Retail executives ask me “Where does Space Management belong?” Space Management can report to Supply Chain, Visual Merchandising, Retail Operations, Merchandising Operations or Finance. Space Management means the entire discipline. “Micro” space (planograms), “macro” space (store planning), space analytics plus the systems and technology team that supports it.

Think about Space Management the same way you think about Inventory Management.

In a mature Inventory Management team, there is an analytic team that creates reportis for business teams and executives. They also create custom analyses that uncover new inventory issues. Inventory leaders determine which SKU’s will be “never outs.” They set the DOS for the top 100 SKU’s. They balance inventory investments for promotional and seasonal goods while supporting the merchant’s vision and financial goals. Business experts focus on improving category in-stock and days of supply. A separate promotions team manages promotional inventory issues. Perhaps there is a team for special projects that fall outside of normal processes. Special projects like NSO’s, pop-up stores, flagship stores, test stores.  Finally, at the highest levels of executive leadership, there are long-term decisions about where to invest inventory dollars to meet changing customer demands.  Those align to short-term decisions about inventory capital to drive sales. Across all of this, there are reports on inventory productivity, where inventory is stranded and initiatives to make inventory more productive.

Space Management is the same.

It begins with creating space metrics and reports so business teams and executives can make decisions to improve space productivity. To measure space productivity, retailers need a system that tracks space utilization that aligns to both the merchandising teams and the financial hierarchy. Rarely are those the same.

Of course, that’s not where most retailers begin. They start with planograms. Planograms improve retail execution and is the easiest system for software companies to provide.

In an integrated organization, the planogrammer is embedded within a cross-functional business team along with the merchandise planner, inventory planner and marketing planner. Assortment planning and space planning are too often seen as separate tasks on a linear path.  In fact, they should be done in parallel and iteratively. For more on this, see AMR/Gartner’s 10 best practices paper on the subject.  Planogrammers should be the business team’s expert on how to improve space productivity within the constraints of the fixtures and the assortment of the category.

Where does space management belong

Planogrammers should be embedded in promotional planning teams. Creating promotional and unique planograms for one-of-a-kind stores have a high value. I have never seen a business team successfully manage planogramming for exception stores. Planogrammers who are already overburdened with multiple planogram versions for standard stores and assortments cannot focus on unique stores. So flagship and other exception stores are set up for failure. 

The Macro Space team should report to the highest level store strategists for the company. They direct space allocation decisions for NSO’s, remodels, store tests and ongoing merchandising refreshes. For some retailers, the President of Stores or Chief Merchant is the right person. Space investments are not as fluid as Inventory investments. Fixture changes and store labor are expensive. They require intense capital to initiate and execute. Once made, space changes are expensive to reverse or change. For that reason, it is important that space productivity be visible to all executives and that they are held accountable for making improvements.

Who holds a space management team accountable for productivity improvements? The COO, the CFO and ultimately, the CEO. They manage the dollars invested in space, the return on those dollars, set targets, challenge the status quo and consistently review those metrics in quarterly and annual reviews.

%d bloggers like this: