Darren Gilbert Jun 8, 2017 2:27:37 PM 7 min read

Why Your Space Planning and Retail Merchandising Need to Connect

Retail Merchandising Space Management-1.jpg

As a word, ‘merchandising’ seems fairly straight forward. If you’re in retail, a simplistic way of explaining merchandising is to say it’s how you pack your shelves and displays so that your customers can see your products and purchase them. Of course, it’s a little more complicated than that.

When it comes to merchandising your store, it’s actually not just about packing your shelf. In fact, there is more opportunity for strategic intent. Great retail merchandising involves, among other things, an understanding of the space you have available in store for merchandise and your category performance knowledge.

It also involves knowing what is selling well and what is not so that you can stock your shelves appropriately and retain customer loyalty.

The relationship between retail merchandising and space planning

Strategically presenting products in a retail space helps you to not only create a unique identity for your store, but it also creates a convenient shopping experience for your customer.

As for the relationship between retail merchandising and space management, it’s simple. The two are intrinsically linked to the overall performance of your store. Without effective space planning, you won’t be able to properly execute merchandising in your store. Or even achieve your goal of maximising sales.

Space planning requires knowledge and analysis of the data behind every SKU in your store since making decisions around the space on your shelf is based on that data.

For example, one way of increasing sales would be to ensure that the amount of space a product occupies relates directly to the amount of sales that it generates. If a particular product represents 25% of your category sales, then it should be allocated space accordingly. Of course, there are a number of factors to take into consideration such as unit cost and profit margin for example before final space allocation decisions are made.

That means if you’re a space planner, you can’t show any favouritism to a brand. Do that, and the retailer allocates too much space to a poor performing product. Conversely, allocate too little space to a high demand product, and the retailer loses out too.

How merchandising principles affect space planning

Before a space planner begins with any planogram, there are a number of principles and rules that need to be set out. These principles are, of course, not decided by a space planner alone.

It is rather a team decision and is dependent on who the space planner is working with, be that the retailer or the supplier.

There are two reasons for this. Firstly, it helps the retailer to get a look at what their shelves should ideally look like. Secondly, in agreeing on the principles, it prevents any time wastage that would happen if you had to go back and forth editing a planogram. This means more time to focus on strengthening other aspects of your store.

When it comes to merchandising principles, there are over a dozen different ones available to you. They’re all very much based on, among other things, your category role, your retailer strategy, as well as the suitability of your retail fixtures.

That being said, here are a few basic principles around spacing specifically to be mindful of when creating your planogram:

  1. There should be a minimum of 2.5cm between the product’s highest point and the underside of the shelf above.
  2. The gap between a product’s highest point and the shelf above it should be evenly spaced by each drop.
  3. Always have a minimum of two facings for a new product.
  4. Have your heavier and larger products placed at the bottom as it’s easier for customers to access these products without injuring themselves.
  5. Never place shelves so close together that an upper shelf hides binned or boxed merchandise on the shelf below it.
  6. Your high profit margin products should be as near to eye level as possible to increase profits.
  7. House brands should be merchandised between the brand leader and the secondary brand.

While there is no rule that states how much merchandise should appear on the shelf, you do need to be careful about cramming too many products on a shelf. The last thing you’d want is to waste capital on products that aren’t going to sell just because you’re striving to provide your customers with variety. Balance is key when it comes to merchandising.

Where data-driven space planning and retail merchandising meets

Without data, your planogram holds very little power. In fact, it will essentially be a pretty picture rather than a planogram. We’ve already covered that topic in our article about why data and retail analytics are so critical for your planogram automation efforts.

There is enough evidence in the above piece to back up any arguments about the use of data to help you to gain a competitive advantage. But don’t forget about space planning and category management software as it’s an essential tool used as a platform to host your data in order to generate data driven planograms, and can also be integrated with your PoS database as well as your product library.

After all, space planning refers to your analytical data-driven aspects of merchandising. That data allows for an analytical outlook of what should be presented when merchandising.

Conclusion

As much as you might want to approach retail merchandising and space planning separately, you simply can’t. A space planner needs data to populate a planogram appropriately. This data-driven planogram will then help a merchandiser to merchandise their shelf, which will in turn, mean your customer will find what they want and leave your store satisfied.

Take any aspect out of the above equation and everything breaks down.

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Darren Gilbert

With over 10 years of writing and marketing experience, Darren joined DotActiv in 2017 as a content writer where he was responsible for producing blogs, Ebooks and more. He has since worked himself up to the role of content manager, where he oversees all and any content produced by the company. He has a Bachelor of Arts in International Studies from the University of Stellenbosch.