One of the best ways to measure your store’s performance is by measuring retail beyond sales per square foot. It tells you how efficient you are with space and gives insights for improving the layout, merchandising, staff management, etc.

Retail sales per square foot are an essential metric, but it still has room for optimization.

What are sales per square foot, and how is it measured?

The formula for retail sales per square footage is the total in-store revenue divided by your store’s selling area. This number can be a great indicator of how much money you’re making and what needs to change with your layout.

As you can see, a store’s sales per square footage are calculated by dividing the total revenue from its retail space. If an apparel shop sells $1 million worth of merchandise in 1800 sq ft., then that store has average gross revenues for every foot it owns.

$1,000,000 / 1,800 sq. ft.

= $555 per square ft.

When calculating a store’s sales per square foot, it is crucial to consider the non-selling areas of the shop, such as stock rooms or receiving areas.

How to increase sales per square foot?

You have a rough idea of what sales per square foot are and how to measure it, so now let’s talk about how to increase per square foot and maximize this metric in your stores.

Have a look at the tips below.

1. Improve your store layout.

If your store’s sales per square footage are not as high as you’d like, consider how the layout could be improved. Start by de-cluttering.

When a store appears cluttered or dirty, people will avoid it. The result is that shoppers can’t find what they’re looking for and leave the establishment frustrated.

Make sure that your staff keeps things tidy and in their proper place.

The first thing you need to do is take a walk around your store and identify what’s not working. You might find that some fixtures are in the wrong place, or there could be too much signage.

It would help if you also were thinking about the traffic flow in your store. Is there anything that might be blocking people’s way? Are you placing your best products where they can catch someone’s eye?

Express is a retailer that is known for its layout changes. This company has started to switch up the placement of sale items in their stores, and it’s working wonders.

Express started putting its full-priced merchandise in the front of their store, dramatically affecting sales. The company saw an increase in comparable sales, margins, and even customer satisfaction.

Consider how you can make your store more customer-friendly by taking a data-driven approach to remerchandising or rearranging it.

You need to use analytics software and foot traffic data to determine how your store should be set up. For example, you might want a section for impulse purchases.

2. Have a winning product assortment.

Track your inventory data to ensure you are not wasting space on products that don’t sell. If it’s clear which items aren’t selling, try rotating them in and out of the store.

The easiest way to track sales activity is by creating reports for specific periods, such as the last month or quarter.

You can find out how much your customers are spending on you by tracking their time of purchase (weekly, monthly, hourly) once you know what they’re buying and when to order more stock.

Adrienne Wiley, the owner of Covet boutique in Dallas, Texas, had the insight to analyze her store data and find out what items were most popular. Adrienne then figured out how to display these products on shelves when shoppers walk by.

“As I opened my new store, I discovered that there were certain items which people wanted more of. By looking at the sales by category and hour, it helped me figure out what needed to be stocked for customers to get what they want. Start taking advantage of the data right away because it can help grow your business.”

3. Improve your prices and promotions.

There are specific strategies that can help with sales. Ending prices in the number 9 or introducing tiered pricing might be just what you need to get people buying your products.

You should also test different types of promotions to see what works best. Sometimes, the less good offers can be more effective for bringing in sales.

There are all sorts of promotional tactics that retailers use to try and lure in customers. Some strategies include buying one-get-one free offers, giveaways, or discounts on a product when they’re running low.

You can’t just give a blanket solution to motivation. You must take the time and measure how each action impacts performance before deciding on a course of action.

4. Upgrade your transaction value.

One of the reasons electronics and jewelry stores are so profitable is that they sell high-ticket items.

The reason these retailers make more money is that their products are pricier.

That said, if you don’t have high-end products and are still seeing a lot of traffic to your store despite the lack of expensive goods, some things can help. You could try one or more:

• Practice cross-selling and upselling

One of the most valuable sales tactics is upselling and cross-selling. Upsells are like buying a cereal box at the grocery store that includes two free bananas, while cross-sells happen when you buy one thing but want to buy another.

As a refresher, upselling tells customers that they can get more by paying an extra fee. Think of it as upgrading your purchase.

For example, if you’re selling a car, then upselling would be convincing the customer to purchase an upgraded model of that exact vehicle.

Cross-selling suggests complementary products instead of just focusing on their buying product. So if someone’s buying a purse, you could recommend that wallet as well.

Done proper upselling and cross-selling can help to make the customer feel like they are getting a deal. But if you do it wrong, you might come off as pushy or too focused on money.

That’s why it is crucial to look at the customer and understand what they need before you try to upsell or cross-sell them on something.

If you’re a business owner, here are some helpful tips from two successful entrepreneurs in Toronto: 1. Always be conscious of your customer’s needs and wants 2. Be flexible with the work environment to create an atmosphere that will motivate employees

• Set up an effective loyalty program

One of the best ways to get your customers in the door is by creating a loyalty program that rewards them for shopping with you. The more they spend and come back often, the more their customer base grows exponentially.

There are many types of loyalty programs in retail. The most common ones include:

1. Points (or dollars) per purchase: This program is the most straightforward to implement. If you’re a customer, all this means is that when you buy something with the store’s credit card, you’ll get points or cash back, which can be used later.
2. Membership programs: Amazon Prime is an excellent example of this loyalty program. With Amazon, customers pay an annual fee in exchange for exclusive discounts and benefits.
3. Tiered format: The rewards for this loyalty program depend on the level that you are at: the higher your tier, the better and more exclusive your premium.

• Have a flexible payment system

Customers with tight budgets will likely spend less than those with more to work with. If you can find a way to make your store an affordable option, they might be willing to buy more.

Get more people on board with your product by offering flexible payment options such as lay-by or installments. If you’re not a fan of waiting for payments, consider using Afterpay: it allows customers the opportunity to purchase products and pay them off in four fortnightly installments.

Not only is it accessible to the customer, but if they pay on time, there are no extra fees.

5. Invest in your staff.

As we’ve discussed before, the most important thing for your store is has an excellent staff. Without great employees, sales and customer satisfaction will likely suffer.

If you want to get more sales per square foot, some things can help. For example:

• You want to give them a good grasp of your company and products so they can sell effectively.
• Educated them on how they could upsell, use suggestive selling tactics, etc.
• We spent quality time training them to get over their selling fears.
• Play the role of a customer and demonstrate what it’s like for you as a salesperson.
• Positive reinforcement and peer-to-peer recognition are the keys to building a successful sales team.

6. Drive in-store traffic from online leads.

If you want to increase your sales, the customer must have a great experience when they visit. This means having enough staff and an exciting layout, so customers don’t feel pressured or intimidated.

A digital marketing strategy is vital to help business people reach the right online audiences.

According to Matt Warren, CEO of Veeqo.com and e-commerce expert:

“One thing modern retailers can do to increase sales per square foot in their physical stores is by increasing customer visits from online.”

So, if you’re a fashion retailer and want to get browsers interested in your new styles on social media channels like Pinterest or Instagram, then have them save their favorite items for later purchase. Offer coupons that can be redeemed when they come into the store.

“If you want to increase your store’s sales, it might be a good idea to make sure that the products are arranged in such a way so as they can be bought together. It also helps if staff know about the different items and upsell customers on those things.”

7. Motivate click-and-collect customers to browse.

One way to increase sales in your store is by offering the click-and-collect service. The beauty of this idea is that customers can buy online and pick up their items in the store when they’re ready, but there are ways you can encourage them to browse while they wait.

Click-and-collect shoppers are surprisingly likely to buy more things when they get into the store because it turns out that many of them come in with a specific product or two in mind.

In-store pickup has been an excellent solution for shoppers who can’t find what they want online. But it’s not perfect.

8. Encourage customers to come in and stay.

It’s no secret that the more people who walk into your store, the higher chance you have of making a sale. The longer they stay in one place, there’s even greater the likelihood that they’ll buy something.

It’s no secret that customers are more likely to spend when they’re in the store. Retailers who encourage their shoppers to stay a little longer have seen a 20-40% sales increase.

One strategy that seems to be working well for retailers is hosting community-based events. These are usually aimed at building up the local economy and strengthening customer relationships.

Lululemon has found success by hosting free yoga classes in the middle of their slow business hours to get people into the store.

Lululemon has the highest sales per square foot in apparel, which experts attribute to its “in-store experience, ” including community-based activities like yoga classes.

When Staples started to offer office space in its locations, it was a brilliant idea. It’s wasn’t just about selling things anymore.

Staples has teamed up with Workbar to turn some of its stores into co-working spaces.

Bonus: Go beyond sales per square foot…

While the sales metric per square foot is essential, it’s not a perfect measure for retail success.

One of the most common questions from retailers is how to increase sales per square foot. The answer, according to Ray Riley, CEO at Progress Retail:

“Retailers should stop chasing this metric.”

What can we do to increase sales per square foot? The answer is: it depends. Sales depend on the store’s revenue and their physical footprint post-lease. 

In a post-e-commerce world, retailers should increase revenue by identifying conversion rates and average transaction values. This is especially important because of the decreasing foot traffic.

Ray says that retailers should focus on and train their employees. His advice:

1. Managers need to learn how to delegate work, not just assign it.

2. Learn from your mistakes; don’t be afraid of them

3. Make sure you hire people who will want the job before they take it (no one wants a job where nobody cares)

4. Understand the basics like staffing needs for each department, which products sell best at different times of the year or with various customer demographics, seasonality strategies, etc…

• Keep a close eye on your sales floor and analyze how much foot traffic there is each week. Look at the numbers from last year to see if they’re going up or down.
• Should staff be greeting customers?
• Is the store staffed adequately during high-peak times?
• Is the product displayed and easy to find?
• You want to ensure that the customer knows what they are getting and how much it costs. Don’t have them do the math on their own; tell them straight up!
• Have you ever given a sales floor manager the autonomy to manage their team?
• Do you have a learning management or sales enablement system that can provide every team member with education to help them grow and learn independently? This way, they aren’t reliant on their manager.
• What’s your managers’ duty? They have to worry about conversion rates, average transaction values, and the number of items sold per customer?

Look at how brick-and-mortar affects online sales.

Sales per square foot are not the only thing to worry about. Consumers today are using many different channels, and you need to know how your physical store can affect eCommerce or vice versa.

Your brand is not truly represented if you’re only crediting sales to a single channel. People must be interacting with your company in many different ways and places. Click To Tweet

Nobody can tell you how much offline retail affects eCommerce, but it does affect it. You could measure the impact by looking at your analytics and seeing what percentage of traffic or revenue comes from places with a physical store.

If you just opened a new store in Austin, TX. The best way to see your location’s impact on online sales is by looking at web traffic and eCommerce data from users who live near it.