How to Increase Retail Sales per Square Foot and Improve Store Productivity

Girls with colorful shopping bags in front of shopping windows

Sales per square foot is one of the best metrics you can use for gauging the performance of your brick-and-mortar stores. It tells you how efficient you are with your use of space and can give insights for improving store layout, merchandising, staff performance, and more.

In this post, we’ll take a closer look at this very important metric and offer pointers on how you can maximize retail sales per square foot in your stores.

 

What is sales per square foot and how do you measure it?

Retail sales per square footage is your store’s average revenue for every foot of sales space. The formula is total in-store sales divided by selling area in square feet. So if say, an apparel store sold $1 million worth of merchandise in its 1,800 sq. ft shop, that store’s sales per square footage would be:

$1,000,000 / 1,800 sq. ft. = $555 per square ft.

When calculating a store’s sales per square ft., don’t forget to exclude the non-selling areas of the shop, such as stock rooms or receiving areas.

Now that you have a basic understanding of sales per square footage and how to measure it, let’s talk about how you can maximize sales per square foot in your stores. Have a look at the tips below.

 

Improve your store layout

If your store’s sales per square footage isn’t as high as you’d like, consider optimizing your shop’s layout. Start by de-cluttering the store. Spaces that appear messy or crowded can drive people away and they make it difficult for shoppers to find what they need. That’s why it’s important to stay on top of tidying up. Instruct your staff to straighten out untidy areas and ensure that items are always in their proper place.  

Walk around your store and identify things that aren’t helping sales. Perhaps some fixtures need to be moved or you need to make better use of signage.

Also, pay attention how traffic flows in the location. Are some items or fixtures in the way? Are you placing your best products in areas where people will actually look at them?

One example of a retailer that effectively improved its layout is Express. Last year, the retailer decided to switch up the placement of sale items in its stores. Rather than having them at the front, Express moved the items to the back and kept its full-priced merchandise in the front part of the store. The result? Express saw an increase in sales, comparable sales, and margins.

See if you can do something similar in your stores. For best results, take a data-driven approach to how you re-merchandise or rearrange your store. Use retail analytics software to measure foot traffic and keep a close eye on product sales. Such data points will help you decide how to arrange your shop or where to put products.

 

Additional Resource

Expert_webinars_Shelley_Linkedin

Learn more about using data to understand customers and make better business decisions at our next webinar, How to optimize the shopper journey using retail analyticsRegister here.

 

Have a winning product assortment

Don’t waste precious floor space on products that aren’t selling. Keep an eye on your sales and product data and use those insights to make decisions on your product assortments.

Generate reports for certain time periods (i.e. monthly, weekly, hourly) so you can figure out when customers are buying from you. From there, you can drill down on what they’re purchasing, and then stock up accordingly.

covet

That’s what Adrienne Wiley, Owner & Operator of chic fashion boutique Covet, did in her business. Adrienne looked at her store analytics then derived insights on which products to carry in her locations, as well as how and when to sell them.

I actually determined what I should be stocking more of in my new location based on sales by category and then fine tuned the hours by looking at the sales by hour,” she said. Doing this helped her improve how she ran her stores, and she’s advising other retailers to do the same.

“Start taking advantage of the data right away, because it can really help grow your business.”

 

Optimize your prices or promotions

See if there’s anything in your pricing strategy that can improve sales. Changes such as ending prices with the number 9 or introducing tiered pricing can make a difference in sales, so consider testing such strategies when pricing your products.

The same goes for your promotions. Test different types of offers and discounts to see what brings in sales (without cutting too much into your margins). There are, of course, various types of promotional tactics including BOGO offers, free gifts, loss leaders, and more.

The only way to figure out what’s right for you is to test various actions, measure the results, and make changes if necessary.

 

Increase transaction / basket value

basketsize

Electronics and jewellery stores always have high sales per square ft. thanks to their high-ticket items. People spend more with these retailers simply because their products cost more.

That said, merchants who don’t carry expensive products can still achieve high sales per square ft. One way to do this is to focus on loyalty. Set up a program that not only encourages customers to shop at your stores, but also to come back.

Tip

Have you checked out Vend’s CRM and loyalty features yet? They let you build your customer database, grow repeat business and increase shopper spend.

In addition to a great loyalty program, see to it that you have strong in-store sales tactics in place. You can, for example, encourage impulse buys by placing particular items near the checkout counter. Also, consider driving add-on sales through cross-merchandising or suggestive selling.

And remember, one of your biggest assets for driving sales is your workforce. Which brings us to our next point…

 

Invest in your staff

We’ve talked about the importance of retail staff training and motivation time and time again, for good reason: store employees can directly impact sales and customer satisfaction. Without great employees, your store performance will likely suffer.

In the context of increasing sales per square foot, some of the things you could do with your staff include:

  • Providing them with a strong background in your company and products
  • Educating them on sales tactics such as upselling, suggestive selling, etc.
  • Training them to get over their fear of selling
  • Role-playing with them to demonstrate different sales scenarios
  • Encouraging positive reinforcement and peer-to-peer recognition

Tip

For more insights and tips on employee management check out the resource, The Ultimate Guide to Training and Motivating Retail Employees.

 

Encourage people to come in and stick around

Needless to say, the more people who walk into your store, the more potential sales you can have. And the longer people stay in your location, the higher the chances that they’ll make a purchase. As we mentioned in our previous post, retailers who encourage customers to stick around in-store have seen a 20-40% increase in sales.

Make an effort to improve the in-store experience. One strategy that seems to be working well for retailers is holding classes. Lululemon, for example, has found success in holding free yoga classes during slow business hours to drive traffic in-store. Classes feature products sold by Lululemon and this increases basket size in the process.

Then there are retailers who are being more creative with their spaces. Take Staples, which recently started offering office space in its locations. The office supplies retailer has partnered up with co-working services provider Workbar to convert some areas of its stores into workspaces.

Offering services such as click-and-collect can also help boost sales per square foot since many shoppers choose to buy additional products while picking up their purchase in-store.

 

Your turn

How are you increasing sales per square ft. in your stores? Let us know in the comments.

About Francesca Nicasio

Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.

  • Erlich Stewart

    Hey Francesca, Nice Article!
    A lot of people in the the retail industry must be looking for such tips.
    All I’ve got to add is that maybe a bit of tech inclusion attracts customers too. Like this whole world going crazy over Pokemon Go just because it has Augmented Reality Tech, I think it would be nice for stores that can afford to offer their customers some Virtual Reality Tech to their shopping experience. Who knows? It may be the next viral thing on the Internet 😉
    In fact actually, some brands have tried it already! You might want to know some tech experiments in retail that worked out great! Here’s the link —> https://appreal-vr.com/blog/ar-in-retail-shopping/
    There’s big names like Converse, IKEA, etc.
    Thanks, Good Luck!