MFM RM SVI.ppt

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SPACEPLANNING



Planners and Buyers must answer four

questions:

•What items, vendors, categories and departments should be carried?

•How much of each item should be carried?

•How much space should the merchandise take?

•Where should the merchandise be located?



Store planners in conjunction with Buyers

start by allocating space based on sales

productivity.

e.g. if knits represent 15% sales, they should

get 15% space.



The store planners must adjust the initial estimate on the basis

of the following Five factors.

•How profitable is the merchandise?

•How will the planned inventory turnover and the resulting stock to

sales ratio affect how many SKUs will normally be carried in stock?

-Allocate space on the basis of seasonal needs rather than yearly averages

-Proportion of merchandise on display vs back-up stock

•How will the merchandise be displayed?

-merchandise and fixtures go hand in hand. Store planners design fixtures to

go with the merchandise. But once the fixtures are in store, buyers must

consider the fixture’s physical limitations on assigning space tomerchandise.

•Will the location of certain merchandise draw the customer through

the store, thus facilitating purchases?

•What items does the retailer wish to emphasize?



Evaluating a Department Layout

Trackers follow shoppers and note everything they do on atrack sheet. They also make inferences on consumerbehaviour based on what they have observed.

• Avoid the butt-brush effect: was discovered at New York City’s Bloomingdale’s. The researchers taped shoppersattempting to reach the tie rack while negotiating an

entrance during busy times. They noticed that after beingbumped once or twice most shoppers abandoned theirsearch for neckwear.

The conclusion: shopper’s don’t like to shop when theirpersonal space is invaded.

•Place merchandise where customers can readilyaccess it:

• Allow a transition zone: allowing some space betweenthe entrance of a store and a product gives it more time in

the shopper’s eye as he or she approaches it.

butt-brush effect

transition zone



Merchandising Presentation Techniques

• Idea Oriented Presentation- overall image or idea, e.g. furniture,women’s fashions.

• Style/Item Presentation- when customers look for a particulartype of merchandise, they expect to find all items in the samelocation.

• Colour Presentation- based on colour.

• Price Lining- organizing merchandise in price categories or pricelining (when retailers -offer a limited number of pre-determinedprice points within a classification). Helps customers easily findmerchandise at the price they wish to pay.



• Vertical Merchandising- customers shop as they read newspaper – from left to right , going down column, top to bottom. Stores caneffectively organize merchandise to follow the eye’s natural movement.

•Tonnage Merchandising- large quantities of merchandise aredisplayed together. Tonnage is equated with low price. “stock is high, letit fly” Used to reinforce a store’s price image. Merchandise itself is display.

•Frontage Presentation- method of displaying merchandise in whichthe retailer exposes as much of the product as possible to catch thecustomer’s eye.

•Fixtures• Visual Communications

•Lighting•Colour•Music•Scent



Store Planning



Elements That Compose the Store Environment



Introduction to Store Layout Management

• Space productivity:

Represents how effectively the retailer utilizes

its space and is usually measured by sales per

square foot of selling space or gross margins

per square foot of selling space.



Store Planning

• Allocating Space

• Circulation

• Layout• Shrinkage Prevention



Non - Selling Space

Back RoomOffices and FunctionalSpace

Aisles, Service Areas

Selling SpaceFloor SpaceFixturesWalls

End CapsCheckouts

Store Planning - Allocating

Space



General InteriorFlooringColors

LightingScentsSoundsStore fixturesWall texturesTemperature

Aisle spaceDressing facilitiesIn-store transportation (elevator, escalator,stairs)Dead areasPersonnel

MerchandisePrice levelsDisplaysTechnologyStore cleanliness



Store Layouts

• Floor plan:

Is a schematic that shows where merchandise

and customer service departments are

located, how customers circulate through the

store, and how much space is dedicated to

each department.



Store Layouts

• Influenced by product assortment (depth and

width)

• Constrained by size and structure of store

• Determined by fixturing

• Objective: to move customers to every area of

store

• Trend towards more spacious and airy layouts



STORE LAYOUT, DISPLAYS AND SPACE

ALLOCATION

• Concerns product adjacencies and flow

• Must provide customer logic

• VM can encourage

– trading up

– multiple complementary purchases

– impulse purchases• Manipulation of the customer or providing a

retail service?



High traffic & highly visible areas

– Entrances, escalators, check-out area, end aisles, featureareas

Profitability of merchandise Private brand, higher margin categories

Customer buying considerations Impulse products near front

Demand/destination areas in back, off the beaten path

Physical characteristics of product Bulky vs. small/easily stolen

Complementary products should be adjacent

Sales rate Display more units of fast-selling merchandise (tonnage merchandising

Space Planning Considerations



Store Layouts

• Circulation

–Free Flow

–Grid

–Loop/ Racetrack

–Spine



Store Layouts

• Free-flow layout:

Is a type of store layout in which

fixtures and merchandise aregrouped into free-flowing patterns

on the sales floor.



Free-Flow Layout

+ Aesthetically

pleasing, relaxing,asymmetrical, invitesbrowsing

- Less efficient, morecostly, more salesassistance needed,more theft

Fixtures

• Bulk-of-stock -straight racks,gondolas,rounders (very

flexible)• Feature – glasscases, 4-way,free-standing,custom-builtfixtures

Feature areas

Windows, walls,feature fixtures,point-of-sale

Feature area arearea designed toget thecustomer'sattention thatincludes end

caps,promotionalaisles or areas,freestandingfixtures andmannequins thatintroduce a softgoodsdepartment,windows, and

point-of-saleareas.



Opposite of grid layout.

Ease of customer movement.

– Must provide enough room between fixtures.

Fixtures arranged in interesting formations

– Encourages browsing.

Free-Flow Layouts



Free-Form Layout

Storage, Receiving, Marketing

Underwear Dressing Rooms

Checkout counter

ClearanceItems

Feature Feature J e a n s

C a s u a l W e a r

S t o c k i n g s

A c c e s s o r

i e s

P a n t s

T o p s

T o p s

S k i r t s a n d D r e s s e s

H a t s a n d H

a n d b a g s

Open Display Window Open Display Window



FourWay

FourWay

FourWay

FourWay

Shelving

Shelving

R a i l

s

R

a i l s

R a i l s

R a i l s

Shelv-ing

Round

RoundTHEFREE-FORMLAYOUT



Advantages

A friendly atmosphereShoppers do not feel rushedPeople are encouraged to walkthrough in any directionImpulse or unplanned purchases areenhanced

DisadvantagesPossible customer confusion

Wasted floor spaceDifficulties in inventory controlHigher labor intensityPotential loiteringDisplays may cost more

THE FREE-FORM LAYOUT



Store Planning

• Grid layout:

Is a type of store layout in which counters and

fixtures are placed in long rows or “runs,”

usually at right angles, throughout the store.



Linear design, checkerboard pattern.

Vertical and horizontal aisles

– May have one main aisle and many secondary

aisles.

Efficient use of space

Simple and predictable to navigate

Focal points at aisle ends

Grid Layout



Fruit

Vegetables

Office &

customer

service

Books, magazines, seasonal

display

Grid Store Layout

R e c e i v i n g & s

t o r a

g e

Exit

Entrance

Cart

areaCheckouts



Grid Layout



Checkouts

THE GRIDLAYOUT



Advantages

An efficient atmosphere is createdMore floor space is devoted toproduct displaysPeople can shop quicklyInventory control and security aresimplified

Self-service is easy, thereby reducinglabor costs

Disadvantages

Impersonal atmosphereMore limited browsing by customersRushed shopping behavior

THE GRID LAYOUT





Store Layouts

• Loop layout:

Is a type of store layout in which a major

customer aisle begins at the entrance, loops

through the store – usually in the shape of a

circle, square, or rectangle – and then returns

the customer to the front of the store.



Loop Layout



Floor Plan: Clarence Sander’s Piggly Wiggly





J.C. Penney Racetrack Layout at NorthPark Center in Dallas, Texas



Store Layouts

• Spine layout:

Is a type of store layout in which a single main

aisle runs from the front to the back of the

store, transporting customers in both

directions, and where on either side of this

spine, merchandise departments using either

a free-flow or grid pattern branch off towardthe back side walls.



Spine Layout



Fixtures

• Accept, hold, stock and show

merchandise.

• Used in window displays, on top of

counters, within floor

arrangements.

• Contribute to store brand image

and ambiance.

• Expected to last a long time.



MERCHANDISE PRESENTATION

• Planning

–Fixtures

- Presentation methods




• Fixture Types

– Hardlines Fixtures

– Softlines Fixtures

– Wall Fixtures




• On-shelf merchandising:

Is the display of merchandise on counters,

racks, shelves, and fixtures throughout the

store.




• Bulk or capacity fixture:

Is a display fixture that is intended to hold the

bulk of merchandise without looking as heavy

as a long, straight rack of merchandise.



Hold large quantities

Shows a single style in

depth of selection.

Usually the largestfixtures in the store.

Usually placed in back

of store.

Capacity Fixtures




• Feature fixture:

Is a display that draws special attention to

selected features (e.g., color, shape, or style)

of merchandise.



Used to highlight

categories.

Hold fewer items.

Best used as lead-in

fixtures.

Also interspersed

throughout store to

add variety.

Feature Fixtures



Four-Way Feature Rack and Round Rack



Signature Fixtures

One-of-a-Kind units.

Positioned at store or department entrance.

Reflects brand image

Designed specifically for the store to catch

shoppers’ interest.




• Merchandise Presentation Planning;

Six Methods

1. Shelving

2. Hanging3. Pegging

4. Folding

5. Stacking6. Dumping




• Merchandise Presentation Planning;

• Key Psychological Factors to Consider

1. Value/fashion image

2. Angles and sightlines

3. Vertical color blocking



45-Degree Customer Sightline



Vertical Color Blocking





















Space Allocation



SPACE Allocation OBJECTIVES

• Use space effectively whether floor, page or

virtual

• Optimise short- and long-term returns on

investment into retail space

• Provide a logical, convenient and inspiring

product-customer interface

• Make right selection of products available

• Communication of retailer’s brand identity

Stage Measuring Space



Stage

1

Measuring Space

The total amount of space should be measurable. In store terms this would be

physical space, the width, length and height should be taken into account. In

non-store terms this would be the target number of pages in a catalogue or on

a website.

Stage

2

Dividing the space into selling areas

At this stage the process is concerned with dividing the total retail space into

selling areas, usually defined by product category or department. The space

devoted will normally be determined by historical of forecasted category/

department performance and will be expressed as a total spatial measure (forexample number of square metres). Sometimes the space will be allocated on

the basis of the number of fixtures that will be given to each category.

Stage

3

Determine the layout

At this stage product adjacencies will be decided, and the location of the

selling areas will be determined. Individual outlet characteristics will influence

this stage of the planning process; for example location of entrances, set

walkways around the store, lift and escalators, pillars and divisions all need to

be taken into consideration in a store plan. In a catalogue the product

categories that are going to go at the front of the book need to be decided.

The relationships between one product category and another also have to be

considered when determining the layout.

Stage

4

Determine the space allocation of product lines

This involves the allocation of space on individual fixtures to each product line

or stock keeping unit. The availability and characteristics of fixtures, individual

product performances, product features and characteristics and the

compatibility of products will all have a bearing on these decisions. Many

retailers use sophisticated computerised space allocations systems in this stage.

THE SPACEMANAGEMENTPROCESS



Measuring retail space using square metres

STAGE 1: MEASURING RETAIL SPACE



Using linear measurement for space




Using cubic measurement for retail space




SPACE PRODUCTIVITY

• Sales volume and profitability can be

measured in relation to the amount of space

used to generate them

• This provides productivity measures, e.g.

– sales per square metre

– profit per square metre

– sales per cubic or linear metre

– profits per catalogue page

STAGE 2 DIVIDING SPACE INTO SELLING



STAGE 2: DIVIDING SPACE INTO SELLING

AREAS

• Allocation of space to product department or

category

• Usually based on previous performanceindication, typically sales

• Some products require disproportionately large

area (e.g. furniture) others can withstand

disproportionately smaller area (e.g. jewellery)

• Category life-cycle may influence amount of space

STAGE 3: DETERMINE LAYOUT AND



STAGE 3: DETERMINE LAYOUT AND

PRODUCT ADJACENCIES

• Converting numerical data into a workable

outlet layout, considering inflexible elements:

– entrances, walkways, checkouts

• Consider space quality

• Consider logical flow through products and

complementary categories

STAGE 4 ALLOCATING SPACE TO



STAGE 4: ALLOCATING SPACE TO

INDIVIDUAL PRODUCTS

• Products, like categories are often allocated spaceon the basis of sales. – Advantage: product is less likely to sell out

– Disadvantage: may not be profitable

• Different sales figures have advantages anddisadvantages (see Box 8.2) – historical sales

– market share

– projected sales

PRODUCT ADJACENCIES



Product Groups in a baby equipment retailer

Feeding Baby Care Bath Time Clothes Travel Nursery

bottles nappies baby baths sleepwear prams cots

sterilizers wipes soaps/liquid daywear pushchairs bedding

formula

milk

change

mats

towels shoes strollers toys

bottle

warmers

travel bags toys outerwear car seats furniture

bibs travel cots

PRODUCT ADJACENCIES



STAGE 4 CONTINUED

• Space elasticity is a term for the relationship betweenan increase in space given to a product line and theresulting increase in sales

• Space elasticity is not uniform amongst products or

across stores• Generally staple products have lower space elasticity

than impulse buys

• Cross elasticity is the relationship between the

increase in sale of one product and the resultingincrease in sale of another product



STAGE 4 CONTINUED

• Allocating space according to product

profitability

– Advantage: best and most space devoted to

products that bring best profit margins – Disadvantages:

• wasting space because of low space elasticity

• consumers may have difficulty finding products

• Long term customer satisfaction must be

considered in space allocation plans

PROFIT BUILDERS STAR PERFORMERS



PROFIT BUILDERS

Profit margins are high but salesturnover is low

Adjust space allocation focusing onquality of space rather than quantityin order to increase sales.

Consider rationalizing range ofproducts in category

STAR PERFORMERS

Sales turnover and profit margins equalor exceed targets

Allocate large amounts of good qualityspace

Consider increasing product assortmentwithin category

SPACE WASTERS

Low profit margins and low salesturnover

Reduce space or eliminate product

TRAFFIC BUILDERS

Products have a good sales turnoverrate , but profit margins are small

Place close to higher profit/impulsepurchase goods. Use to pull customersthrough store

Work on improving margins. Considerintroducing own-label variation

Product sales

Product

profit

Space Allocation alternatives

STAGE 4 PRATICAL AND CUSTOMER



STAGE 4: PRATICAL AND CUSTOMER

CONSIDERATIONS

• Seasonality

• Product characteristics: size, weight, hazards,

chilled and frozen, fragile, expensive,

contamination

• Customer characteristics

– pester power

– mobility

• Fixture limitation

SPACE ALLOCATION SYSTEMS




• Inputs:

– Product information• costs, sales, dimensions, complementary products

– Fixture information• specific requirements of product (e.g. shelf level),

dimensions, number available

– Product manager knowledge/experience• space and cross elasticity, stock holding objective, life-

cycle stage

• Output

– Planogram or visual display map





• Advantages: – optimises space productivity

– maintains consistent corporate identity

– allows retailers to experiment with visual display

– helps to achieve efficient assortment (see ECR)

– moving towards store specific planograms

• Disadvantages: – costs

– not appropriate for small retailers or where displays arefrequently changed (e.g. independent fashion retailer)

SPACE ALLOCATION AND CATEGORY



SPACE ALLOCATION AND CATEGORY

MANAGMENT

• Many would argue that space planning and allocation and

category management go hand in hand.

• Space planning systems help retailers to fine tune categoryassortment and analyse product and category performance

• Planograms by category ensure stores are implementing

category plans

• Consumer behaviour (decision sequence) can be accountedfor within the space allocation plans



Planogram• A planogram is a tool used by the retailer, and it helps

determine the location of merchandise within a dept.• It is a diagram that visually communicates how

merchandise and props physically fit onto a storefixture or window, to allow for proper visibility andprice options.

• A planogram is created after taking into account,factors like product sales, the movement of theproducts within the product category and the spacerequired for the various products and the exactnumber of products to be displayed in a particulararea

Planogram for Salad Dressing







Pl



Planogram

• A planogram is often received before aproduct reaches a store, and is usefulwhen a retailer wants multiple store

displays to have the same look and feel.Often a consumer packaged goodsmanufacturer will release a new suggestedplanogram with their new product, to show

how it relates to existing products in saidcategory.

Pl



Planogram

• Planograms differ significantly by retail sector.Fast moving consumer goods organizations and

supermarkets largely use text and box based

planograms that optimise shelf space, inventory

turns, and profit margins. Apparel brands and

retailers are more focused on presentation and

use pictorial planograms that illustrate "the look"

and also identify each product.

Pl

http://en.wikipedia.org/wiki/Fast_Moving_Consumer_Goods

http://en.wikipedia.org/wiki/Supermarket

http://en.wikipedia.org/wiki/Supermarket






Planogram

• Since the purpose of a planogram is tocommunicate how to set the merchandise toincrease customer purchases, much researchoften goes into the layout of a planogram.Attention is given to adjusting the visibility,appearance and presence of products to makethem look more desirable, or to ensure

sufficient inventory levels on the shelf ordisplay.

Pl

http://en.wikipedia.org/wiki/Merchandise

http://en.wikipedia.org/wiki/Merchandise



Planogram

• The use of planogram software however, enables auser to do much more advanced and detailedanalysis. Most planogram programs evenautomatically add product images to products, in

addition to providing dynamic shading and labelingto better show opportunities in the set. One stepfurther is to automate the production of planogramswhere a retailer or merchandiser requires many

planograms to be produced at once, based on storespecific data.

Planogram Softwares



g

• Intactix

• PlanoGraphics

• Shelf Logic Software Products

• mockshop

• Spacemate

http://www.jda.com/p_SpaceMgmt.asp

http://www.planographics.com/

http://www.shelflogic.com/product_overview.shtml

http://www.visualretailing.com/

http://www.ingen.com/spacemate.htm

http://www.ingen.com/spacemate.htm

http://www.visualretailing.com/

http://www.shelflogic.com/product_overview.shtml

http://www.planographics.com/

http://www.jda.com/p_SpaceMgmt.asp

Documents

MFM RM SVI.ppt