Optimised Space and

Assortments
How They Can Reduce the
Environmental Impact of Retail
Operations
By Galleria Retail Technology Solutions
Retail Insights
How they can reduce the environmental impact of retail operations

Introduction
In the rush to match rising customer expectations on environmental issues, retailer’s environmental impact
has been under increased scrutiny both from pressure groups and new legislation designed to reduce
environmental damage from pollution, noise and development.

Many retailers have been quick to announce a

host of green initiatives in a bid to enhance their
corporate social responsibility programmes.
Most of these initiatives have been of a type that
There is another
customers can readily understand, such as: environmental angle
Utilising trucks that are more fuel efficient
affecting retailers that has
Transferring road freight to the railway been largely overlooked
Encouraging customers to adopt reusable bags until now – store space
Use less, and more sustainable packaging and assortments.
Sourcing more local products
Encouraging staff to work from home, saving on commuting
Supporting environmental projects in the community
Making stores more energy efficient by installing alternative energy
sources such as wind or solar generation

However whilst these initiatives make for good headlines, the actual environmental benefit from many of
these schemes and programmes has been fairly limited. This in turn is leading to further pressure from
groups and threats of legislation being imposed. There is another environmental angle affecting retailers that
has been largely overlooked until now – store space and assortments.

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Retail Insights
How they can reduce the environmental impact of retail operations

The ‘Average Store’

Galleria, the leading provider of Retail and Category Optimisation solutions, believes that delivering the
right product to the right stores in the appropriate quantities delivers significant and positive environmental
benefits as well as significantly enhanced sales and customer satisfaction.

Traditionally retailers have tried to pack as many different products into all of their stores without giving
consideration to what customers actually buy or the store space available to them to merchandise those
products. Under pressure to deliver ever increasing sales and accommodate new products, many retailers
have simply adopted a ‘one size fits all’ approach to store space and assortment planning meaning in many
cases all stores carry the same assortment regardless of the space available or the local demand for those
products..

Traditionally retailers
have tried to pack
as many different
products into all of
their stores without
giving consideration
to what customers
actually buy.

Other retailers have tried to determine the mathematical average across all of their stores and then develop
assortment and space planning decisions based on it. This is no better than a one size fits all approach with
the same obstacles and constraints.

Stores vary for a variety of reasons including, physical size, type of store, floor layout, fixture type and size,
consumer demand patterns, local variation and more. No Two stores will be truly identical or even average.

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Retail Insights
How they can reduce the environmental impact of retail operations

For a retailer trying to adopt a one size fits all policy to all of its stores will result in a number of problems and
issues:

Wrong products
Too many products are on sale, not enough space to merchandise best-selling products and too much space
devoted to poor selling lines and even some products which won’t fit onto the shelves at all due to a generic
planogram approach being used.

High level of Wastage

From an environmental point of view this means millions of tonnes of unnecessary freight is being moved
around the country to stores which will often end up having to return it or waste it because of lack of
demand. This results in even more road transport and waste going to landfill which is both damaging to the
environment and the retailers bottom line.

Poor Customer Satisfaction

If a customer enters the store looking to do a full week’s shopping they’ll be hoping to find everything they
need under one roof. A shopper visiting a store will frequently find their favourite products are out of stock
because not enough space has been devoted to them and they have sold out. The customer may purchase an
alternative brand or substitute for another product but more likely they not make any purchase and will be
forced to shop elsewhere.

More Wastage
This means the customer will be forced to travel to another store, potentially some distance away in order
to purchase the products to complete their shop. If this were one or two people having to do this the
environmental impact would be minimal but millions of people worldwide are forced to do this every week.
The result is an increase in unnecessary travel which causes not just localised and global pollution but also
noise pollution and traffic jams.

Store Sales Not Achieving Potential

On top of the environmental impact the impact on sales is also negative with sales lost to competitors
because customers are unable to purchase items they actually want, when they want them. Customer loyalty
is reduced and the lifetime value of the customer is significantly reduced.

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Retail Insights
How they can reduce the environmental impact of retail operations

The Solution: Optimise Assortment and Space

Synchronisation and optimisation of assortment and space planning is an essential move towards
reducing the environmental impact of retail stores. It allows retailers to create localised customer-centric
merchandising plans that ensure the right products will be present at the right time and in the right capacity
in every store.

Retailers who do not synchronise their assortment

and space planning functions often find it difficult
to create customer-centric merchandising plans and
run into hurdles that could otherwise be avoided. Synchronisation and
A retailer can implement strategic initiatives such
as computer assisted ordering (CAO) and advanced
optimisation of assortment
forecasting systems to calculate optimal inventory and space planning is an
based on replenishment cycles, case pack and lead
essential move towards
times for each store, but, if the merchandise space
is not factored into the equation, the optimum stock reducing the environmental
that was calculated may not necessarily fit on the shelf impact of retail stores
meaning all the efforts and expense of shipping goods
to store will have been wasted.

Galleria’s store-specific inventory optimisation translates optimum stock calculations into executable
customer-centric merchandising plans, ensuring that the right quantity of stock is delivered to the selling floor
to fit the available space.

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Retail Insights
How they can reduce the environmental impact of retail operations

Understanding Products and Space

To achieve the benefits of synchronised assortment and space planning, retailers need to perform these
processes at a store-specific level to create operational customer-centric merchandise plans. To do this data
on each stores fixtures and fittings, type, space etc are all fed into the demand intelligence layer, the common
repository for all data required to calculate the assortments and space allocations. By knowing each individual
store details, store specific merchandising plans can then be generated allowing the retailer to move away
from a ‘one size fits all’ approach.

A leading U.S. retailer that has applied

Galleria’s Customer-Centric Merchandising
solution across the majority of its categories
has seen planogram compliance increase A leading U.S. retailer that has
to more than 95% ensuring that the right
applied Galleria’s Customer-
products are able to fit on the shelves in each
individual store. Centric Merchandising solution
across the majority of its
With the assortment and space planning
information combined, the retailer has a far
categories has seen planogram
clearer understanding of how every product in compliance increase to more
every assortment is consuming space and how than 95%
they should be merchandised in each store.

The solution understands how many units

a particular item sells per week, how many
facings it requires and the exact amount
of space it will consume in each store. This
enables the retailer to allocate space to the
best performing products and eliminate those
that merely take up space.

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Retail Insights
How they can reduce the environmental impact of retail operations

Understanding Products and Space

By developing optimised space and assortments there is a substantial increase in planogram compliance,
that is merchandise plans delivered against a planned design for each store. Averages store plans become
a thing of the past and each store assortment and space plans have been optimised taking into account
the constraints of each store and local demand intelligence. The net result of this provides significant
environmental, sales and customer satisfaction benefits:

1. Greater availability
Recently there has been a lot of discussion about food miles – how far our food and other goods have
travelled to get to our stores throughout its production. Whilst this is a significant issue moving large
quantities of goods around the globe is relatively efficient. Just as valid but rarely mentioned are customer
miles – the distance a customer travels from their home or business to a store to purchase goods. Customers
visiting a store expecting to find a specific product will not have to travel to other stores if it is on display
every time. One stop shopping reduces customer miles, enhances customer loyalty and increases the lifetime
value of the customer.

2. Reduced wastage
Store-specific planning greatly increases the match
between what local customers want and what is
on the shelf, increasing stock turns and therefore
reducing waste. In contrast, generalised plans over-
supply slow-moving items, inevitably increasing
wastage. Less waste means less perishable goods
ending up in landfill and fewer truck miles returning
unwanted hard goods to distribution centres across
the country.

3. Making every shelf inch count

Retailers are beginning to talk about the carbon footprint not only of stores and products but also of display
space. Galleria implementations have a proven effect on overall sales increases, store by store. This naturally
makes the utilisation of the finite space in each store more efficient. Retailers in challenging economic times
will appreciate the benefits that can be achieved in optimising existing stores rather than relying on continual
store expansions to grow the business. This means fewer controversial and expensive planning applications
and a reduction is pollution attributed to the building on new stores.

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Retail Insights
How they can reduce the environmental impact of retail operations

4. More efficient deliveries

With good assortment and space planning, trucks only carry what is needed. The recent hike in world
fuel prices has once again highlighted our dependence on oil for transportation. With a typical truck only
managing 8-10 miles per gallon, it makes no economic or environmental sense to ship products to stores
whose customers don’t particularly want them. It’s not only a waste of our natural resources but also a waste
of money that will only hurt the business bottom line and keep prices high for customers.

5. Increases sales and Customer Satisfaction

Retailers who have implemented Galleria’s
solutions have seen a significant increase in sales,
in some categories over 20% increases have been
seen. Coupled with a reduction is wastage of over
8% it’s clear to see how quickly the investment in
the solutions can pay for itself. How many more
sq. ft of retail space would have to be built to
achieve those kinds of figures and at what cost to
our environment?

It’s not just the retailer who wins from increased sales. Retailers using Galleria solutions are seeing real
improvements in customer satisfaction levels with complaints about range and stock levels down markedly.

The Future
In a previous era where transportation was inexpensive and people were less worried about the effect of our
day to day activities have on our world, customers would buy what they were offered or travel elsewhere, no-
one questioned the environmental impact, and the industry could get away with badly-optimised plans. This
is no longer the case. For retailers who are looking to increase sales in a sustainable way and reduce their
environmental impact then Galleria has the answer.

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Retail Insights
How they can reduce the environmental impact of retail operations

Founded in 1989 and operating from offices in Cheshire in the UK and

Chicago in the US, Galleria is the leading provider of retailer and vendor
category planning, automation, optimization solutions and consulting
services. With its comprehensive product suite, Galleria provides
customer focused solutions for clustering, automated assortment and
space optimization supported by detailed analytics and reporting tools
designed to meet the needs of retailers and CPG vendors. The solution
suite supports both bottom-up product level in addition to store,
department, zone and aisle optimization.

The net result is that Retailers and CPG vendors/manufacturers realize

significant benefits from adopting Galleria’s solutions and services.
Identifying target customer groups and presenting them with the best
possible assortment, in the right location and with accurate inventory
levels results in satisfied and loyal customers.

Galleria’s flexible approach means that solutions can be hosted by Galleria

and or operated as both work group and integrated solutions. In addition
to purchasing the solutions the consulting practice is on hand to either
augment current resources or work on specific projects as and when
required. Typical engagements involve the analysis and optimization
of store space, assortments and promotions based upon intelligent
forecasting and customer behavioral analysis.

Galleria currently works with many of the world’s leading retailers

including A&P, Coop Denmark, East of England Coop, Giant Eagle, Maxima,
M.Video, Morrisons, One Stop, Safeway, Tesco and Unilever. Galleria has a
number of strategic partnerships with: Nielsen, RGIS and ZBD and is also
an accredited Microsoft Certified Development Partner.

For more information about Galleria visit www.galleria-rts.com

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