Are your shelves working for you?

It doesn’t matter how large your business is, the ultimate arbiter of your success is how your bottom line looks. In retail it’s easy to name your top 10 selling lines or even your top 10 profit generators, but can you identify your poorest performing products or decide what you need from a product to allow it to remain on your display?

Back in February I took a look at the cost of stocking magazines and suggested that a fully faced magazine needed to generate 64p per day in profit to keep its space in the example given. We recently made some minor changes in our store that give confectionery an extra 1 metre bay and as with all investments we need to know how it is performing. As we have given more products double or triple facings we need to understand if this is working. Is the extra space producing more profit? We also need to know which of the original and new products are failing.

Time to get out the tape measure. Working on a cost of £3.00 per metre of racking per day I can work out that a single metre shelf needs to produce £3.15 profit per week to break even. A single facing of Mars Bar, KitKat or any of the other standard size products costs around 50p per week to display and has to justify its space. The top selling products achieve a multiple of this and demand the best space, but at the bottom end it’s a different story.

Any line that does not cover its display cost needs to be considered for delisting, but before knocking it out of the range it is worth checking why it is performing so badly. Is it a dud line, wrongly displayed, out of season, been out of stock or any other reason. If it’s a failure, it has got to go.

We have around 20 lines that look like they are for the chop, but as we only extended our display and grew our range fairly recently I will be leaving it another month before we delist products. I will be doing the same exercise around the store to make space for more multi-facings or missing ‘best selling’ lines.

Running a small or large retail business is about delivering more profit to the bottom line. Improving the profit from every metre of display space is certainly one of the ways to do this.