Sales per Square Foot

What Are Sales per Square Foot?

The dollar value of sales per square foot has, for many years, been a measure of success in the brick-and-mortar retailing industry. It is simply the average revenue earned for every square foot of sales space.

In the age of "omnichannel" marketing, this number may be less relevant, at least for large retail companies. However, it still can be a critical measure of success for an independent local business.

Key Takeaways

  • Sales per square foot is a key measure of success in brick-and-mortar retailing.
  • Square footage refers to the floor space available for selling items in brick-and-mortar retailers.
  • Managers and analysts consider a higher number to be proof of greater efficiency.
  • The measure is becoming less relevant in today's omnichannel marketing environment.

Understanding Sales per Square Foot

The measure of sales per square foot is used by businesses and retail stock analysts to measure the efficiency of a store's management in creating revenues given the amount of sales space available to them. It is tracked over time simply by totaling sales revenue over a period of time and dividing it by the total square footage of retail space available.

There is no absolute good or bad number. The higher the sales per square foot, the better job the store's management is presumably doing in selecting, displaying, and marketing the store's products.

Studies show that this figure is dropping. As more stores increase their presence online, traditional brick-and-mortar locations are bound to feel the pinch. The 2020 economic crisis also impacted retail sales per square foot. According to Colliers International, sales per square foot in 2020 were $338.3, a decrease from the 2019 figure of $382.9, but likely this dip was due to reduced foot traffic during the height of the COVID19 pandemic. This is likely to continue to affect physical retail space as analysts predict that as many as 100,000 retail stores could close by 2025.

It Varies Widely

There is a wide dispersion of this metric in the retail industry. At the higher end of sales per square foot, Apple Inc. (AAPL) produces around $5,550 per square foot, and Tiffany & Co. (TIF) generates approximately $3,000 per square foot. Both companies sell small, high-dollar value products in smaller store spaces. By contrast, sales per square foot for Walmart (WMT) stores is approximately $480 per square foot, while Target (TGT) is around $300 per square foot.

Analysts generally compare a retailer's sales per square foot against that of its direct competitors in comparable retail environments. A retail analyst considering sales per square foot might compare Target unfavorably to Walmart, but he would probably not compare Walmart unfavorably to Tiffany. They are in the same business but certainly not in the same sector.

Measuring Success as a Small Business Owner

Then again, sales per square foot might mean the difference between success and failure to a small locally-owned business, with or without a website. The number relies on many factors including product selection and display, staff performance, pricing, store location and layout, and much more.

Keeping track of sales per square foot over time might be extremely useful for a small business owner. A series of declines is a clear signal that something is wrong, and a problem may need to be identified and rectified. Steadily climbing numbers are a sign that the business is strong and getting stronger.

Does Sales Per Square Foot Still Matter?

With the ubiquity of e-commerce and online shopping, sales per square foot may no longer be as relevant to management or analysts as a measure of efficiency as it has been in the past. "Omnichannel" is the new buzzword in retailing that describes a hybrid approach to physical stores and online venues. For example, the Apple stores may be as much about marketing, customer service, and image creation as about direct sales volume.

Where Can You Find a Company's Sales per Square Foot?

Sales per square foot is disclosed by some companies during conference calls or in their 10-K or 10-Q filings.

How is Sales per Square Foot Used by Investors?

Sales per square foot is a reliable indicator of how efficiently management is using its stores and allocating resources. The higher the sales-per-square-foot the better, when comparing direct competitors with similar businesses. Trends and changes in year-over-year sales per square foot can show if a retailer is growing or struggling.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Colliers International. "What's Happening Next in Retail?," Page 8.

  2. USA Today. "100,000 Retail Stores Could Close by 2025, Accelerated by COVID-19, Analysts Say."

  3. S&P Global Market Intelligence. "Apple, Tiffany & Co., Lululemon garnering highest sales per square foot."

  4. Target. "Financial Summary."

  5. Global Data. "The Sales per square feet of Wal-Mart Stores Inc in United States of America (2017 - 2020, USD)."