How do you leverage shelf space allocation to differentiate your retail brand and value proposition?

1 Why shelf space allocation matters

Shelf space allocation is the process of determining how much space each product or category gets on the shelves, where they are located, and how they are arranged. This process is influenced by factors such as sales performance, profitability, customer demand, merchandising strategy, and store layout. Shelf space allocation is important as it can have a major effect on your retail brand and value proposition. It can increase visibility and awareness among customers, display unique selling points and benefits, improve assortment and variety, create a positive shopping experience and loyalty, and optimize inventory and turnover.

2 How to assess your current shelf space allocation

Before you can leverage your shelf space allocation, you need to assess your current situation and identify any gaps or opportunities. To do this, you can use shelf space analysis, planogram, and category role. Shelf space analysis is a process of measuring the actual space allocated to each product or category, comparing it to the ideal or target space, and calculating the shelf share, shelf out-of-stocks, and shelf productivity. Planogram is a visual representation of how products or categories are displayed on the shelves, including their location, orientation, size, and quantity. It helps you align your shelf space allocation with your merchandising objectives and customer behavior. Category role is a framework that defines the strategic role and objectives of each category in your store based on its performance, potential, and customer needs. This helps you prioritize and allocate your shelf space accordingly.

3 How to leverage your shelf space allocation

Once you have assessed your current shelf space allocation, you can leverage it to differentiate your retail brand and value proposition. Begin by defining your target customer segments and their needs and preferences, so that you can tailor your shelf space allocation to their shopping behavior and expectations. Then, identify your competitive advantages and points of differentiation, so that you can highlight features and benefits that set you apart from competitors. Align your shelf space allocation with your category role and merchandising strategy to achieve specific goals for each category, such as increasing traffic, sales, margin, or loyalty. Finally, implement and monitor your shelf space allocation to execute your planogram, track results, and make adjustments as needed.

4 Best practices for shelf space allocation

To leverage your shelf space allocation effectively, you should use data and insights to inform decisions, such as sales reports, customer feedback, market research, and industry benchmarks. Additionally, it’s important to offer a balanced mix of products that meet customer needs without overloading or understocking your shelves. Furthermore, optimize product placement and arrangement strategically based on popularity, profitability, seasonality, and complementarity. Finally, experiment with different shelf space allocation scenarios to measure their impact and learn from successes and failures.