Monday, March 9, 2009

Inventory Levels & Sales Per Square Foot

Inventory (at retail) should be approximately 25% of annual sales. If sales are $300,000, then inventory should be approximately $75,000 (on average). The stockroom must be able to
accommodate that merchandise.

In evaluating both successful and failing shops, a minimum of $500 per square foot (at retail) in sales annually is doable for most shops.
A number of shops around the country are generating over $1,000 in sales per square foot per year.

NOTE: This benchmark applies to shops that are proportionate in size to their hospital (number of employees and beds). A small shop in a big hospital should generate higher sales per square foot. A disproportionately large shop in a small hospital will generate lower sales per square foot.

To maximize every square foot of a shop’s selling space:
- There should be very little storage (drawers or cupboards) in the selling space.
- The merchandise must turn fast.
- Appropriate pricing structures must be maintained to receive the maximum profit on the merchandise. Good profit margins are the key to success!

This information is based upon Cindy’s general experience and knowledge of hospital gift shop management and information gathered through her national surveys.