KPI space performance measuring

One measurement that I think SMB do not do nearly as well as larger retailers are looking at their KPIs for space usually this is generally measured in Australia as sales per linear metre of the shelf.

To get the figure, firstly get a tape measure although many SMB will pace their footsteps the shop. Now draw up your shop on a big piece of paper using a pencil as you do often need to correct it. Once you are happy, photocopy the result as you may need several copies.

Now, this might be a planogram for a shop.

Now go to your point of sale system and get sales figures. I recommend instead of using sales that you use the number of sales and profit. So I will use profit here because I think its the most meaningful.

I also recommend that you use the ad-hoc reporting tool using excel because then you can quickly do calculations such as division and multiplication etc.

Now divide the sales, number or profit by the linear measurement, eg if had $3,300 profit in that period and the shelf you paced is 3 step then your KPI = 1,100. Now go through each department and calculate the figures and take the average. Now divide the result into five groups,

Blue = Very good
Green = Above average
Yellow = Average
Orange = Below Average
Red = Bad

I find it quick to take the top items as they stand out and put them in my blue group, then I take the bad ones and dump them in the red. Now you are looking for every three yellow a green and an orange.

Now I produce on my planogram each group which will look like this.

See where the green arrow points, apparently there is something to investigate at these spots. See the green arrow pointing to red. This a problem. Everything around is blue, so it is not the location. As this simple example shows, this KPI is a good indicator of how effective your use of space has been. You can use this to make stock, marketing, and layout decisions.

Although I have used here profit, try the same thing with numbers. What you want with numbers is to see that your clients are being attracted to going deep into the shop.