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How Data-driven Floor Planning Reinforces Merchandising Strategies

DotActiv Team
by DotActiv Team on Jul 13, 2016 8:00:00 AM

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A logical and well-thought-out floor plan which is driven by retail data is the path to a successful merchandising strategy; here are a few reasons why: floor plans dictate how categories flow from one to the next to make sure that customers can find the items they are looking for. They help to increase sales through logical product placement. And finally, floor plans determine which complementary products or similar brands are placed in close proximity to encourage cross-category or cross-brand sales. 

A floor plan will always aim to achieve the two following objectives:

1. Reduce store congestion. You can reduce store congestion by making sure popular categories are spread out across the store, as opposed to having all popular categories placed in the same location, which would create a lot of traffic.

2. Allocate category space correctly according to the performance of each category, so that products with higher demand are always well represented in the store.

So how do you create the most logical and profitable floor plan? As seen in the previous blog, retailers can use category management software to create spectrum highlights for planograms, to better monitor the performance of their shelves and identify opportunities to increase the overall category and sales performance of a planogram. In the same way, creating spectrum highlights for floor plans can be a useful tool for floor planning. This function enables floor planners to highlight and rank the different categories on a floor plan, based on certain performance-based criteria such as sales, profit or weekly movement:

store_floor_plan_3.png

 

We call this a heat mapped floor plan. Heat mapped floor plans are a good way to ensure product categories receive correct space allocation and placement in the store. Below is an example of a customised heat mapped floor plan created in CatMan Enterprise:


store_floor_plan2.png


The floor plan highlights every product category in the store by attributing a colour code that reflects a ranking of each category based on their sales performance. In other words, the categories highlighted in red are the categories which have the highest sales, and the categories in blue the lowest sales. In this example, the categories in red are spread out evenly which will ensure that customers can shop without too much traffic.

Using Heat Maps to Reinforce Your Merchandising Strategy

Generating a heat map based on factual information is a good way for a retailer to visually represent where best performing categories are located in the store. By analysing and comparing the performance of the different categories, the retailer can make decisions such as increase the space allocated to a category that is performing well, or place a category in a different area if there are too many high sales categories in the same area. In almost every case, a retailer will want to use one of the following 3 performance based fields: Sales, Profit and Weekly Movement.  

For example, if the strategy is to encourage shoppers to buy products with higher margins, the retailer might want to allocate more space to categories generating the most profit and place them in more accessible areas around the shop.

On the other hand, if the positioning of the retailer is more geared towards economy products and the strategy more focused on pushing higher volumes/units of merchandise, more space might want to be allocated to categories which show higher levels of Weekly Movement. In this example, the floor planner can use the heat map function to highlight categories based on the weekly movement on shelf (for example if the shelf sells 50 units in 7 days the weekly movement is 50). The heat map will highlight the categories which have the highest weekly movement, enabling the floor planner to view where they are placed in the store and determine if they are well positioned with the correct space allocation.

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