How small shops can compete with retail giants in making the most of their space: Simon Williams

Over the last few years, the retail cost per square metre has increased significantly.

Since Brexit and the war in Ukraine, energy costs and the cost of goods has increased and container costs have risen due to shipping concerns. Margins are under constant pressure.

Every shelf space, therefore, every product, must provide a financial return.

Retail giants, such as Tesco, Asda and M&S, pour significant resource into sophisticated systems and experienced practitioners that provide endless streams of analysis on the utilisation and profitability of space in their stores.

But, if you don’t have unlimited resources, how can you use your data to optimise the space that you own?

Keeping things simple allows you to be agile and responsive to trends. Start with the sales data you record. Correlate your sales to the location of your products. This will help you map the selling hotspots in your shop and the cold corners that need reviving.

If you don’t have the sophisticated software or skilled data analysts, how can you produce simple maps that show how your space is performing?

A back-to-basics approach can provide visibility of your business performance and how you forge ahead with sales-driving decisions. All you need is a pencil, ruler and some squared paper.

Create your own shop drawing. Map out the space on paper, organise your sales data by volume or value and rank your products best to worst. Then, colour code product locations in red for ‘hot’ and blue for ‘cold’ and you can create your very own sales heat map.

But why is this useful? We’ve all been into supermarkets after they’ve moved products and categories to new locations. Whilst this is frustrating for customers, it is deliberate.

Retailers use technology to follow the movement of customers in store, monitor where their gaze is drawn and when they stop to browse. Using this type of customer research alongside sales performance data has shown that location changes can have a significant effect on sales volumes and profitability.

You too can use your sales heat map as a remerchandising tool to move products and display equipment around. You can then relocate the more popular and profitable items in the hotspots. You can also rejuvenate those cold areas that customers either can’t access or are difficult to locate.

Creating promotional space away from hotspots can bring customers further into your shop where they might find new or clearance products to buy.

To summarise, you can improve sales and profit by creating a map of your space and overlaying the sales of your products. Use colour to create a picture of performance. Find the hotspots. Remerchandise your products and reorganise shelving to freshen up your store environment.

Most importantly, review the results of your changes to see the impact they made to your sales and make changes where required.

Simon Williams runs the SW Retail Consultancy