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Author: Daniel Frost
In the evolving landscape of UK retail, how effectively physical space is put to use has become a defining factor in resilience, profitability and growth. But while some retailers generate standout returns per square foot, others - often with similar square footage, assortments, footfall, or customer demographics - see markedly underwhelming results.
What drives this disparity? The reasons for this are, as you’d expect, complex. Beyond common levers like operational efficiency, product range, store format and location, differentiators often lie in less-visible factors: how retailers analyse and use data, the quality of decisions, and whether they treat their physical space as a dynamic profit engine.
With ever-increasing property costs and compressing margins, today’s leading retailers are those who treat every square foot as a strategic resource.
Jump into the data with our guest author Daniel Frost as we examine how some of the UK’s largest retailers rank on space productivity, and how emerging tools like Scalene’s space optimisation platform can help convert underperforming square footage into a high-yielding asset.
High revenue figures can be seductive, especially when comparing store performance. But revenue is only part of the equation. Two retailers might generate similar sales per square foot but deliver wildly different levels of profit from their space. Revenue may be your headline metric, but profitability is your bottom-line truth. Which means decisions around space aren’t just operational, they’re strategic.
Take these examples:
In short, not all square footage is created equal, but most importantly, not all revenue contributes meaningfully to the bottom line. A 5% uplift in revenue from a high-margin category may be more valuable than a 20% uplift in a low-margin one. Variations influence not just what’s sold, but how space is planned, stocked, and justified.
The data highlights how various UK retailers use their space to drive exceptional value. Sainsbury's leads with the highest revenue per square foot, followed closely by Aldi and Tesco—showcasing the efficiency of grocery retailers in maximising return on space. The razor thin profit margins of the grocery sector emphasise the importance of continuously optimising layout, range, and merchandising to enhance sales per square foot and be better positioned to cover operational costs and maintain profitability, especially in a market where physical retail space must work harder than ever.
Next’s performance stands out among non-grocery retailers with a leading revenue per square foot. Since 2017, a year described by Next’s Chief Executive Lord Wolfson as “the most challenging year we have faced for 25years”, the retailer has improved their revenue by £249/sq. ft . While there has been a recent focus on improving e-commerce offerings, Next are planning to open 10 new stores this year (the first increase in trading space in 5 years), highlighting that physical store presence remains an important factor for growing revenue and improving profitability.
The takeaway from all of this? High footfall and fast turnover may drive revenue, but true performance lies in turning space into profit, not just pounds through the till. For those retailers that aren’t closing the gap in space productivity compared with peers, it’s more than a missed opportunity, it’s a fundamental risk to future prosperity.
One of the biggest risks in retail analysis is over-reliance on averages. Aggregated metrics like revenue or profit per square foot across entire chains, or even store clusters, may be convenient for reporting, but they can hide nuanced performance – both good and bad – at category and store level.
For instance:
To truly optimise, retailers need granular data and insights. That level of insight is where space productivity can shift from a diagnostic metric to a lever for performance uplift and growth.
In a market defined by razor-thin margins and fast-changing consumer habits, retail space must be seen and managed as a strategic asset with returns that can be driven by better decisions about how it is utilised.
Those who embrace this mindset, supported by the right data and tools, are already pulling ahead. Scalene empowers retailers to take that next step, making every square foot work harder, smarter, and more profitably.
See how our platform Space Advisor can help your retail business.
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