How to Make Macro Space Work
So you have a floor planning system but you still don’t know what your space productivity is? Suddenly, you are hearing more than you care about promotional locations, seasonal department areas and non-planogrammable products like apparel, produce and footwear? Why isn’t it working? You were supposed to be able to know the Gross Margin Return on Space down to the business line level – – at least, that is what the software sales rep and resulting IT business case said.
Here is how to integrate macro space management with assortments (!) and promotional planning to get real space metrics.
First, let’s assume that you have “micro space” planogramming software that links SKUs to Fixtures to Floor placement (even if at a prototype level.) For those areas, your team probably tells you, you can know the GMROS of your entire hierarchy.
Here is the dimension path for planograms:
SKU’s roll up to ASSORTMENTS roll up to FIXTURES (At this point, you have a PLANOGRAM) roll up to FLOOR SPACE
All of these relationships have a MANY to MANY relationship.
For planograms (dog food, cereal, toys, headphones) the system assumes that the planogram exists 52 weeks a year on the missing TIME dimension. The assortments may change more frequently, but in calculations, the planogram “always exists.”
To be able to create Macro Space metrics that accurately reflect PROMOTIONAL locations, you need to add the TIME dimension to the FIXTURE. The FIXTURE exists 52 weeks a year, but the PLANOGRAM that is attached to it changes as frequently as once per week. This will work for locations such as endcaps, check lanes, racetrack locations, dump bin locations, departmental H-Fixtures, etc. The performance and the space allocation for the promotional location can be allocated back to the business line weekly and aggregated along with the standard in-line planogrammed space to reflect accurate space productivity.
For Apparel, Produce and other Departmental areas where the department and fixtures exist all year, but the assortments change, the TIME dimension needs to be added to the ASSORTMENTS. You can know the fixture holding capacity. You can know the inventory allocation, sales rate and replenishment of that Assortment by store. You can know the Assortment start and end date. Therefore, you can know the Space Productivity of that assortment for its time period and allocate that back to the business lines accordingly.
Finally, there are Seasonal Departments (Holiday, summer, Back to School, etc) that change their merchandise over time. These typically have planograms or directed merchandising in the case of large items like grills, christmas trees and lawn mowers. These can be treated like the Apparel example above with some augmentation by getting even more concrete space allocation if you create planograms for the Seasonal Department.
It isn’t that hard to explain or understand. And I have made this work. In a real live retailer. It can be done. But as Yogi Berra said:
‘In theory, there is no difference between theory and practice. In practice, there is.’