Measuring your sales per square footage is important, but calculating it can be complicated. We’ll show you how to calculate sales per square foot and what factors you should consider when interpreting your results.

What is Sales per Square Foot?

In accounting, the terms sales and generated per square foot of retail space. Sales per square foot is a metric that retail companies use to determine how much revenue they generate per square foot of retail space. This information is important in accounting because it helps businesses track their sales and income. 

The retail industry can use its sales figures to determine its efficiency.

It’s important for retailers to know how to calculate sales per square foot in order to track their sales and revenue and make informed decisions. Continue reading this guide to know more!

These sales-based retail metrics should be used by companies that only operate in physical space because it only takes into account the revenue from the space that a company is occupying.

How to Increase Sales per Square Foot

1. Improve the layout of the store.

If a store’s sales per square foot is low, it might be because the store is using its space inefficiently. For example, the store might be cluttered with unnecessary equipment.

Improving the layout of your retail stores by getting rid of any unneeded items could boost your sales.

2. Stay on top of the latest trends

One reason for low retail sales may be that the store’s inventory is not appealing to customers. For instance, if a store is selling clothes that are not currently in style, this could cause a loss of business. By generating reports on the top-selling items and removing the items that perform poorly, retailers can increase their sales revenue from their stores.

By analyzing which items are selling well and which aren’t, you can increase the profits of your retail store.

3. Invest in employees.

Employees play a vital role in the success of the retail industry. Their interactions with customers can make or break a sale, and ultimately impact the store’s bottom line.

By investing in employee training and development, retailers can ensure that their staff is equipped to provide the best possible experience for shoppers. This, in turn, can lead to increased sales and customer satisfaction.

Employees who know the products well are in the best position to upsell and cross-sell.

Product knowledge is critical for retail sales staff in order to cross-sell and up-sell company products. Adequate training in product knowledge, up-selling, and cross-selling tactics will result in improved sales per square foot.

How to Calculate Sales Per Square Foot

How to Calculate Average Daily Sales

To calculate the daily average sale per square foot, take total sales and multiply by the number of days, then divided by the total amount of shop floor space. So, if a shop made $100,000 in 30 days and it had 10,000 sq. ft. of floor space, the daily average of $3.33.

Analysts use this kind of information to compare the sales of different retail stores in a chain, regardless of their size. This can help determine which ones should be expanded and which should be contracted.

In addition to sales per square foot, commercial property owners are able to determine the appropriate amount of monthly rent based on other metrics such as foot traffic, number of stores, etc.

Examine sales records to determine the time period you wish to measure. Sales per square foot can indicate yearly or monthly sales.

Using both data sets allows you to compare your store’s performance from year to year, but also month to month.

Calculate the total sales for the time frame you’re examining. Gross revenue is the total amount that customers spent at the retail store, minus any refunds.

For example, if a company’s sales were $350,000 but returned goods cost $50,000, the company would have $300,000 in net revenue.

To figure out your store’s average sales, you’ll need to know the total amount of sales space in your store. This includes all areas where merchandise is on display but doesn’t include restrooms, storage areas, or space behind the counter.

For the example above, let’s assume that the total sales space is 1000 sq. ft.

To calculate your revenue per square, divide the total revenue by the total amount of space. For example, if a store has $300,000 in gross sales and 1000 square feet of selling area, then its average sale is $300.

Conclusion

Sales per square foot is an important metric for retail businesses. It helps them understand how much revenue they’re generating for each square foot of space that they have. Calculating retail sales per square foot can be tricky, but it’s essential to do if you want to get accurate results.

This guide has shown you how to calculate sales per square foot and what factors to consider when interpreting the results. Use this information to help your business make informed decisions about its operations moving forward.