During the off season I have been writing a series of blog post’s to try and encourage shop owners and managers to reflect and think outside the box. The aim is to enable them to consider strategically the way they are retailing and encourage them to make some changes to help drive their business.
In the first article, I discussed the importance of recognising that cash is the basic fuel of commerce and needs carefully preserving. In particular, I looked at the importance of stock turns and the need to view them in conjunction with gross margins. This demonstrated that lower margins taken in conjunction with higher stock turns could be more profitable for certain product groups.
In this article, I want to discuss space and how its use can significantly impact upon year end results. Given that the amount of space is relatively fixed, the first decision that needs to be made is the distribution between the various activities within the shop: selling, stocking, repairs and office admin. Selling space needs to maximised, so I am often surprised to find when out in the field that the allocation to non-selling activities appears high. Could it be reconfigured? Could higher stock turns, for example, reduce the size of the stock room?
Possibly the next step is to decide where the till should be placed. There is a range of thinking in this area. Some suggest that it should be at the back of the shop as it draws customers through the displays exposing them to your merchandise possibly creating impulse purchases. Others recommend that it should be placed near to the entrance as it enables customers leaving to be monitored for shop lifting (yes it does happen but it is not always recognised). One pro I know caught someone in the act who later confessed to have been stealing clubs from him for years. The weakness in the latter positioning is that customers can pop in and out for counter top items without ever seeing the range of merchandise on offer. Many prefer a compromise between the two. Placing it on the side wall to the left of the door, owing to our supermarkets conditioning to shop in an anticlockwise direction, but not too close to the door, avoiding intimidating shoppers on entry.
Once the shop floor has been allocated, consideration needs to be given to the type and positioning of fixtures and displays. Their layout will dramatically affect the footfall around the shop, which in turn can affect profitability. It’s important at this stage to know your target customer and the type of merchandise you want to sell – are customers mainly upmarket or middle market? Are clubs or clothing, for example, more important to you in your merchandise mix? First, you need to choose the most appropriate style and quality of units and finally their layout. There are many different floor plan types: straight, diagonal, angular, geometric and mixed – here are only two examples to set you thinking and researching!
If the shop is small and the target customer is middle market, then a straight floor plan will probably be the most efficient. In contrast, a larger shop with an upmarket customer base, where a high-end atmosphere needs to be created, would be better suited to a mixed plan. It helps to separate the product groups into sections, which can be merchandised appropriately and encourages traffic flows deeper into the shop.
In conjunction with the floor plan, you need to consider likely traffic flows through the units. Strategic aisle planning – not forgetting it’s a false economy to make them too narrow – can lead customers where you want them to go. This will enable you to categorise your displays into the primary best-selling space, the secondary average-selling space and tertiary the worst-selling. Primary space should be used for your top performing product – those you want to push. Also, don’t forget, if you place essentials in corners or towards the back of the shop this can help to draw customers through.
One final point, your space in the internet world is infinite. It offers you the opportunity to go global! However, it is very competitive and has many pitfalls as a number of pros have found out. My advice would be to optimise your bricks and mortar first and only then think about other channels of distribution once your core business has been optomised.
These articles are not designed to give you immediate answers but to get the grey stuff thinking. My next blog – the final one in this resource series looks at people. This will include thoughts on displays and merchandising which your staff need to understand.