UNIT 3-Retail Space Management and sales resources

Have you ever wondered how retailers manage to organize thousands of

products in a small store so efficiently? That hundreds of customers can shop at
the same time without going crazy. Therefore, making the full use of retail
space with strategic space management techniques is crucial for retailers.
A store which is well-organized and spacious provides better sales because
people like to shop in places where they don’t have to struggle much to find
what they need.
A well-organized store also helps you to cut cost as you don’t have to keep the
main salespersons to assist your customers in looking for products they want.
Retail space management is a process of using the space available in the store
effectively. The management of space is important as a retailer is required to
display a large number of products in limited space available in store. Space
management is not a difficult process to understand.
In simple words, you can say that space management is a process of utilizing
store space to attract more and more customers and providing them a pleasing
shopping experience because you cannot deny that only a happy customer can
bring more sales.
You would not want to waste a single square meter of your store when you
know that you have rented that place. You would want to use every available
space in the store to get the maximum return on investment.
Effective retail space management requires you to ask the following questions
to yourself before you start allotting space to products of different categories.
How much space should be allotted to each brand on shelves?
Importance of Retail space management
#1 Retail space management is important to increase sales
Planning available space in the store helps you to increase sales. Having an
understanding of the space available in the store helps you to decide the layout
of your store and location of different categories of products.
It is essential for a retailer to divide the right amount of space available on
shelves to the different categories of products.
If you don’t plan your storage space and place products without thinking will
leave you in trouble later. You will always find yourself struggling with a
shortage of space for important products. Let us understand this with the help of
a retail store example which has about 30 categories of products.

It will be difficult for a retail manager to place all products and provide them
sufficient space if they don’t understand the space available in the store and he
might end up allotting extra space to one category of product that he might not
get enough space for a few categories of products to display.
There are chances that the category of products which generate maximum space
might not get enough space to display.
No retail manager would want low-yielding products taking up maximum shelf
space available in store. This can largely impact the income generation.
In addition to this, you might end up investing more for buying less yielding
products, and your hard-earned money will be wasted in buying excessive
inventory and maintaining it rather than amending your store to increase sales.
#2 Customers can easily find the products they need
Nowadays, customers don’t only come to your store to buy things they need,
but they also come to destress themselves. Just think how they will feel if they
can’t find things they want to buy easily.
There are chances that they would prefer to visit a nearby store with a better
organization, or they would order the things that they want to buy online.
Let us understand this with the help of an example. Imagine your customer enter
your store with a list of ingredients to make a cheesecake.
He would expect to locate all the products easily and in less time. By
organization, your store properly and by allotting proper space to each product
and placing them at the right place on the shelf will help your customer to find
them easily and without getting frustrated.
Poor retail space management will give you more and more unsatisfied
customers with constantly dropping sales. However, proper logical
categorization of products will help your customer to locate the things they want
to purchase easily without wasting any time.
#3 It is helpful in controlling the rush in the peak hours
Choosing an effective layout for your store is important as it will not only help
you keep your store well organized but will also keep the rush moving during
peak hours of a day.
You can take professional help in choosing the right layout for your store, or
you can copy the layout plan of a store which has similar dimensions to your
store.
Just imagine how difficult it would be for you to handle your store if it is always
overcrowded. Proper space management will let you choose the most sold
categories of products and distributing them around the store so that you can
avoid cluttering in one corner of the store.
What to consider while managing space available in-store and allocating it to
various products?
Retail stores come of different sizes. It would be unwise to plaining copying the
layout design of one store that has maximum sales in your town without
considering space available in your store and the categories of products you
want to sell in your store.
Effective management of retail space requires you to consider the following
points
#1 life of products on the shelf
The space on shelves should be allocated to products based on their shelf lives.
For example, a product with a short product life should not be placed on the top
of a shelf.
#2 Categories of products:
This is the most important factor for deciding the space allocation. Products can
be of different categories such as profit builders, traffic builders, star
performers, and space wasters.
You would certainly not want to waste much space on space waster products,
and maximum and premium space should be allotted to profit builders and star
performer products and traffic builder products should be distributed evenly in
the store to avoid congestion.
#3 Adjacent Products:
The next important decision a retail manager is required to take “which products
should be placed adjacent to one another so that sales can be increased.
#4 size, shape, and weight of products:
These are important factors that a manager needs to consider while placing
products on the shelf. For example, it would be poor space management if you
place heavy products such as a bottle of cooking oil on the topmost shelf.
However, products such as kids’ diapers, soft toys can be placed on the top shelf
because of their heavy size.
#5 Frequency of purchase:
There is a certain category of products which are frequently bought by
customers, and customers usually come in a hurry to buy such products. The
example of such products will be toilet paper. Toilet papers should be placed at
the bottom of the entry shelf. So that people can easily find them without
making many efforts.
Different Layout design for Retail space management
The different layout design is used for different types of stores. Let us learn
about them one by one.
#1 Free Layout
As the name suggests, the free layout does not follow a proper design or fashion
and is usually used when there are large space and fewer products to display.
For example, the free layout is a suitable design for luxury stores and fashion
stores. Using this layout, you are not guiding your customers to follow a
particular fashion.
Instead, you are giving them liberty wander in your store. You don’t impose any
rules on them. The free layout is the best way to showcase your creativity.
However, don’t forget to add proper signs and window display wherever
required so that your customers don’t feel lost.
The free layout encourages interaction between salespersons and customers.
Salespersons help customers to make a shopping decision and also offering
them other products available in the store to make more sale.
#2 Grid Layout
Grid layout is the most common type of layout used by retail stores. in a grid
layout, products are displayed in a very predictable manner. So that customers
don’t have to make much efforts to look for products. You will see this type of
layout in stores such as pharmacy stores, convenience stores, grocery stores, etc.
The main reason behind using grid layout is to display maximum product
categories without leaving any empty space in the store.
In grid stores, items which are bought by customers impulsively are placed near
the cash counter, and staple products such as milk and bread are placed at the
end of the store to encouraging more sale.
This type of layout is suitable for stores which sell more than 30 categories of
products.
#3 Loop Layout
Loop layout is a closed layout where the customer starts at one end of the store
and can exit store after going through all the merchandise available in store.
This type of loop is suitable for stores which sell a few categories of products.
For example, a loop layout is good for a wine store.
So that customers can have a look at all the wines available in the store before
making a final purchasing decision, loop layout helps you understand the
pattern of traffic in-store, and there are fewer chances that customers can bump
into each other.
This type of layout can also prove to be risky as customers who don’t have
much time would not prefer to shop from such stores and might mind avoiding
coming to store in the future.
#4 Herringbone Layout
Herringbone layout is a substitute for Grid layout for the store has long and
narrow retail space. This type of layout is used most by small hardware stores,
libraries, tuck shops, etc. the one major drawback for using herringbone layout
is the risk of theft.
As space is congested and provides chances for picking and hiding things. But
this can be avoided by installing Cameras.
Steps used to use storage space efficiently
1. the first step would be to measure the total space available in the store,
such as its size and shape.
2. Make the division between selling and non-selling area in the store. The
non-selling area can be used official use, customer support area, cash
counter, etc.
3. Choose a layout for the store. A layout can be selected on the basis of size
and types and number of merchandises to be sold in the store.
 4. Make a diagram which will contain information which merchandises
should be placed at what place and which categories of products should
be placed adjacent to one another.
5. Determine how much space should be allocated to merchandises by
referring to the history of sales of the products. Decide much space
should be allocated to the billing area on the basis of the expected crowd
in the store.
6. Decide on the location of all products within a single category of
products. This will help customers to locate products easily and quickly.
7. Make the use of irregular corner of your store properly and with careful
planning. As this space in the store can be used effectively to display
large or products of irregular shapes.
8. Leave space for promotional activities such as window display etc.

Sales Resource Allocation Efficiency: Optimizing for Enhanced

Performance and Profitability
Sales Resource Allocation Efficiency plays a pivotal role in sales management.
Efficient allocation holds the potential to significantly boost profitability and
customer satisfaction.
In this article, we will unpack what Sales Resource Allocation Efficiency
means.
You'll learn why it matters and gain practical strategies to optimize it.
Understanding Sales Resource Allocation Efficiency
What is it?
Sales Resource Allocation Efficiency refers to the optimal use of sales
resources. The resources are mainly people, time, and money. The principal
goal is to boost sales results.
Why is it Important?
Efficient allocation is crucial as it improves sales performance. It also helps in
cutting costs and boosting profitability. Moreover, it uplifts customer service
quality and enhances customer satisfaction.
Key Components
The key factors in this process are:
 Sales staff: Their skills, territories they cover, and how efficiently they
manage their time.
 Budget: How the budget is allocated for different sales activities.
 Sales strategies: Deciding which markets and customers to target.
By understanding these components, businesses can effectively allocate their
resources. This, in turn, helps them achieve their sales targets more efficiently
and profitably.
Strategies for Efficient Sales Resource Allocation
Bottom-Up Approach
This strategy involves direct input from salespeople on the field. It focuses on
detailed market information from those who interact with customers regularly.
Though highly accurate, this process can be time-consuming.
Key traits of the Bottom-up approach:
 Heavy involvement from field salespeople.
 Utilizes fine details from the market.
 Highly accurate but can take more time.
Top-Down Approach
An alternative approach is top-down, where senior management leads the
decision-making based on broader business goals. While faster, this
methodology may overlook certain market nuances. Good communication
across all levels of the company is crucial here.
Key traits of the Top-down approach:
 Mostly led by senior management's decisions.
 Faster but may miss fine details.
 Strong communication is a must.
Hybrid Approach
The hybrid strategy seeks to merge the strengths of both previous approaches. It
fosters collaboration between management and sales teams, resulting in better-
informed decisions and greater staff buy-in.
Key traits of the Hybrid approach:
 Combination of both bottom-up and top-down strategies.
 Encourages team collaboration.
 Very likely to lead to well-informed decisions.
To sum up, each of these strategies has its own strengths and potential pitfalls.
Utilizing an approach that suits your organization's specific needs can
significantly improve your sales resource allocation efficiency.
Benefits of Efficient Sales Resource Allocation
Proper use of sales resources results in multiple benefits. Let's look at three
major ones.
Boosts Sales Performance
Firstly, optimal sales resource allocation boosts the performance of your
sales. By using your resources wisely, you will see better results in sales. This
can manifest in different ways:
 Higher close rates: More deals are struck and contracts signed.
 Larger order sizes: Customers are willing to buy more from you.
 Reaching profitable markets and customers: Your resources are geared
toward those who give you the most profit.
Reduces Costs
Secondly, efficient resource use helps in cost reduction. How does this work?
 Wastage prevention: You're not using resources where they are not
needed.
 Lower sales costs: Less money is spent on getting each sale done.
  Higher return on investment: The money you spend on sales gets you
more returns.
Costs are an essential part of any business, but reducing them adds directly to
your profitability.
Enhances Customer Satisfaction
Lastly, better resource use also improves customer satisfaction. How so?
 Improved customer service: With proper resource allocation, your
customer service improves.
 Lower wait times: Customers get quicker responses.
 Higher response rates: More customer queries and problems are
addressed.
In a competitive market, satisfied customers are invaluable. They not only bring
repeat business but also act as your brand ambassadors. Consequently,
enhancing customer satisfaction through better resource use helps improve your
business reputation.
Sales Forecasting in Resource Allocation
In the world of sales, sales forecasting plays an essential role. It is used to align
our resources with expected sales. Think of it as a map that guides where we
should place our resources for maximum effect. Accurate forecasting is crucial
to avoid common problems like understaffing or overstaffing. In essence, it
makes our budget allocation work smarter across different sales areas.
There are numerous techniques to perform sales forecasting:
 Use of historical data: Past sales trends can provide a reliable guide for
future sales.
 Sales force composite: This is when we pool together forecasts from
various salespeople.
 Market research: This involves using customer and market data to
predict future demand.
Each method brings its own strengths. We need to select the approach that best
fits our business context.
On the other hand, accurate sales forecasting has many benefits:
 It paves the way to reduce waste by aligning resources with sales
demand.
 It helps prevent missing out on opportunities due to lack of necessary
resources.
 Additionally, it facilitates long-term sales planning , making our efforts
more targeted and effective in the long run.
In conclusion, accurate sales forecasting is not just a luxury; it's a necessity in
our quest for efficient resource allocation.
Evaluating Sales Resource Allocation Efficiency
To measure the success of your sales resource allocation, you need reliable
yardsticks. Here, we’ll pinpoint these measuring tools.
Key Performance Indicators (KPIs)
Sales KPIs help us to gauge how well we're using our resources. Some standard
KPIs include:
 Sales per Rep: This shows the amount of sales each rep brings in. It
points out your highest performers.
 Close Rate: The ratio of leads that become customers. A low close rate
might mean your reps are overworked or need more training.
 Customer Acquisition Cost: This is the cost of getting a new customer.
If it's too high, you might be spending too much on unproductive
activities.
Regularly checking these KPIs is a must. They highlight areas that need a closer
look.
Feedback from Sales Team
Your sales representatives have a treasure trove of insights. They know where
resources fall short or get wasted. Regular chats with them can unearth these
issues. Work together to find solutions.
Data Analysis Tools
Data analysis tools like CRM systems and sales analytics software can make
sense of your sales data. They detect trends and patterns that might not be clear
at first glance.
They give you useful insights such as:
 Which sales tactics work
 What kind of customers buy the most
 Which territories are underperforming
These tools also make it easy to understand your data. They turn raw numbers
into helpful visuals for simpler decision-making.
In the world of sales, efficiency is king. Keep a sharp eye on your KPIs, listen
to your team, and use the right tools. That's the way to keep your sales resource
allocation effective.