Retail Space Management

Dr. Yamini Pandey

• 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 a process of utilizing
store space to attract more and more
customers and providing them a pleasing
shopping experience .
• Effective retail space management requires us
to ask the following before we start allotting
space to products of different categories.
– How much space should be allotted to each brand
on shelves?
 IMPORTANCE
• Retail space management is important to
increase sales
• Customers can easily find the products they
need
• It is helpful in controlling the rush in the peak
hours
 Types of Merchandise Which Occupies Retail Space

• 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.
•  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.
• For eg. candles , Chocolates 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.
 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.
• For Eg. 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.
 4. Specialty Products
• 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 Factors
• 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.
• 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.
• 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.
• 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.
• 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.
• For example Sugar, Hand Sanitizers
 Different Layout design for Retail space management

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.
 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.
 3.  Loop (Race Track) 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 premium Furniture
store.
• So that customers can have a look at all the furnitures
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.
 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.
 5. Spine
• This is similar to herringbone layout without
the ‘side roads’.
• This form of circulation plan can be seen in
single brand stores, which are small in size.
 Floor Space Management
• Space productivity – A major problem
• Store operations – Important as it is
responsible for reorders and replenishments
and buying of products and it leads to Gross
Profit Return.
 Parameters to judge / measure space
performance
• Performance parameters are :
– Sales output and ensuing margins
– Inventory holding
• How to judge
– Sales per square foot
– Margins per square foot
– Stock holding per square foot
• Space performance measurement can be done
for any SKU(Stock Keeping Unit) Hierarcahy
– A department/ division
– Category/ Class
– Sub – Category/ Sub-Class
– A Brand
– Any style or Size
• Data Analytics can be used
Ground rules for successful space and layout
management
• Always put customer’s convenience first
• Ensure ease of customer circulation
• Optimize trading space
• Make a periodical audit of store space
utilization
• Make a sensory appeal to customer : Aesthetic
and functional layout would bring him back