Driving store profitability via macro space optimisation

The challenge

When Australian big-box retailer Officeworks embarked on a comprehensive store transformation program focused on efficiency and growth, the turned to us to help achieve their ambitious space productivity goals. Key features of the challenge included determining optimal space allocations for each of its 160 stores, estimating future product performance, accommodating strategic and operational constraints and the impact of store-level space changes by category in terms of both cost and benefits returned.

The solution

Our unique retail space intelligence platform enabled the analysis of available store and customer-centric data. Space elasticity assessments together with applied business rules, model configurations and strategic overlays provided Officeworks with tailored, store-specific space allocation recommendations optimised to deliver on customer and business needs.

Officeworks identified the most valuable space change opportunities aligned with their customer’s needs, business strategy and objectives while also enabling efficient and effective implementation of space changes in stores.

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The results

As a result of implementing data-driven space change recommendations across all stores, Officeworks saw a net change in sales and margin of over 7%. This equated to an incremental annual sales increase of+$45m and incremental annual margin increase of +$21m, far exceeding their investment in our partnership. In addition, the tools and processes have laid a foundation for ongoing store space productivity improvement and stronger-than-expected growth through the post-implementation period.