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Four core questions of Space Management

Retailers and their suppliers carefully plan shelves for a sales room in the specialist or retail trade: Spacemanagement builds up a shelf of product carriers and fills it with products, applying an assortment strategy and optimizing inventory quantities.

As a result, the shelf should guarantee an attractive, strong selling impression on the consumer, produce optimal sales and earnings and present an inventory that is appropriate for the market size, avoids short selling, makes the best possible use of space and does not tie up unnecessary capital.

The four core questions of space management are therefore: What? How much? Where? Why?

4Q Strategy
4Q stategy and processing steps in XPace Space Management

Question 1: What?

Which articles should be placed on the shelf? The shelf should represent a certain assortment, a customer listing or a product selection or merchandise category.

The selection criteria for the articles on the shelf are determined by assortment rules, they are thematically linked to the planogram project. ABC categories for different market sizes, individually agreed listings and criteria of supplier competence are also applied here. The selectors used are decisive.

RESULT The answer to the What is the list of items to be placed on the current shelf.

Question 2: How much?

For each item that is positioned on the shelf, you must decide which opening stock is to be assigned to the item.

Criteria are rules for inventory management and stock coverage, historical or estimated sales figures and the delivery frequency. The aim is to avoid out-of-stock selling for all articles. However, high inventories tie up capital and increase the risk of loss (especially in the case of perishable goods). Broadly placed products also occupy space that is no longer available for other articles – the articles compete for the occupied shelf space. The aim is to achieve a balance between stock coverage, capital commitment and article diversity.

RESULT The answer to How much is the ideal stock quantity for each individual item in the selection.

Question 3: Where?

On which fixel, in which height, in which order and arrangement should the articles be positioned?

Product groups, series and by-products are usually placed or hung close together. Some product groups define a natural sequence of the individual products, e.g. screws in ascending sorted lengths and diameters. Shelf zones have typical values and priorities. Optical criteria such as color sorting can also play a role. On pegboards, the area should also be filled as completely as possible.

RESULT In response to the Where all items are assigned their position on the shelf.

Question 4: Why?

While the first three questions deal with immediate shelf planning and logistics, the question of Why is the question of the justification of each individual article item and the merchandise category as a whole.

Business and financial aspects play the main role here: Can the prepared shelf planning be adequately justified by contribution margins, sales and earnings expectations? Goods values and speeds are evaluated as capital commitment and compared with area productivity (turnover per area) and area profitability (earnings per area).

RESULT The answer to the Why underpins every single planning decision on the shelf with tangible arguments.

Upshot

A qualified shelf planning always takes place in the area of conflict between article selection, inventory management, spatial arrangement and justification. The aim is to achieve optimum area performance. The four core questions mentioned represent four competing optimization goals, which cannot all be equally achieved.

An optimally planned shelf is the best possible combination of all criteria. Since the concrete basic data (sales figures, delivery cycles and profit margins) change over time, a planogram is not static, but needs to be regularly revised for current conditions.

Space management software should have adequate functions for all these questions, not only for the initial planning of a shelf, but also for regular shelf maintenance through exchange and comparison functions.