What is 'Sales Per Square Foot'

Sales per square foot is a popular sales metric used in the retailing industry. Sales per square foot is simply the average revenue a retail business creates for every square foot of sales space.

BREAKING DOWN 'Sales Per Square Foot'

Sales per square foot is used by businesses and analysts alike to measure the efficiency of a store's management in creating revenues with the amount of sales space available to them. The higher the sales per square foot, the better job management is doing of marketing and displaying the store's products. There is a wide dispersion of this metric in retailing. Apple produces around $5,500 in sales per square foot and Tiffany generates approximately $3,000 per square foot. By contrast, sales per square foot for Walmart and Target are only around $400 and $300, respectively.

Growing Irrelevance of this Metric?

The retail landscape is evolving, with changes to traditional business models forced upon by e-commerce (read: Amazon).  "Omnichannel" is the new buzzword in retailing that describes a hybrid approach to physical stores and online venues to sell goods to customers. Thus, with the amount of retail space on the decline, assuming the trend plays out, sales per square foot may not be as relevant as a sales efficiency measure to management or analysts as it has been in the past.

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