Last week, we wrote about the importance of location-based entertainment (LBE), and how it could help save traditional retail. The central idea behind the article was that retail environments need to provide additional value outside of product offerings, in order to provide customers with an incentive to shop in person vs. online. For decades, the same paradigm has been used to evaluate the success of a retail location: Sales Per Square Foot (SPSF). As we move forward, however, this antiquated way of thinking must shift to a new model. It raises a question for many business leaders: If the future of retail is in the customer experience, what’s a good way to measure the value of your stores moving forward?
Our answer? Experiences Per Square Foot (EPSF). Here’s a look at the old vs. the new.
SPSF has been a staple in the retail industry for the better half of the last century. The concept is simple: define a location’s value by the number of sales your team can close compared by the amount of space required to run the business. The idea basically encourages shop owners to squeeze as much ROI as they can from as small a physical footprint as possible. In an age without Internet, that made complete sense. However, as we’ve seen the meteoric rise of ecommerce in recent years, this script is now out of touch with the pulse of most retail locations. It emphasizes sales numbers instead of people, and sticking to this performance indicator will only be a losing battle as online shops grow their offerings without the constrictions of having a physical location.
As we’ve seen the paradigm shift towards a focus on experience over directly driving sales volume, the way we evaluate the success of our retail stores must also change. That’s why many industry leaders are emphasizing EPSF instead. If experiences are what’s drawing foot traffic into a store, then the more experience a business can offer should positively correlate with the number of people visiting that location. It’s no longer about providing customers with the right variety of products for their needs. Most items can be bought anywhere, and the business must leverage new ideas to stand out from the crowd. That’s really what’s at the core of this new metric. Giving potential customers a memorable interaction with your business that keeps the brand at the top of their mind, and motivates them to convert with return purchases.
As a retailer, how do your EPSF metrics look? Finding the right mix can truly become a winning combination for both you and your customers. If you’re serious about improving your store’s technology infrastructure to a point where it can support initiatives such as what we’ve mentioned in this article, we encourage you to connect with us through the Calendly scheduler that is in the upper right-hand corner of this page, or contact us here.