Darren Gilbert Feb 16, 2018 4:19:03 PM 8 min read

3 Reasons Why Retail Space Management Matters

Space Management.jpg

As a practice, space management - managing your retail space - is crucial for any store manager to master. That said, managing your space isn’t always easy since there are many factors to consider. And don’t forget the immediate repercussions if you fail. Manage your space poorly, and your stores will suffer financially.

What is Space Management?

Space management isn’t a difficult or complicated retail concept to understand. In short, it refers to the management of the space within your retail outlet. If you want to take it further, you could also describe it as the process of competently managing your floor space to please your customers and increase your sales.

In that way, it’s heavily linked to floor planning.

 

Download your Free Copy of our Floor Planning Ebook

 

As for the importance of managing your floor space, you only need to consider the fact that you pay per square metre for the shop space that you rent. It would thus be in your best interest to manage it properly and ensure maximum financial return on the space you occupy.

As a side note, once you understand how you are using your store space, you can take the actions necessary to ensure you manage your space properly. That includes strengthening those areas that are lacking and tending to any gaps or mistakes that you might have made.

Why does it matter that you have proper control of your store space?

Shopper needs.png

It matters because you can satisfy shopper needs and prevent customer confusion

As we’ve mentioned previously on this very blog in articles on developing a winning category strategy and how to exceed customer expectations, pleasing your customer is of the utmost importance. Of course, it’s tough to achieve that goal, and there are times when it’s almost impossible. That said, your task becomes that much easier when you have a better understanding of your retail space.

Let us explain.

Your customers come to your stores with a list of items they need to get. In entering your store, they expect to find those items. More importantly, they expect to find them easily. To help them, you should provide them with a shopping experience that is as frustration-free as possible. In fact, you should make it so easy your customers don’t have to think twice about where to go to find an item.

Of course, that’s not going to happen if you don’t understand the importance of retail space management or have proper control over your space. For example, a logical category and product flow will meet the expectations of your shoppers and help them to find what they need.

However, by not managing your store space appropriately, what could end up happening is you begin placing your categories wherever there is space. This makes it appear as if there is no thought or strategy behind any of it.

The consequence of that is two-fold. On the one hand, you’ll frustrate your shoppers and confuse them since they navigate your stores by associating categories with one another. And then there is the consequence of a loss in sales and/or a ruined reputation. Shoppers will refuse to shop your stores.

Floor congestion.png

It matters because you can maximise the sales potential of your retail space

Only once you know how much space is available in your store can you begin to plan on how to make full use of it. You can figure out your store layout and where to place categories. More importantly, you can look at ways in which to maximise the sales potential of your space.

To do that - to maximise your sales potential - you apportion the correct amount of space to each of your categories. Of course, if you don’t first understand your retail space or how much is available to you, you’ll soon find yourself struggling as you place your categories around your stores.

Let’s take the example of an average FMCG retailer who has 50 categories that they want to place in their stores. By not first knowing how much space they have to play with, they’ll soon run out of space. That means they will need to compromise, and as a result, can’t give each category the space it deserves.

One direct consequence of that is a loss of potential income. It becomes even more problematic if the retailer needs to give a high-yielding category less space. Also, since the cost of shelf space is at a premium, the last thing you’d want to do is pack a shelf with low-yielding products.

On the other hand, by not managing your store space appropriately, you quite easily order too much or too little stock. It’s been known to happen. You might look at a similar store in a similar region, assume the space is the same, and then set out and order products accordingly, only to find you’ve made a gross miscalculation.

That means that instead of pumping money into improving your store to maximise sales, you could find your capital tied up in inventory you can’t use.

Logical.png

It matters because you can reduce floor congestion during peak shopping hours

When it comes to the proper management of your retail space, you can’t not talk about your store layout. That’s because it’s more crucial to the overall performance of your stores than you may think.

That said, it’s worth pointing out that you can’t simply pick a layout and expect it to work for you. You first need to look at your space, consider how your customers shop the categories you would stock and then match that to the appropriate store layout.

You can read this piece to find out which store layout suits your retail business best if you’re unsure.

More than that, in understanding your space, and by choosing a store layout that matches your store, you have a better chance at reducing floor congestion. In fact, you’ll struggle to combat floor congestion if you don’t understand your space. And that’s not just confined to peak shopping hours. It’ll happen throughout the day.

 

Download your FREE copy of the Financial and Practical Benefits of DotActiv’s Category Management Software

 

Just imagine what your store would look like (and what it would be like to shop) if it was always overcrowded. It would be chaotic. And that’s even before you consider the fact that you’d need to restock your shelves while your customers crowd around your shelves.

That said, there is another benefit to proper retail space management. You’ll know where your high-trafficked categories are so that you can spread them out. Floor planning software with a heatmapping capability can help you find those categories sooner rather than later.

avatar

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.