What is sales density?
Sales density is a term used most commonly in retailing. It refers to a way of measuring performance, and is calculated by looking at the revenue generated by a particularly specified area of sales space within a store. This is then used to assign a monetary value per square metre.
Where have you heard about sales density?
If you work in the world of retail – for example in-store merchandising, floor planning or larger operations – there’s a high chance you will have come across sales density. It is a measurement applied by many stores and businesses to ensure that they are making the best use of their floor space.
What you need to know about sales density.
When looking at sales density, the general rule is that the higher the monetary value per square metre, the more efficiently the floorspace is being used. Sales density is often used along other measurements and indicators to properly examine the merchandising process, one of these being like for like sales. On a larger scale, the measurement is calculated by taking the total retail sales over the year and dividing that sum by the total surface of all the stores owned by the retailer. Different businesses have different approaches when deciding whether their online sales should be included as part of the measurement.
Find out more about sales density.
To better understand sales density, it’s useful to also understand like for like sales.