Sales per unit area calculations

Generally when a new store is to be opened, the approximate RPM for that store is calculated. For every retail company, this RPM value differs. To get more info about RPM click here.

How this value could be used by Logistics department? What impact will cause on logistics operations the opening of new store? Can be this impact predicted from RPM value?

RPM is revenue per meter square per a year in US dollars. Suppose we have two different stores: one with 3000 RPM and another is with 6000 RPM. For the store having RPM 3000 net sales area(area without fitting rooms, staff room, etc) is 550 m2 and for store having RPM 6000 net sales area is 700 m2.

For first store: 3000RPM*550m2/30 USD/365 days=150 pieces. 150 pieces of merchandise are sold every day if the average price per merchandise is 30$.

For the second store: 6000RPM*700m2/30USD/365 days=383 pieces are sold every day.

Two stores sell more than 500 pieces every day. So according to these sales rate people hired in the warehouse. Suppose another store is to be opened having an RPM: 13 000 and net sales area of 1200 m2.

The number of merchandise to be sold per day on average is: 13000*1200/30/365=1424 pieces of merchandise. That is almost 3 times higher than the current workload. So inbound frequency will increase and outbound volume will increase. Also as this new store is 700 m2 bigger than existing stores average new ranges of products are to come so warehouse area will increase. Also the warehouse staff number will increase.

Also RPM could be used by HR department, Merchandisers, etc. For example HR calculations would be as following: the higher RPM the higher foots enter the store, the more store staff will be needed.