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Our article on why space teams deserve recognition received such an enthusiastic response that we decided to continue the conversation with a deeper dive into how these teams can influence critical metrics and KPIs, given the right focus and enablement. In this piece, we explore how your space team can drive substantial improvements in business performance across twenty-five (yes, 25!) metrics crucial to retailers.
Here they are:
Revenue, Sales Growth, and Sales per Square Metre
Effective space planning and optimised space utilisation in each store result in more appealing, efficient layouts that enhance the customer experience and improve sales outcomes. By curating space allocations at a localised level, space planners can maximise revenue per unit of space and significantly boost utilisation and productivity metrics. Scalene clients have successfully implemented these strategies over extended periods, leading to consistent 3-8% sales growth.
Transaction Value, Items per Basket, Price per Item (Trade-Up), Visit Frequency, Transaction Count, Share of Wallet, Customer Satisfaction, Loyalty
Strategic space allocation tailored to each store meets local needs and preferences, resulting in successful shopping missions, repeat visits, and increased spending. Optimised adjacencies ensure complementary offerings are merchandised together, encouraging customers to fulfil more than their original mission, prompting additional purchases, and boosting spending per visit. Loyalty and advocacy not only retain individual customers but also attract new ones. More customers visiting more often and purchasing larger, more diverse baskets with premium options leads to greater space productivity, higher sales, and improved gross profit.
Sales per Category, Profit per Category, Profit per Square Meter per Category
Analysing and adjusting space allocation based on performance data ensures that high-potential categories receive adequate space, while underperformers are reduced. This improves the health of all categories, allowing productive ones to grow efficiently while repurposing unproductive space.
Planogram Compliance, Shelf Availability, Rework Rates
Effective planograms help customers shop more easily and support operational objectives, including shelf availability and replenishment efficiency. Planograms that perform well in store are more likely to be supported by store staff, resulting in greater compliance, a better customer experience, and improved store operations.
Stock Turnover Rate, Days of Supply, Stock on Hand
Strategic space allocation can enhance the pace of sales while maintaining or even reducing inventory volumes. Reducing slow-moving inventory and allocating more space to faster-moving items improves key inventory metrics.
Shrink and Waste Reduction
Shrink and waste are persistent problems often requiring significant investments to address. While space teams may not traditionally be the go-to resource, they can make a substantial impact by identifying range and space allocation changes and optimising assortments to reduce theft and waste, especially in fresh and on-the-go food categories. Space teams should consider waste reduction as a percentage of sales to enhance profitability and meet sustainability targets. Clients have achieved store-level improvements of 9% in waste reduction and 5% in stock loss while maintaining customer satisfaction and loyalty.
Supply Chain, Labor, and Operating Efficiency
Optimising store range and space to meet local demand results in better inventory management, reduced restocking, improved on-shelf availability, and more efficient store operations, leading to cost savings and productivity gains. In an era of rising costs, unlocking these efficiency and productivity gains is crucial.
Gross Margin, COGS, Net Profit
Better space utilisation leads to efficiencies in inventory management, reduced shrink and waste, and increased sales of higher-margin products. Retailers have seen gross margin increases of up to 8%. Gains in gross profit from space optimisation have a disproportionate impact on net profit due to their incremental nature. Optimising space leverages a range of existingactivities within the retailer, so driving more sales and margin throughexisting operations without materially increasing fixed costsdisproportionately benefits the bottom line. A well-run space optimisationprogram can boost net profit by over 10% annually, and often much moreis achievable for many retailers
Future Success
The impact of your Range and Space team extends beyond immediate results and contributes to the long-term success of your business. Effective space and assortment planning allows for rapid development and deployment of changes, supporting cost-efficient delivery of category and enterprise strategic initiatives that benefit your business’ future.
What’s Next?
You might be wondering what investment is needed to achieve this kind of impact from your Space team. From our experience, the answer is straightforward: invest in better decision-making. Achieving optimised space allocations for each store may seem daunting, especially with numerous scenarios covering every SKU and category. However, the technology and data science capabilities required are more accessible than ever.
Start by providing your team with the data, tools, and software solutions needed for informed, tailored, actionable recommendations that optimise space performance in each store. Ensure their remit is clear and foster collaborative workflows and engagement across key functions. This approach will set you on the path to achieving the impactful results you're seeking.
We help retailers transform how their Range and Space team delivers maximum value. To learn more please get in touch at info@scalenesolutions.com.