The average foot-traffic and the customer conversion ratio are primary operational parameters that drive the revenue of a retail outlet. A retail store in a prime location will yield high revenue per square foot. However, a rented retail outlet in a prime location may have a high rent, this may even exceed the revenue at times. A high Rental expense can erode the EBITDA margin of a retail chain, as shown in the below graph. Reject Shop has a relatively low EBITDA per square feet, owing to its high rental expenses. A retailer can make a strategic portfolio of stores in both prime and non-prime locations, owned and leased, to ensure overall positive margins.
A store needs a high headcount when a higher foot-traffic is expected, but can manage
A store needs a high headcount when a higher foot-traffic is expected, but can manage