For most retail implementations, Space Planning is focused on the right side of this continuum. The tactics of Space Planning. To be honest, those are table stakes. It is what you have to do to be able to get a seat in the game of retail. Do the right side well and there are benefits that impact the bottom line. Reset efficiencies. Reduced restocking. Improved customer experience leading to more sales. Less shrink. The fractional percentages that build to create an efficient and profitable operation.
Like I said: table stakes.
Now dig into those retailers who are long lived and iterate through generations of successful store concepts on the market. They leverage Space Planning in an entirely different manner. One that pushes their benefits from the right side of the continuum to the left side.
Those retailers use space planning for its strategic advantages. Retailers who understand the marginal return on space by category - and even by item - make better investment decisions that add up to weighty benefits.
Knowing the right store size by location. And they do not build or lease stores that will become operational problems. For example, stores that are too small for their volume and are a nightmare to operate without disappointing customers with out of stocks. Or stores that are too big and take up too much inventory to "look like they're in business" for their low footfall. Which inevitably leads to markdowns and stranded inventory.
Understanding the return on space in stores versus online. That means Category Managers know where items are going to sell: online or in stores. So they stage their products for customers in stores while balancing the breadth of assortment by supplementing it with an endless online aisle.
Connecting long-term strategic changes to future store remodels. They integrate future customer shopping changes and category trends with ongoing store investments so that remodels accurately predict growing and shrinking categories. When retailers are more proactive, they take advantage of early mover sales - when categories and products are most profitable. When retailers react to changes during a mass shift, they end up participating in the a less profitable stage in a category or product's lifecycle.
Leveraging the correct lever to improve sales. When retailers measure return on advertising, return on inventory, return on space, return on labor by category, they can lean into the single best tactic to efficiently drive sales. Not every business reacts similarly based on its investment.
From our vantage point, we see retailers who only understand how to drive value out of space tactics. When that happens, space planning is an overhead expense. A cost of doing business. Sadly, they usually have made all of the investments they need in systems and people. If they would just invest a fraction more into reporting, analytics, testing and process, they could transform that expense department into a strategic advantage.
If you'd like to gain strategic advantages with your Space Planning investment- and schedule an assessment of your retail space planning maturity - contact us now.