Have you ever wondered how retailers manage to organize thousands of products in a small store so efficiently? That hundreds of customers can shop at the same time without going crazy. Therefore, making the full use of retail space with strategic space management techniques is crucial for retailers.
A store which is well-organized and spacious provides better sales because people like to shop in places where they don’t have to struggle much to find what they need.
A well-organized store also helps you to cut cost as you don’t have to keep the main salespersons to assist your customers in looking for products they want.
Retail space management is a process of using the space available in the store effectively. The management of space is important as a retailer is required to display a large number of products in limited space available in store. Space management is not a difficult process to understand.
In simple words, you can say that space management is a process of utilizing store space to attract more and more customers and providing them a pleasing shopping experience because you cannot deny that only a happy customer can bring more sales.
You would not want to waste a single square meter of your store when you know that you have rented that place. You would want to use every available space in the store to get the maximum return on investment.
Effective retail space management requires you to ask the following questions to yourself before you start allotting space to products of different categories. How much space should be allotted to each brand on shelves?
Where to place products in the store? And what two categories should be placed adjacent to each other? Etc. Answers to these questions will help you to utilize shelf space in the store effectively.
Importance of Retail space management
#1 Retail space management is important to increase sales
Planning available space in the store helps you to increase sales. Having an understanding of the space available in the store helps you to decide the layout of your store and location of different categories of products.
It is essential for a retailer to divide the right amount of space available on shelves to the different categories of products.
If you don’t plan your storage space and place products without thinking will leave you in trouble later. You will always find yourself struggling with a shortage of space for important products. Let us understand this with the help of a retail store example which has about 30 categories of products.
It will be difficult for a retail manager to place all products and provide them sufficient space if they don’t understand the space available in the store and he might end up allotting extra space to one category of product that he might not get enough space for a few categories of products to display.
There are chances that the category of products which generate maximum space might not get enough space to display.
No retail manager would want low-yielding products taking up maximum shelf space available in store. This can largely impact the income generation.
In addition to this, you might end up investing more for buying less yielding products, and your hard-earned money will be wasted in buying excessive inventory and maintaining it rather than amending your store to increase sales.
#2 Customers can easily find the products they need
Nowadays, customers don’t only come to your store to buy things they need, but they also come to destress themselves. Just think how they will feel if they can’t find things they want to buy easily.
There are chances that they would prefer to visit a nearby store with a better organization, or they would order the things that they want to buy online.
Let us understand this with the help of an example. Imagine your customer enter your store with a list of ingredients to make a cheesecake.
He would expect to locate all the products easily and in less time. By organization, your store properly and by allotting proper space to each product and placing them at the right place on the shelf will help your customer to find them easily and without getting frustrated.
Poor retail space management will give you more and more unsatisfied customers with constantly dropping sales. However, proper logical categorization of products will help your customer to locate the things they want to purchase easily without wasting any time.
#3 It is helpful in controlling the rush in the peak hours
Choosing an effective layout for your store is important as it will not only help you keep your store well organized but will also keep the rush moving during peak hours of a day.
You can take professional help in choosing the right layout for your store, or you can copy the layout plan of a store which has similar dimensions to your store.
Just imagine how difficult it would be for you to handle your store if it is always overcrowded. Proper space management will let you choose the most sold categories of products and distributing them around the store so that you can avoid cluttering in one corner of the store.
What to consider while managing space available in-store and allocating it to various products?
Retail stores come of different sizes. It would be unwise to plaining copying the layout design of one store that has maximum sales in your town without considering space available in your store and the categories of products you want to sell in your store.
Types of Merchandise Which Occupies Retail Space
To be able to decide where and how to place the merchandise you want to sell depend on the type of merchandises.
Here, you will learn about four different types of merchandise which are sold in a store.
1) Demand Products
Demand products are those products which are regularly bought by your customers or the products which are consumed regularly. For example, bread, eggs, milk, etc. are the kind of products that are bought and consumed regularly by customers and they can’t live without them.
Such products are part of the daily life of customers. Demand products should be placed at the last of your store so that when customers try to reach them, they have to cross the whole store while searching for them.
By making your customers walk through the store can tempt them to buy one or two additional products from the store.
2) Impulse Products
The products of this category are not bought with planning. People buy these products just because they look good or have tempting price tags or attractive offers on them. You must have seen fragrant candles near the cash counter.
These candles are the perfect example of impulse products. Stores usually place products like candies, chewing gums, chocolates, etc. near the cash counter. People buy these products impulsively while checking out their goods.
These things are not on the shopping list of buyers, but they buy these products because they are placed there. Impulse products should be placed near the cash counter or near the products (like demand products) which are bought frequently.
3) Category Products
People make a lot of brand comparison for the products under the category products. For example, when people buy a laptop or mobile phone, they usually do a lot of research before making a purchase decision. People make a buying decision based on how that brand makes them feel.
Take the example of Apple company. When people buy “iPhone,” it makes them feel that they are richer and have status in society. To make the maximum sales of this category of products store should place a few brands that your customers would want to buy.
For example, Costco stores only offer one or maximum two brand choices. People prefer to buy products from Costco stores because they believe that this store only sells the best quality products.
You can also choose this strategy for your store and choose to sell a few quality brands. In this way, you can build the trust of your customers on your store.
4) Specialty Products
Now, this category of products in your store’s specialty. People come to your store to buy these products, especially.
The good thing about these products is that there are no brand comparison alternatives for customers to choose from. People will find you out on their own if your product is a specialty product.
You don’t have to make extra efforts to be able to get located in the market. Specialty products should be placed in a prominent area of the store.
Effective management of retail space requires you to consider the following points
#1 life of products on the shelf
The space on shelves should be allocated to products based on their shelf lives. For example, a product with a short product life should not be placed on the top of a shelf.
#2 Categories of products:
This is the most important factor for deciding the space allocation. Products can be of different categories such as profit builders, traffic builders, star performers, and space wasters.
You would certainly not want to waste much space on space waster products, and maximum and premium space should be allotted to profit builders and star performer products and traffic builder products should be distributed evenly in the store to avoid congestion.
#3 Adjacent Products:
The next important decision a retail manager is required to take “which products should be placed adjacent to one another so that sales can be increased.
#4 size, shape, and weight of products:
These are important factors that a manager needs to consider while placing products on the shelf. For example, it would be poor space management if you place heavy products such as a bottle of cooking oil on the topmost shelf.
However, products such as kids’ diapers, soft toys can be placed on the top shelf because of their heavy size.
#5 Frequency of purchase:
There is a certain category of products which are frequently bought by customers, and customers usually come in a hurry to buy such products. The example of such products will be toilet paper. Toilet papers should be placed at the bottom of the entry shelf. So that people can easily find them without making many efforts.
Different Layout design for Retail space management
The different layout design is used for different types of stores. Let us learn about them one by one.
#1 Free Layout
As the name suggests, the free layout does not follow a proper design or fashion and is usually used when there are large space and fewer products to display.
For example, the free layout is a suitable design for luxury stores and fashion stores. Using this layout, you are not guiding your customers to follow a particular fashion.
Instead, you are giving them liberty wander in your store. You don’t impose any rules on them. The free layout is the best way to showcase your creativity. However, don’t forget to add proper signs and window display wherever required so that your customers don’t feel lost.
The free layout encourages interaction between salespersons and customers. Salespersons help customers to make a shopping decision and also offering them other products available in the store to make more sale.
#2 Grid Layout
Grid layout is the most common type of layout used by retail stores. in a grid layout, products are displayed in a very predictable manner. So that customers don’t have to make much efforts to look for products. You will see this type of layout in stores such as pharmacy stores, convenience stores, grocery stores, etc.
The main reason behind using grid layout is to display maximum product categories without leaving any empty space in the store.
In grid stores, items which are bought by customers impulsively are placed near the cash counter, and staple products such as milk and bread are placed at the end of the store to encouraging more sale.
This type of layout is suitable for stores which sell more than 30 categories of products.
#3 Loop Layout
Loop layout is a closed layout where the customer starts at one end of the store and can exit store after going through all the merchandise available in store. This type of loop is suitable for stores which sell a few categories of products. For example, a loop layout is good for a wine store.
So that customers can have a look at all the wines available in the store before making a final purchasing decision, loop layout helps you understand the pattern of traffic in-store, and there are fewer chances that customers can bump into each other.
This type of layout can also prove to be risky as customers who don’t have much time would not prefer to shop from such stores and might mind avoiding coming to store in the future.
#4 Herringbone Layout
Herringbone layout is a substitute for Grid layout for the store has long and narrow retail space. This type of layout is used most by small hardware stores, libraries, tuck shops, etc. the one major drawback for using herringbone layout is the risk of theft.
As space is congested and provides chances for picking and hiding things. But this can be avoided by installing Cameras.
Steps used to use storage space efficiently
- the first step would be to measure the total space available in the store, such as its size and shape.
- Make the division between selling and non-selling area in the store. The non-selling area can be used official use, customer support area, cash counter, etc.
- Choose a layout for the store. A layout can be selected on the basis of size and types and number of merchandises to be sold in the store.
- Make a diagram which will contain information which merchandises should be placed at what place and which categories of products should be placed adjacent to one another.
- Determine how much space should be allocated to merchandises by referring to the history of sales of the products. Decide much space should be allocated to the billing area on the basis of the expected crowd in the store.
- Decide on the location of all products within a single category of products. This will help customers to locate products easily and quickly.
- Make the use of irregular corner of your store properly and with careful planning. As this space in the store can be used effectively to display large or products of irregular shapes.
- Leave space for promotional activities such as window display etc.