Figuring Foot By Foot

Carole Sloan, March 6, 2006

Sales per square foot.

It's a critical retail measurement, yet one that is infrequently used in general retail analyses. Obviously, it's not the only gauge — but it is crucial as retailers take ever-more radical steps to increase their productivity and profit. A couple of instances of this measurement came about recently.

In last month's conference call discussing fourth quarter performance, JCPenney's chairman and ceo Mike Ullman made specific reference to this measure in terms of the company's growing roster of off-the-mall stores. He pointed out that these stores, expected to hit 42 by year-end, were registering sales per square foot of $250.

At the analysts' meeting the company held in April 2005, executives had reported that as a company overall this yardstick was at $150, and the emerging off-the-mall sales per square foot were $200. The goal for the coming year, they noted, was $250, which now has been achieved. And interestingly, in 2001 as the company was in the midst of its strategic turnaround, the number was a mere $136 per square foot.

A recent report on Linens 'n Things cited a figure in the neighborhood of $155 per square foot. As the financials emerge over the next few months on the leading retailers, this will be one of the key figures to identify and compare. When it comes to the world of home textiles, retail managements are increasingly looking to this measurement as a key barometer in terms of space allocation within a store.

Industry-wide the trend towards sameness and commodity in product continues in home textiles. If the sales per square foot don't show significant improvement, the tendency among the executive decision-makers could well be to carve a sliver here and a sliver there away from the home textiles presentation overall.

We all know it's getting more competitive out there. This is definitely the time for more creativity and less of the sameness in assortments that has been pervasive throughout the market.

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