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Thinking inside the box – making the most of your store space

By ShopAbility for Retail Pharmacy

If the average pharmacy ranges up to 4000 skus, and they’re mostly small bottles and boxes, what’s the best way to lay it all out? ShopAbility discuss getting best return from your store ‘box’ in this latest article in the series.

From our previous few articles you’d now have an idea of how to tackle what to range and how much of it.  The next retail question is then where do you put it all in the store so it makes sense to shoppers and they can find what they are looking for easily.

This article we’re going to discuss this under the headings Space and Layout.

What is space & layout?

Space and layout pertains to how shoppers navigate a store and an individual category – how they get to what they want and how easy it is to find an individual product. We will discuss both store and category levels.

Layout includes what categories go where (“Location”), in what order (“Flow”), and what goes next to what (“Adjacencies”).

Space considers how much physical space a department, category, category segment, brand an individual sku has. Physical space is typically calculated in metres, bays, shelves, and facings.  Levels of space are represented in Figure 1.

Space and Layout  = Easy to Shop

Space, layout and navigation are important because they are direct contributors to ease of shopping and the in store experience.  In most retail channels space attributes impact a shopper’s choice of your store. Attributes such as ‘easy to shop’, ‘quick to find what I want’, and ‘well laid out’ generally figure in the top 10 reasons shoppers choose your store over another.

Your store – the retail ‘box’ – is a finite space. You need to look at what return you’re getting on that space, particularly when you’re paying high rents. The most common way to do this is measuring your space to sales – sales per square metre, and number of ‘facings’ of an individual product vs its sale rate.

The role of space to retailers is a bit like Yield in air travel. There are only so many seats on the plane, so they manage the available space for best return.

Laying out your store

Think of your store as a box if drawn from an aerial view. Most pharmacies have the dispensary at the back of the box (if you draw the door at the front). Categories in the box are like bits of Lego that you can move around and stick next to each other. By looking at it as an aerial view you can quickly see where the traffic blockages are likely to happen.

In most pharmacies, since dispensary is the destination for up to ¾ of shoppers, the question is how do you expose them to the greatest amount of product on the way to and from the dispensary?  In other words, how do you lay out the pharmacy to invite impulse purchase? In grocery, more than 80% of shoppers deviate from the shopping list (they add to it) so ideally you want them to walk every aisle … to get more likelihood of an impulse purchase.

There are also non-dispensary categories that are destination categories eg cosmetics and analgesics. For destination categories, particularly ones that are a distress purchase (such as when the shopper is in physical pain) they need to be easily found.

So you need to find the balance between exposing shoppers to products, and making it quick and easy for them for find a specific thing. There’s no point in irritating them by turning your store into a maze.

When in doubt, err on the side of straight aisles that run from the front to the back of the store so they have a clear ‘run’ to the dispensary. Don’t put aisles cross ways as by doing this you’re effectively creating a block shoppers have to go around.

A very basic store layout might look like Figure 2.

Location, Flow & Adjacencies

Where you locate each category in the store says something about it to the shopper. If it’s in a corner and doesn’t have a lot of space dedicated to it then it mustn’t be an important category. Having an entire wall of cosmetics says that you are a specialist in and destination for cosmetics. The more space a category has, the more visible it is to shoppers and the greater the likelihood of purchase. When laying out your store, think about your range and competitive positioning and ensure that the categories you want to be known for are the most prominent and easily seen.

In grocery, retailers sometimes would place a low traffic or low basket penetration category in the same aisle as a high traffic one, which is why you’ll sometimes see the stationery in the same aisle as the confectionery. The thinking is that the high traffic category is the destination so you might increase your basket penetration of the low traffic one by impulse purchase.

However, shoppers generally think in occasions and solutions and are more likely to look for the stationery where the gift cards are, for example. So retailers are gradually moving toward putting relevant categories next to each other.

Other things to consider

Contributors to perceptions and actual experience of space are aisle width and fixture heights.
Considering the majority of pharmacy shoppers are female, with a fair few mothers, you need aisles wide enough for strollers to get through without knocking everything off shelves.

High fixtures can block light and decrease perceptions of space. And shoppers can’t reach beyond 6 feet anyway. Additionally, once shoppers get to a category the shoppable area – where they look and select from – is generally between shoulder and knee height.

Lower profile fixtures (or at least fixtures with a shoppable area finishing at shoulder height and an easily visible category or segment sign on top) create the illusion of space. But there’s not much point ranging anything on shelves below knee height as shoppers won’t see it, and older shoppers aren’t going to bend down to get it. So again, you need to find a balance.

Lastly, security measures – desirable theft items shouldn’t be next to the entry unless they are behind counter and selected by staff (like bottled spirits often are in drive through bottleshops).

Laying out a category

The principles of flow and adjacencies apply within categories as well as to the whole store.

Within a category, flow relates to what category segments are next to each other, in what order. In other words, how the category is broken down.

So you need to figure out, or work with your suppliers on, how the category is broken down – from a shopper perspective (not just on manufacturing specifics).

For cold drinks this broadly looks like Soft Drinks, Water, Juice, Tea, Flavoured Milk, Energy and Sports.

For categories in pharmacy the way you break it down by category may vary. When in doubt, by product purpose is a good way to go. Some categories you might segment by condition or ailment. Other categories might segment by body part. Eg painkillers might look like head, period/menstrual pain, stomach, back.

Once you’ve broken the category down (segmented it) you need to figure out what the flow and adjacencies of the segments are. There aren’t any particular rules for this. You might cluster body parts in similar regions together, or start with head at one end and work through to feet at the other.  Keep in mind that shoppers ‘read’ a category like a newspaper – from top left to bottom right.

Most categories work best using vertical blocking  – ranging the products in a block from top to bottom (rather than horizontally across the bay). Premium lines are generally on the top shelves, value and private label brands are down the bottom and the mainstream lines are in the middle.

Figure 3 is a visual representation of this – a ‘mudmap’.

Vertical blocking doesn’t always apply though. Tall skinny products that are all only going in one bay work better in rows (think like soft drinks in a vending machine) – you need the multiple facings across ways to be able to see what the product actually is.

You also need to consider how many products there are for a given segment and whether you should group like products together, or block by brand. Normally a shopper shops by category, but for some categories there MAY be a case for brand blocking … traditionally vitamins have been brand blocked, with Blackmores the ‘beacon’ brand, mainly because it’s a very dense category (lots of different products, all only 1 sku each, all in small bottles). However that’s not to say that’s the only or best way to do it.

Allocating Proportionate Space

So now you’ve sorted out what segments are in the category, you need to look at what each segment is worth of total category sales.

The principle here is space to sales. A segment or product should have a roughly equal % of category space to the % of category volume or value it represents.  This is where the concept of Facings comes in.

Each individual unit of a product is one facing wide, because its face takes up one space. The overall shelf display is measured in terms of the number of facings per product.
The more facings a product has, the easier it is to see. Note that facings are an expression of product width. Product and shelf depth (number of products sitting behind the front facing, from the front to the back of the shelf) is an indicator of stock holding capacity.

So for example, if Neurofen White is 30% of total painkiller sales then in theory it would get 30% of the space (ie 30% of the total facings). And if painkillers are a growing category and Neurofen brand is outpacing category growth, you might give it a bit more space again.

Some operational realities apply though. If giving Neurofen White 30% of space meant that a lot of other specific painkillers would have 1 or no space facings, then you might adjust it up or down a bit.

Pharmacy is interesting for category space allocations because there are so many skus, and most are small boxes or bottles.  For small products you need multiple facings simply to be able to SEE them.

From an operational standpoint, space allocations impact on stock holding and stock turn (and refilling/merchandising requirements. Things you need to consider include:
• Layout adjustments based on category performance and segment growth trends
• Match layouts against the shelf inventories to identify any operational impacts on stock holding and days of supply – if you have a fast moving product and ‘under-face’ it you will have to restock the shelves frequently.

You need to look at your Space and Layout if …

So, you might need to do a Space and Layout analysis on your whole store or a specific category if you answer yes to one or more of the following:
1. There are navigation and traffic roadblocks in the store
2. The categories that are your major points of difference are not easily seen, not easily found or hard to get to
3. Shoppers spend a long time trying to find a specific product in a given category
4. You have shelf refilling issues where some products need refilling all the time
5. The top selling products, brands and segments in a category have changed.

So that was a bit about how to make products easy to find using space. Next issue we’ll look at how to think about how you sign your categories to make things more visible within the available space.

In the meantime, we welcome feedback on these articles – what you agree with, what you don’t – and what you’d like to hear about. Email us with feedback on enquiries@sh-opportunity.com.au

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