For large format retailers, space has traditionally been one of the great advantages. Bigger footprints allow for broader ranges, deeper stockholding, stronger category presentation and more immersive customer experiences.

But with occupancy, construction, labour and operating costs continuing to put pressure on retail economics, I think the question for leadership teams is changing.

It’s no longer simply, “How much space do we need?”

It’s “What return are we getting from the space we already have?”

For retailers operating substantial footprints across multiple locations, even relatively small improvements in the productivity of each square metre can become significant when multiplied across an entire network.

That makes space productivity more than a property or design issue. It’s a capital productivity issue.

Look beyond sales per square metre

Sales per square metre remains one of retail’s most useful benchmarks. It gives us a straightforward way to compare stores, formats and categories.

But on its own, it can also hide important differences in performance.

Two categories generating similar revenue from the same floor area may produce very different margins. A service area that appears unproductive on a traditional sales-per-square-metre calculation might materially improve conversion elsewhere. A fixture may generate strong sales but require disproportionate labour to replenish and maintain.

So rather than simply asking how much revenue an area generates, I think the better question is: What job is this space doing for the business?

That means looking at sales alongside gross profit, conversion, average transaction value, stock productivity and labour efficiency.

It also means recognising that not every square metre needs to directly generate a transaction. Some space supports navigation, service, stock, brand experience or conversion elsewhere in the store. The important thing is understanding the role it plays and whether it is delivering enough value.

Small improvements become significant at scale

This becomes particularly important in large format retail because both efficiencies and inefficiencies multiply.

An awkward fixture, unnecessary process or poorly considered stock location might add only a few minutes of labour in one store. Replicate that across 100 stores, every trading day, and the economics start to look very different.

The reverse is also true.

Reducing replenishment time, improving stock capacity, simplifying merchandising changes or achieving a modest improvement in conversion can create substantial cumulative value when those improvements are embedded across a national network.

That’s why we tend to think about store formats as repeatable systems, rather than individual projects.

When developing a new format or refurbishment, the question isn’t only whether the solution works in that particular store. It’s whether it can be manufactured efficiently, rolled out consistently, operated effectively by store teams and adapted as the business changes.

Design for change, not just opening day

Adaptability is another part of the return equation that can be easy to overlook.

Retail environments rarely stay unchanged for the life of a lease. Ranges expand and contract. Category priorities shift. New services and technologies are introduced. Brand standards and customer expectations evolve.

A solution designed specifically for opening day can therefore become tomorrow’s capital expenditure.

Fixtures that can be reconfigured rather than replaced, branding that can be updated independently, infrastructure capable of accommodating new technology and layouts that can absorb category changes all have an economic value.

That value may not be obvious in the original construction budget, but it becomes very apparent over the life of the asset.

Sometimes the cheapest solution to build isn’t the cheapest solution to own.

Measure before the capital is spent

One of the simplest ways to improve retail investment decisions is to establish the commercial and operational baseline before changing the environment.

How is the store performing today? Where are customers experiencing friction? Which categories are over- or under-allocated? Where is stock capacity constraining availability? How much labour is being consumed by replenishment and merchandising?

Then, after the refurbishment or format change, measure those things again.

Where possible, compare the results with similar stores that haven’t changed.

Without that baseline, it’s easy to know that a store looks better after a refurbishment. It’s much harder to know whether the investment actually made it perform better.

And when you’re deciding whether to roll the same solution across another 50 or 100 locations, that distinction matters.

Every square metre needs a purpose

Retail environments are interconnected systems.

Increasing merchandise density might improve stock capacity but compromise navigation. Expanding a service area may reduce display space while increasing conversion. Moving stock closer to the selling floor might consume valuable area but materially reduce labour requirements.

Optimising one element without understanding its effect on another can simply move the cost somewhere else.

That’s why some of the highest-value decisions happen before construction begins, when property, operations, merchandising, design, procurement and delivery teams can look at the environment together.

The objective isn’t to squeeze revenue out of every available square metre.

It’s to make sure every square metre has a clear commercial or operational purpose — and that we understand the value of that purpose.

Across a large-format retail network, getting those decisions right can improve sales, margins and customer experience while reducing operational friction and future capital requirements.

And when relatively small improvements are designed to be repeatable across the network, that’s where the real value starts to compound.

Mark Gale, CEO, Associated Projects