A lot has been said of the importance of office space management. Employees need adequate, well-organised space in which to work if they are to be productive, happy, and healthy. This includes things like office design, layout, lighting, ventilation, and furniture. But what about retail space? How important is retail space management?
It’s very important, actually. Not only is it important to keep employees happy, healthy, and productive, but it’s also important to keep customers in a buying mood and stock flying off the shelves. Space is at a premium – there isn’t an awful lot of it to go around, and what there is costs a pretty penny, so retailers have to make the best use of the space they’ve got, and that’s where retail space management comes in.
Space management is not an afterthought
According to Ovation Business, space management should never be treated as an ‘ad hoc’ activity. Instead, it should be treated as a separate management activity that requires proper planning, design, and, of course, budget.
During the planning stage, you need to divide up all the space into different sectors according to use. So there will be space for selling areas and non-selling areas, which includes the aisles and tills. Then there is space for stock storage, administration offices, and staff areas, like kitchens, staff recreational areas, and bathrooms.
According to Ovation Business, selling space should be further divided into product categories. Categories that consistently deliver the best profits and which have the highest turnover should be allocated the maximum amount of space. Although, it should be noted that some products, by virtue of their size, will naturally take up more space than others. Boxes of cereal, for example, take up much less space than table tennis tables. Space allocation then becomes a matter of proportion and ratio.
It’s only once the space allocations have been determined that you look at product location, and that you start looking at space for particular brands.
Brand space allocation
Ovation Business suggests that you place brands in four broad categories:
1) Products with high profit margins but low sales numbers. These don’t need a lot of space, but they need to be in customer hot-spots.
2) Products that always exceed expectations in sales and profits. They need a lot of space in even hotter spots.
3) Products that always perform below par in terms of sales and profits. Always think carefully about continuing with these. If you decide to persevere, allocate them less desirable, but still easily visible space.
4) Products that sell very well but don’t generate massive profits. These often work best when placed with prominent displays near the tills or on the edges of aisles, where impulse purchasing decisions are made.
All of this is important so that you can maximise your profit per square metre – so that not a single centimetre of space is wasted.
Only as good as the tools
According to Clare Rayner, in the old days, retailers had to rely on 2D planograms to help them divvy up space. This was not necessarily a train smash for independent retailers, but it didn’t work out so well for those who were part of multinational chains. This is because there tended to be a one-planogram-fits-all approach to the stores. It didn’t matter what the actual floor size or shape was the store had to conform to type.
These days, as retail space management is given more prominence, stores are given more freedom to maximise their own space. New 3D technology, combined with various point of sale and product placement visualisation tools give store owners and managers much deeper insight into space optimisation.
Rayner adds that space planners face greater challenges today than they did in the past because, these days, shoppers are looking for convenience and an experience. Bricks and mortar retailers are competing with online stores, so they have to pull out all the stops to ensure that customers keep walking through their doors. This means that space planners have to be ever more inventive, and ever more aware of the importance of big data.
According to the Manage Mentor, the cost of good space management tools is paid back within a matter of months, as just some of the benefits of improved space management, such as lower merchandising costs and smoother buying processes, are felt immediately.
Jemima Winslow is not a fussy shopper; so long as the aisles are broad enough to wander through two trolleys abreast, she’s happy.
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