What Does It Mean?
Sales per square foot measures the average revenue for every square foot of sales space. The KPI exclusively tracks space you use for sales, and doesn’t count fitting areas, storage space, or offices.
A Product Sales Analysis Sisense Dashboard
Why Does It Matter?
As a retailer, it’s a challenge to find ways to maximize limited sales space and display products you think are going to sell frequently. The KPI is not specific—it can’t tell you if one product is selling while others aren’t—but it can highlight you how efficiently you’re using your store.
Floor layouts are an important aspect of your sales strategy, and low sales per square foot are a clear sign that either your existing inventory isn’t popular, or it’s not being displayed properly to maximize sales.
How Do You Measure the KPI?
To track your sales per square foot, you’ll need your full revenue data for the period you’re measuring, as well as a clear idea of your store’s square footage minus any non-sales spaces. To calculate the KPI, start by finding your net sales (gross sales minus any returns), and divide the number by your sales space’s square footage.
What Sources Would You Use to Measure the KPI?
You can set up your retail dashboard to track all the sources that make up your sales per square foot in one location. The most valuable data sources include your CRM for gross sales and returns data, and your existing floor plan to determine your sales space’s total size.
Give Me an Example…
Let’s say you’ve recently redesigned your store after getting a new batch of inventory, but your sales have trailed off from previous highs. You know the new products you’re stocking are generally in demand, but it’s not translating into the sales figures you expected.
You can use your sales per square foot to determine if the issue is related to how your store is laid out, and if your team is maximizing the space to get the most out of it. Additionally, a low sales per square foot measurement can indicate that perhaps the products you currently have on hand are not as popular as you believed and clue you in on the best possible layout for your store.
What Benchmark/Indicators Should I Use?
- Total sales
- Total returns
- Floor space
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