When leasing retail space it's important to track certain metrics to make sure your retail stores are profitable. One way to track same store sales over time or to compare sales in different retail store locations is to calculate sales per square foot (sf). Sales per square foot is a calculation of the dollar amount of sales that you generate in one retail store per square foot.
Calculating sales per square foot can help retailers decide which stores to expand, reduce in size, or relocate altogether. It's also used by retail shopping center owners to determine the amount of rent to charge retailers. As a best practice it's a good idea to calculate both sales per sf per year AND sales per sf per month.
How Do You Calculate Sales Per Square Foot?
- Determine your yearly or monthly gross sales. Gross sales is your TOTAL sales revenue for the year or month MINUS any returns. An example would be a total sales of $400,000 and returns equal to $40,000. Your Gross sales would be $350,000
- Divide the retail stores square footage into the gross sales. For example if your gross sales are $350,000 and your stores square footage is 1,500 sf then your sales per sf is $233.33 ($350,000/1,500).
Key Thing To Remember When Comparing Different Locations:
When comparing different store locations based on sales per sf make sure you calculate each stores square footage and gross sales the same way so you have a solid apples to apples comparison.