How can you optimize floor space with merchandise performance analysis?

I would ensure that you are interrogating the performance of any secondary space in terms of merchandise performance. There is a misnomer in retail that you have to put stock on multiple locations to sell, not true. Often the primary location is sufficient and keeping that location stocked. As I say to clients, customers are not wandering around the store for Cranberry Sauce, they'll go to the core location and find it there. This is single biggest reason for overstocks too, poor performing promotions that were sent to store to fill numerous locations. Then they sit in the backrooms for the next deal and take up associates time, who have to recase / deal with the excess stock.

There is no one single route to success. Many retailers/consultants will point to the "tail" and those slow moving lines that are bought by perhaps 1-2% of customers. I recall that Sainsbury's in the early days of Justin King had one such product "Grape Nuts" which was a slow mover, but bought by the top 1% of customers. The only other seller of this, was Waitrose. If removed, then you ran the risk of losing the entire basket spend to Waitrose. Also worthy of a mention is balancing space v sales (IE minimising in day replenishment) and the growing "pay to play" sponsored bays and signage that do not improve the shopping experience at all. The only thing commercial money benefits is the marketing department's bottom line.

Optimizing floor space is critical in retail because floor space placements executed strategically translates into higher revenue and lower costs. Whether discussing planograms, facings, depth, price or assortment mix; the location, access and availability of products will influence your ability to sell merchandise. Optimizing your store floor space to make the experience for customers translates into higher revenue, lower costs and maximizes sales of higher margin products. Depending on the nature of your retail operations, your strategic goals such as maximizing revenue, sell-through, minimizing markdowns, or profitability require strategic thinking about floor space.

Great space optimisation in my experience requires a strong segmentation and ensuring key selling lines from all segments are retained and presented effectively. ‘Tail’ analysis when linked / applied at consumer driven segmentation level can manage many of the risks of deleting key lines to key shoppers. If data and time allows, substitutability and basket role / importance just reduces risks further.

Optimizing floor space requires testing. Lots of testing. It starts with breaking product down into 4 categories. Basics, key items, fashion, and trend. Then it's about 'wearing moments' and what kind of product combinations yield the highest units per transaction? How do you sell outfits, not just items? With great storytelling! By creating combinations of basics, key items and fashion/trend that beg to be bought together. Floor fixtures or wall sections could be anchored by basics and key items while fashion and trend product is continually flowed and rotated through the store. Mall entrance fixtures are freshened frequently so the store always looks updated and inviting.

Floor space optimization is crucial for retail success. Use data from sales and customer feedback to identify what works. Adjust your space to highlight high-performers and test new product placements to maximize both sales and customer satisfaction.

In order to truly maximize sales and increase productivity, floor space analysis should determine each division/gender’s space, number of fixtures and assortment size dedicated to them. In my experience, we found tremendous success when flexing quarterly. For example in BTS, we would see a higher contribution in youth and footwear sales versus in holiday, the floor space would shift towards the female consumer. Important to note we maintained general store navigation and way-finding between genders to stay consistent and not to confuse the consumer but would shift an adjacent wall or a couple floor fixtures. This allowed us to amplify better storytelling by offering a bigger space to the right consumer at the right time.