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How to increase sales and profit by merchandising methods
20.07.2013 15029

How to increase sales and profit by merchandising methods

The retail space problem is faced by everyone who runs a retail business. Space is an indispensable resource, but which itself is very expensive. How to present the assortment so that the retail space is used most effectively, and the buyer can quickly select the right pair of shoes for himself? Specialists of Clever Fashion marketing company tell about it.

Sales and profit per square meter - key indicators of the trading success of the company. Usually they are calculated by the floor area, because in this case it is easier to calculate the cost per square meter of the store in terms of rent, tax rates and other costs. However, if desired, you can also use a cubic meter or linear meter, which means the area occupied by products on the shelf.

Sales per square meter is the revenue received by the store from the specified area. This indicator can be considered in different time periods: day, week, month, quarter, season or year, and this is determined by what kind of analysis needs to be carried out. The sales per square meter may vary depending on how much space is allocated to a sales unit. And the shelf density, in turn, should depend on the format of the store. In premium stores with a medium and high price range, goods are displayed at a significant distance from each other so that the buyer immediately draws attention to each model. In stores of affordable brands, equipment, on the contrary, is designed in such a way that as much as possible goods can be laid out on it. A large assortment is a strong point that can and should be emphasized, but it is important not to go too far: when the shoes are in a continuous row, it is more difficult for a potential buyer to find what they need. Yes, and being in such a store can tire a person faster, and the store itself leaves an impression of monotony and uniformity. To emphasize the breadth of the assortment, but not to tire the visitor, group the goods. This can be done on the basis of collections, colors, materials or categories, which include the height of the heel, the purpose of the shoe and other features (editor's note: for more details on how to group the goods, see the article “Everything on the shelves: four ways to arrange shoes” published in SR # 106).

The features of human perception are such that it is rather difficult to keep at the same time more than 5-7 types of products in sight. If there are more pairs on the shelf, the client will not only not see the rest of the models, but will also have to independently select these 5-7 pairs from a large variety to study them without stress. In order not to bore the buyer, divide large groups of goods into blocks according to the 2-3 sample and place them at a distance of 20-40 cm from each other. In this case, the total number of samples in the line should not exceed 9, since the human eye is capable of capturing a maximum of just such a number of objects of the same type. It is best that the number of products in the line is odd.

According to the canons of merchandising, the height of the rack with shoes should not exceed 1,5 - 1,6 m, since higher equipment is difficult to inspect completely due to the fact that a person perceives vertical structures from top to bottom. Many stores neglect this recommendation in order to save space, which often leads to reduced sales efficiency.

Everything in its place

The ideal balance between the density of product distribution and the harmony of perception in your store can only be achieved through trial and error. Constant experiments with the amount of space given to one half-park will not be in vain, because if you find the optimal distance between pairs, sales will increase. However, this is only half the battle, because experiments with the amount of space for each pair will not affect the income in any way: compacted or free placement of the product, excluding the store zone in which the product is presented, and the profitability of the product itself cannot affect profit. Therefore, to increase revenue per square meter of the store, you should arrange the goods in accordance with their potential in terms of sales:

- stellar goods that bring high income and sell well should be located in large numbers and in the best places;

- profit-generating goods: they bring high income, but occupy a small volume in the sales structure, therefore they should be placed in a limited space, while giving the best places in the store;

- goods that sell well, but do not bring a lot of income, must accompany the buyer through the entire store, thereby organizing the flow of customers. This, for example, may be models of the previous collection, sold at a discount.

- goods that are not in demand and bring small income should be given the least amount of space and think about reducing their number in the assortment of the store.

As you can see, within the same store there are "hot zones" in which it is most profitable to place goods, and "cold zones", least of all attracting the attention of buyers. How to determine which zone you are dealing with? In standard layout stores 80-85,% of the customer flow is typically directed counterclockwise. Accordingly, the cold areas of the store’s retail area are: the entrance area remaining behind the customer’s back, the back of the store, corners, narrow passages and dead ends. We can safely call hot zones the entrance zone, located to the right in the direction of travel, the central part of the sides of the perimeter of the trading area, the part of the shelf or rack, located at eye level, as well as the cash desk area.

Please note that the obvious logic “you need to put a badly going product in a good place and then it will go away” does not work in merchandising. Therefore, be guided by the following principle: the most circulating and profitable product should occupy a lot of space in hot zones, and unpromising models should not interfere with the sale of bestsellers (editor's note: read more about this in the article “How to increase profits from the“ square ”of the sales area” published in Shoes Report No. 105).

Thus, when working with merchandising, a store should strive not only to increase sales per square meter or profit from the same area, but also to harmoniously combine these two indicators, since only it can give the most effective sales.

The retail space problem is faced by everyone who runs a retail business. Space is an indispensable resource, but which itself is very expensive. How to imagine ...
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