Tuesday, April 28, 2009

Layout Optimization

By Doron Levy, President, Captus Business Consulting

We are probably in the most challenging time for retailing. Customers discretionary spending has come to a stand still and what little money or credit they have left is going to retailers that provide necessities such as groceries and pharmacies. This climate could provide lucrative opportunities for chains that sell daily needs merchandise.

So we’ve managed to get some customers into the door. As retailers, it is our job to get customers to spend in our stores. We do that by merchandising. Big, bright aisles filled with product, colorfully and logically displayed with price signs. I am here to tell you that is NOT enough. We are going to have to kick it up several notches to get some of that precious margin we are all after.

Every retailer, big or small, needs an organic and flexible layout optimization program. Things are always changing for us in this industry and we must be adaptable. Layouts and merchandising plans must be changed to suit the current environment. Plans-o-grams must be flexible enough to accommodate new and unique products that should be offered to your core customers. High margin and high velocity stock should have extra displays throughout the sales floor. Hot promo price items must be shielded with high margin associative merchandise. A great example: If Scope or Colgate toothpaste is on sale that week, place your own house brand toothbrushes or floss in bins within the display.

That’s how you keep the margin gods happy in this current economic environment.

Doron Levy is president of Captus Business Consulting. Captus provides support to the retail industry. His blog can be found at www.gocaptus.com/blog and can he can be reached at doron@gocaptus.com.

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