Making the most of space

Commercial director of AIS, David Standing explains how to make the most of the space in your garden centre.

Earlier in my career with the likes of Homebase and B&Q everything was analysed to within an inch of its life.

There were, of course, systems in place and specialist teams to look at every business metric ? a situation that is typically not replicated within smaller independent businesses.

Nevertheless, it is difficult to argue against the merits of understanding as much detail as possible about business performance and one of those key metrics is return on space.

Those companies, as with many other multiples, would take that right down to measuring profitability at facing or peg hook level, often attributing all costs relating to that product from the supply chain to overhead and any extraordinary selling costs such as specialist staff.

Department, category, range.

Some of you may go that far but, at the very least if not by line, there should be an understanding of sales and margin return by square or linear metre down to whatever level you are able to, whether department, category or range.

If you don?t already do that kind of evaluation ? and it surprises me how many businesses don?t ? a simple matrix showing the ratios of sales, percentages and cash margin against space will provide the basis for a management debate.

Of course, that needs to be put into the context of category strategy, what you set out your customer proposition to the customer to be and the relative space required to present dominant or credible or convenience only ranges.

If you want to be the killer destination for outdoor leisure it?s naturally going to require more space than, say, chemicals.

Conversely, doubling the space on a high margin return area wouldn?t necessarily make sense as there are inevitably diminishing returns through sales cannibalisation, increased stockholding and so on.

Your business context

So, it?s a question of balance and common sense within your overall business context, but it gives the platform to challenge the status quo and inform decisions on whether to expand or contract departments and ? perhaps more importantly ? highlight opportunities to free up space in order to introduce new, potentially higher return, categories.

Such analysis also sets a benchmark for measuring the success of any new initiatives.

New opportunities for space

As garden centres increase the pace of expansion of non-horticultural categories and the introduction of new ones there are some key examples from within the portfolio of product areas that can be sourced through AIS where many of our current garden centre members have enjoyed great success.

Toys often represent a completely new department that fits perfectly with typical garden centre customer profiles.

The broad area of gifting is another and, perhaps most significantly, housewares or cook shop.

This latter example is not new and some of you will already have significant space devoted to it, including perhaps dedicated till points to encourage conversion and really convey the feel of a shop within a shop.

However, it is undoubtedly a growth area and one where centres already with the department can look to expand ? providing the return on space analysis supports that of course.

Finally, in my multiple days, there was always a great focus on the performance of promotional locations.

Whilst garden centres are not as regimented in gondola end layouts as supermarkets or DIY stores there are still many opportunities to maximise these within customer flow in a more informal manner.

Thinking for the long-term

By definition, promotions are relatively short lived and can?t be measured on an annual basis but that doesn?t exempt them from justifying their space.

If you follow some of the multiples? buying principles, begin with a forecast of expected sales, margin and return including a continuation or exit plan.

Track actual performance over the period and retain as the benchmark for next time because ? let?s be honest ? not much changes in the general seasonal make up of promotions, but what the real winners and losers were sometimes gets lost over time or become myths rather than facts.

 

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