What if you bought this shiny new crib for your store. It measures 62″ wide and 35″ deep. It takes up 15 square feet of your store.
What if six months after you bought it, you still hadn’t sold it?
One calculation some stores use to see how healthy their sales are is Sales per Square Foot. Take your total annual sales and divide it by square footage of selling space to find out your Sales per Square Foot.
Now you know how much business you should be doing for those 15 square feet.
But if you haven’t sold a single crib, where are you? You’re in the hole. You’re out whatever it cost to bring that crib in. You are in negative numbers.
Not only have you not made any money, you’ve lost money on that space.
And chances are, since no one wanted that crib in the last six months, just taking 10% off the price isn’t going to move it any faster.
The best move is to mark it at cost and sell it quickly. Get it out of there. Get back to zero for your 15 square feet. Then you have six more months to try something else in that space that will make you money.
Hey, we all make bad buying decisions, dogs that just won’t hunt. That’s part of the retail game. But a worse decision is not getting rid of the dogs soon enough.
PS If you want to know more about managing your inventory including the two formulas every retailer should know and track, download my FREE eBook on Inventory Management.
PPS Follow this link for my post on the best way to make your dogs bark.
PPPS Check with your industry to see if there are standards for what your Sales per Square Foot should be. But understand that every store is different. The bigger your store, the more of your space might be used for extra cash registers or wide aisles for shopping carts, thus lowering your numbers.