Productivity of Space
What gross profit dollars does your company generate per square foot? In our productivity
of space analysis, frequently we have found classifications and departments that are significantly
under performing. Just as in Assortment Analysis, classifications that are performing above
average should be expanded and those that are under performing should be reduced or
eliminated. The same approach should be used to space analysis. The most important per square
foot number is gross profit dollars, not sales.
Few shoe or apparel stores average gross profit dollars per square foot in the $180-$450. Pace
has achieved this performance in undistinguished real estate, located in small and midsize
markets. In more metropolitan demographics, performance is considerable higher.
Return on Investment-ROI
Inventory turnover has a much greater impact on ROI than margins. Pace has consistently delivered
to clients inventory turnover 50-100% greater than industry benchmarks. This performance has been
achieved in even our smallest clients with volume levels where high turnover is much more
difficult. In a very profitable nationwide chain, Pace increased turnover by over 30%.
|