Is it any surprise that Apple stores take the lead for the highest retail sales per square foot? I bet you are surprised that the sales per square foot for Trader Joe’s is double that of Whole Foods Market.
Retail sales per square foot is a popular way for retailers to determine how successful store sales have been. It is simply the average revenue for every square foot of retail sales space.
According to Advanced Retail Management the average regional mall sales per square foot is $341 and most big box retailers average between $250 to $350. Annual sales divided by the total square feet gives you the sales per square foot. So if you have a 5,000 square foot site with $2 million in annual sales, your sales per square foot is $400.
Sales per square foot of store space can be considered a key measure of efficiency in retail. In the clothing industry, according to RetailSails, sales per square foot for Nordstrom is $400, compared with just $173 for Macy’s. At $350, Saks Fifth Avenue’s sales per square foot approaches Nordstrom’s. But, then look at Ross stores where the figure was $355 in 2012.
Apple stores are the envy of many retails with $4,542 sales per square foot this fiscal year to date according to the Wall Street Journal and down from $4,754 this time last year. In 2012 Apple saw a sales per square foot of $5,971. Tiffany & Co. had sales of $3,453 per square foot and popular yoga-clothes retailer Lululemon Athletica Inc. pulled in $2,464 per square foot last year.
On the low end of the scale you will see Hancock Fabrics at $72 in retail sales per square foot. How about Target and Walmart? Walmart boasts sales per square foot of $430 per year while Target’s is $300.
According to Apparel Magazine the key is to maximize space productivity. Retailers each have their own strategy such as analyzing customer behavior, adjusting pricing, offering promotions, increasing transaction size, trying different product placements and testing new store layouts.
Anna B. Smith of Conjecture Corp. states: “Using this measurement as an indicator of overall profitability allows both retailers and property managers to analyze stores on an equal standing. This statistical number may be frequently used by retailers to determine whether it might be profitable to open a store in a new location.”
Simplicity is the solution, according to the Wall Street Journal. Trader Joe’s offers about 4,000 products compared with other supermarkets, which offer 40,000 products. Trader Joe’s sells an estimated $1,750 in sales per square foot. Limiting variety doesn’t mean bland selections, however; the company does extensive research on its customer base to make smart choices on behalf of the people who shop there, mixing in some exotic food choices and using playful, quirky packaging.
The top retailers have sleek, uncluttered formats and are constantly trying new things and watching their customer base closely for buying trends.
Which are your favorite stores and why? Let me know in the comments section.
Burt M. Polson, CCIM, is a commercial real estate adviser with ACRES Real Estate Services Inc. He has been assisting clients in the sale, leasing and consulting of commercial real estate in the Napa Valley since 1992. He can be reached at 254-8000 or email@example.com. His blog, Real Estate in the Napa Valley, can be viewed at BurtPolson.com.
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