Sales Per Square FootIt can seem that all you do is look at numbers when it comes to running a retail or spa business. You are constantly looking at daily sales figures, order numbers, SKU numbers, wage percentages, mark-up and markdown percentages, and more, ad infinitum it seems. These are all important figures and data to consider and are a necessary part of measuring how your enterprise is doing.

To add to that you have to consider how your inventory is performing. With your establishment stocked with Candles of Eden and other product lines, you want to make sure each square foot of space that contains your merchandise is contributing to the overall performance of your store. You can use the sales-per-square-foot measurement to see if your inventory is really performing for you.

With the busy candle-selling season ahead of you, it may be time to look back at the past year to see if you are productive and efficient as a business owner-operator or manager. Your sales-per-square foot will let you know the answer. Yes, it is another number or statistic to look at, but being in business is being in the numbers game – it’s the language of business and you have to understand what the numbers are telling you. You want to know how SoyLuscious® Soy Candles and other inventory lines are contributing to your business as a whole. Sales-per-square-foot will let you know if you have too much selling space or if you are selling too few products from the selling space you do have.

Sales-per-square-foot is a measure widely used in business and an easy one to calculate. To come up with sales-per-square-foot just take your “net” annual sales and divide that number by your total “selling area” in square feet. If your net annual sales are $400,000 dollars and your selling area is 1,000 square feet then your sales-per-square-foot are $400. In a year, each square foot of selling space contributes $400 to your net sales.

Your retail space costs you hard-earned dollars. You pay rent for the space you have. You pay heat, hydro, insurance, taxes, and even maintenance and cleaning costs. You may be part of a mall or office building retail complex and have to pay common area costs. With all these things to consider it’s of paramount importance that you drive that sales-per-square-foot higher each year as best you can.

When you look at the formula make sure you put the “net sales” figure in the top part of the equation. Gross sales minus returns, discounts, and allowances = net sales. You only want to include dollars you actually have “in your till” so-to-speak at the end of a year. For the bottom figure of the equation, “total selling area in square feet”, you only want to include actual selling space where your inventory meets the customer. You do not want to include your backroom stock area, your receiving area, or the area behind your checkout unless you have stock displayed behind you in that section.

Generally you should strive for a sales-per-square-foot figure of $300 or better - with the stress on better. When you start getting into the $200 area you are not getting enough performance per square foot. This means you have dead stock that is sitting around collecting dust and not contributing to your store’s profit. You need to consider what you are selling. Are you offering quality at fair prices in all areas of your store as you do in your candle section with your Candles of Eden inventory? Alternatively, are you offering inferior or out-dated products that are over-priced and therefore not turning over? Those are some of the questions to ask when your-sales-per-square-foot figure is too low.

However, you may be carrying top-quality products across all inventory classifications. You have your quality SoyLuscious® Soy Candles line. You have your quality bed and bath products, and an elegant giftware line. You have unique handmade greeting cards, stationery sets, and many other great lines and you are aggressively promoting them and the sales are there. The problem may be you have too much floor space for yearly sales you bring in. Maybe you do not need to rent such a big unit. Alternatively, you may need to add more product lines to fill the extra floor space you have that is not working for you. Look your premises over and see if there are open areas where you can add displays and shelving to increase sales. These are all things to consider when you evaluate your sales-per-square-foot figure.

Take the time to work out your operation’s sales-per-square-foot. It’s an easy number to calculate and can tell you much about your business. Work to increase steadily that number each year. Make each square foot of selling space work harder, whether it’s housing Candles of Eden or other products. You perform daily as a seller; make sure your floor space is as well.