Methods for increasing profits from the "square" of the trading area
20.02.2013 17684

Methods for increasing profits from the "square" of the trading area

If the assortment is well-chosen, marketing works boldly, and sales still do not meet expectations, perhaps it is a matter of merchandising. Anna Balandina, the author of the training “Visual merchandising: increasing revenue per square meter” at Fashion Consulting Group, told Shoes Report how it should be in order for each “square” of space to bring maximum profit.

Three whales of effective merchandising

A retail space can provide maximum revenue per square meter only if a visual merchandising (VM) system is built in the store or brand. This system is a balance between a visual design that gives an emotional impact and commercial VM tools that operate at the level of rational laws. In "competent" brands, the system of visual merchandising is documented in the form of a brand's merchandise, the main tenets of which the staff must know by heart and implement in their store.

If we analyze the system of visual merchandising, then we can say that it is based on "three pillars": on marketing and branding, on the features of the brand's trade concept and on the characteristics of its collections. Each of these three building blocks is shaped by factors that a company must take into account when designing its visual merchandising system. In particular, studying the features marketing and branding When it comes to visual merchandising, a company must take into account the brand's DNA, positioning and market segment. The second "whale" - shopping concept - is determined by the specific model of this concept, the individual characteristics of the commercial equipment, as well as the optimal capacity, which is calculated based on the real parameters of the commercial equipment used by the company. Finally, when building a visual merchandising system, it is also taken into account that is directly related to Collections: assortment policy (assortment structure, supply calendar, discount system and other aspects) and necessarily analytics of sales of the collection of past seasons, months, weeks with the identification of its hits, base, best sellers and outsiders.

All these elements are closely related. For example, the brand's DNA determines not only the structure of the brand's assortment, but also how exactly the product will be presented: rationally (by product categories, collections) or emotionally (by color or thematic "stories"), or rather, in what ratio these two will be approach in a unified visual presentation of the brand. It's fair to say that the way a product is presented largely determines the brand the way customers see it. There are no trifles in visual merchandising; details form the brand's style. Today, many companies already understand this and are increasingly rebuilding their visual merchandising system so that customers get maximum emotions from being in the sales area or contemplating shop windows, and can also conveniently choose the product they need, because it is the emotional component of product presentation in the fashion business - one of the components of successful sales.

Shopping concept that works

After the company has figured out the DNA of its brand, its positioning and segment, and has decided how they will affect the visual merchandising system, you can go down to earth and deal directly with the retail space and assortment. It is with them that you can and should work in order to increase the profit per square meter of retail space. Let's first consider the features of working with a trading concept.

The optimal capacity of a particular sales area is very important, taking into account the peculiarities of its layout and commercial equipment. A significant rule of thumb for visual merchandising in terms of capacity is “maximum capacity is not optimal”. In practice, this means that you should not try to display all the goods that are in stock on tables or shelves. This will lead to the fact that the space will be overloaded, and the goods will simply be lost against the background of each other. Of course, in the case when the purchase is made taking into account the optimal capacity of commercial equipment, such a situation simply will not arise and all articles will take their rightful place in the hall - depending on their group and the possibility of being sold.

How to determine how many units of a product should be on the sales floor? To do this, you can use the calculation of the store capacity, which is most often revealed by experimental laying out in the hall on all types of available commercial equipment and is necessarily registered in the brand's merchandise. The principle of calculating the capacity is as follows: you need to understand how many units of commercial equipment fit in the sales area, how many so-called product options can be placed on one table or shelf, and how many units of goods can be placed in one option. In clothing retail, an option means a “dimensional slide”, while in shoe sales, the option can be different - from two semi-parks to a whole range of sizes. Despite the fact that the general principle of calculating store capacity seems simple, it has a lot of nuances. You can get acquainted with them in consultation with experts in visual merchandising or at a special seminar "Calculating store capacity", which is held by Fashion Consulting Group.

Optimal capacity standards are not the only condition that must be followed to maximize revenue per square meter. It is also influenced by the layout elements of the retail space. For example, its volume and shape: the most convenient is the shape of a rectangle or square, since in this case it is easy to manage customer flows and place trade equipment. Also, inside the trading floor, a special balance of trading and non-trading space must be observed. Western mass-market brands consider the ratio of retail and non-retail space "70% to 30%" to be optimal. Finally, ergonomics of space is of great importance in maximizing profit per square meter, which means correct zoning, equipment arrangement, comfortable distance between tables and shelves, and convenient organization of customer flows (“rooting”). When organizing a space taking into account these aspects, you need to be guided by certain rules. In particular, the rule of the golden triangle, the rule of hot and cold zones, the rule of customer flow and others, which can be learned in detail from professional sources on the topic or from the training "Visual merchandising: increasing revenue per square meter", which is conducted by Anna Balandina at the training center FCG.

World trends and Russian errors

Today in visual merchandising, several effective trends in working with the retail space have emerged. In particular, mobile zoning: this is the organization of retail space zones without the help of walls, by means of atypical commercial equipment inside the zones, decorative elements, light, unusual display methods, or using movable elements such as groups of mannequins or different types of commercial equipment in one store. A good example of mobile zoning is the use of deliberately sloppy drawers to display athletic shoes and lacquered tables for classic models, which, when installed in the same retail space, clearly zone the space into a sports area and a classic area.

Despite the fact that visual merchandising does not stand still, many shoe stores in Russia ignore its basic rules, effectively depriving themselves of profit. For example, they place retail equipment only along the perimeter of the store and do not use the rest of the area, or place a cash register in a “hot zone”, for example, near the entrance. It is also a mistake to leave the entrance area of ​​the store empty, because this very place can become an active shopping area and, in fact, an internal showcase. However, in order for the entrance area to "work", it must not only present the product, but must also be decorated with an emotional component - an element that, if it does not cause a sigh of admiration from the visitor, will at least draw their attention to itself. It is desirable that the emotional component of the active buying area echoes the showcase concept, in which it is especially important. However, the emotional component will help to sell goods not only in shop windows, but also in the sales area. Some brands decorate their store spaces with items that emphasize the spirit of the collection: for example, a tennis racket in a sports "story" or a gramophone to complement the presentation of a retro collection. It is highly undesirable to underestimate the emotional component in the presentation of shoe stores: it is so important to sales that sometimes it is worth sacrificing the capacity of the sales floor for it.

Best Places - Best Products

Even if a company has built a visual merchandising system taking into account all the features of its brand and effectively uses the sales concept, revenue will not be maximized without constant work with collection sales analytics. This work includes sales analysis and competent presentation of product groups, which, as the analysis showed, require a different approach. For example, items from the “sales driver” category of the priority month should always be prioritized in in-store presentation, as they were the main hopes for high sales and high profits when purchasing. This, however, does not always mean that sales drivers need to be given space in the active buying area: sometimes it is better to give it to inexpensive best-selling models that sell well for several seasons and / or attract a buyer at an inexpensive price. The showcase is a great place to present sales drivers. With models from this category, it is sometimes also possible to present in a single concept some articles from the worst-selling category. Such a second chance given to "outsiders" is often not in vain. Bad-performing models should not be put into the far corner also because analytics-based experiments with a model's place on the sales floor sometimes produce unexpected and pleasant results in sales.

The general principle of visual merchandising, taking into account the assortment, is as follows: when placing models in the hall, take into account the sales analytics for several months in order to know exactly which model should be purchased / produced, and then presented as an image model, and which will be sold in the maximum volume, and you need to present it respectively. At the same time, the size of the store in this case is not important, it is important to give the product / line / collection, which are sold much better than the rest of the product, even more opportunities, presenting them as commercially as possible and in the best - hot zones.

test questions

Let's summarize. To increase revenue per square meter of the store, you need to first think about: how is the brand's DNA and its positioning reflected in visual merchandising? Is the trading concept correct? Is the zoning working, is the direction of customer flows planned correctly? Is the entire retail space "hot" and, if there are "cold" zones, are they worked out using special visual merchandising techniques? Does the active shopping area work, and what is presented in it? Are emotional components present in the display cases and in the room? Finally, is your visual merchandising based on sales analytics? If the answer to all questions is “yes”, then in this case we can really talk about the effective operation of the visual merchandising system and expect maximum profit. Of course, provided that you are selling a competitive and quality product in your segment. 

If the assortment is clearly selected, marketing works boldly, and sales at the same time still do not live up to expectations, perhaps it’s a matter of merchandising. About how it should be so that everyone ...
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