Range and Space Management (E)
What is the role of Category management in contemporary market? What is the relation of range and space management and product availability? Learn about space allocation and layout setting tactics.
Posted: Sep 2011
Range and Space Management has the aims to develop an assortment of products by balancing the needs of the consumer against the agreed performance measures objectives
Determine the criteria for adding or deleting SKU’s. This is important because we supplier and retailer aim to offer the correct choice of SKU’s in the most efficient manner. This means that the consumer should be offered by variety not duplication of products. If the product is not given the right merchandising and range and space allocation, than the availability problems or write off situations may appear.
The key strategy is giving the full deployment to every product, through the 3 way tactics: Range, Space and Layout.
The proper Range setting should deliver the most appropriate and effective range per account. The range should offer the choice to the consumer. The duplication should not happen often. The range principle should be applied to all consumer segments.
The Space should be used in the most efficient way, on shelf or any other point. The space should give the availability of key selling lines. The space should be allocated in the way that will reduce the replenishment costs ( too frequent replenishment of a small space is creating costs and potentially sales loss ). Also, space for some product should not be too large, proportionally to the sales ( frozen inventory and write of risk )
The proper layout helps sales growth through offering the ease of choice for planned purchase to the consumer, with stimulation of additional purchases through adjacencies and visual impact.
Range Assortment gives opportunity to increase both efficiency and effectiveness of product performance in the retail outlet.
Efficient Range enables reduction of trade, distribution and marketing costs for both retailer and suppliers. Efficient range provides better stock holding. All that is followed by lower operating costs. Efficient range can reduce unsuccessful new product launches.
On the other end, effective range meets customer needs. It provides choice and avoids duplication of products, flavors, pack sizes and price points. Effective range leads to increased customer satisfaction and higher loyalty to the outlet. It gives less chance of switching to another retailer or brand.
Why do we need enough Space? Sufficient space fights the out of stocks situation. The stock out drains value from the Category, it causes loss of revenue for the Supplier and Retailer. Stock out increases the shopper dissatisfaction. Stock out causes shoppers to switch outlet or product.
Also, constant shelf replenishment is costly and inefficient. Therefore we need to get the levels of stock on shelf as accurate as possible to reflect shopper demand. Balancing the space is the key for fighting the out-of-stock on one side and frequent replenishment on other side.
Range and Space Management
Stock out Effects
6 Steps of Range Assortment
Space Allocation and Layout Setting
Space Allocation Case Study