal utilization of available space.
Sales per Square Foot is also given to influence by factors that cannot be controlled by the retailer such as peak selling seasons, a change in consumer preferences and habits, and economic conditions.