In a fast-changing world of space planning, where the role of technology is advancing fast and shoppers are more informed and choosier than ever, one long-standing fact remains as true today as it did when planograms were jotted by hand:

People — you, your colleagues, your competitors — are at the center of the successful space analysis needed for shoppers to be satisfied and delighted with what they find on shelves in stores.

This week, the Space Planning Community released “Space Analysis 101,” our newest training course. The course covers the fundamentals of space analysis — the optimization of retailer’s selling space to ensure the right products are available for consumers. Members can click here to take the course, which provides a deep dive on space analysis best practices and applications.

More than anything, however, the course puts the space planner in the spotlight. Technology is coming fast, but the practitioners — you — are still making the decisions.

In this article, the Space Planning Community unveils a brief space analysis FAQ for all readers, with added analysis from space leaders on the ways space planners can make all the difference in a space strategy that works. The article covers macro space, then micro space, and then brings it all together at the end.

Macro Space

What is macro space analysis?

Macro space analysis is the study of ensuring the right amount of overall space for categories in each store. This includes the proper placement (and amount) of shelves, fixtures, frozen, meat, and dairy cases, and other related equipment.

As with micro space analysis, the shopper is at the center. For instance, if a store wants to make its name in fresh/prepared foods, ensuring an inviting store perimeter is a must. If a location has a reputation for strong center-store sales, having enough space to maximize that revenue is key.

By their nature, macro-space fixtures are not easily movable once placed. Think of a grocery store’s freezer aisles, for instance, or a cosmetics aisle with brightly lit custom shelving. Once these decisions are made, they are difficult, if not impossible, to undo, given the cost. Robust analysis must be conducted before enacting a new macro-space strategy.

How do category roles intersect with macro-space analysis?

The products carried in stores can be separated into four category roles:

Destination categories drive shoppers to a store. An example would be fresh fish at a grocer with a strong seafood assortment, or an auto parts store with a robust selection of aftermarket parts. Generally, these should be overspaced within a store, given their importance to the overall focus of the store.
Core categories contain items that shoppers expect you to carry and are regularly shopped. Examples include paper towels at a grocery store, aspirin at a big-box retailer, or cleaning spray at a home improvement store. Core items should have sufficient space in the store — if retailers fail to have them in stock, it will leave a poor impression with shoppers, as anyone who’s ever seen an empty shelf of toilet paper will tell you.
Convenience categories contain goods added to the basket during a shopper’s trip that are not destination or core items. An obvious example is bottled soda near the cash register at an office supply store. These items will typically be underspaced relative to total overall store space.
Seasonal categories are goods carried only during a particular time of year, such as Halloween candy. These items are often held in a “Seasonal” section of a store, with rotating assortment throughout the year (think sparklers for the Fourth of July, or winter-themed wrapping paper for Christmas). As with convenience items, seasonal items will typically be underspaced in most stores.

There is a large population of space planners in our industry and they play a critical role. Where do they have an impact in macro space?

It’s here we cede the floor to Jenny Tornow, VP of Merchandising Presentation & Execution at Whole Foods and a Space Planning Community board member.

“On the macro side of the equation, the industry is very reliant on data scientists and data modeling to figure out how to optimize the macro space — and macro space is just expensive to change,” Tornow says. “It’s expensive to do a remodel. It’s expensive to have store labor or third-party merchandisers come in and change the allocation of a particular category in a store. Those are not small activities. You can’t be doing that every month. You can’t change the category space of your Dairy to run every month. So it has to be very thoughtful.

“A human has to really decide what’s realistic to do and what’s the juice that’s worth the squeeze in regards to macro-space changes, because the data model might tell you that you should change the space in the following ways, but you have to account for the fact that that’s however many thousands of dollars of labor in order to make that change and have a total ROI perspective.”

Micro Space

What is micro space analysis?

Micro space is the art and science of ensuring the proper amount of space for items, as well as segments and sub-categories. Think, for example, of shelves of hot sauce. Micro space analysis considers how much space and on which shelf each sauce gets which placed. For instance, for a store with a large Mexican clientele, it could be wise to increase the space given to brands like El Yucateco, Huichol or Búfalo.

What are some key elements of micro space analysis?

Micro space analysis starts with understanding shopper, category, and consumer trends. In short: what is selling, and why? The category’s overall profit and loss picture must also be analyzed closely.

Another element to consider is the role of each of the brands on shelves. Is a brand a “star,” with high-market share and high growth? Is it a “cash cow,” with high-market share and lower growth? And what do with lower-selling items? Are they items with “potential,” or are they “dogs” (our apologies to canine enthusiasts) that need to be weeded out?

Finally, shelf placement and strategy must be analyzed. Are the right products easily shoppable?

What is fair share analysis?

Fair share analysis is the determination of the right space to allocate given consumer demand/market share within a category. A fair share analysis takes these elements into account:

Share of sales within the category
The share of space allocated
The role of the product within the segment — is the product a standout, an old standard, a rising star, or is it lagging so badly it merits a reduction in space?
The average days of supply for the product on shelf

What are some key measures for micro-space analysis?

One particularly key metric is “space to sales” gap, which assesses whether a product is underspaced or overspaced relative to sales. Consider this example: if Hot Sauce A has 10% of category sales in a store but just 6% of space, there is a 4% gap. The question then becomes: does Hot Sauce A merit more space?

Another is days of supply, or the amount of time it takes to turn over existing stock. Let’s now consider Hot Sauce B, which has 22 days of supply on average. Is that a good number, or a lagging number? Well, it all depends. Does it turn over at a rate like other hot sauces in the category, or is it slower or faster to sell out? Does the store have a wide range of hot sauces, or does it have just four feet allocated?

We asked earlier about the “human touch” with macro space. Planning and human input at the micro-space level is critical, too. What are a few “watch-out” areas where micro space analysts can make a difference?

We asked Tom Tester, a Space Planning Community board member and planogram manager for Ahold Delhaize USA, for a couple of hurdles micro space planners must be careful to clear, and he listed two where a human’s experience can help steer clear of mishaps.

Knowing a planogram’s holding power vs. company standards. Tester’s guidance: “Space planners must use system highlights designed to easily visualize areas of concern, understanding that holding too much product can be equally troublesome as not holding enough. Care should be taken to ensure that horizontal and vertical facings satisfy company standards, yet don’t drive unwarranted inventory to shelf.” While Tester advises that space planners should use technology for planogram generation and validation, a space planner’s learned knowledge of company standards is essential to execution.
Obtaining and using the right Consumer Decision Trees (CDTs) in the planogram creation process. “Ensuring an unbiased source of the CDT is key here, in driving what your company’s consumers are telling you, vs. a potentially biased view that a product vendor may share,” Tester says. “After this, space planners must take care that their base planogram meets those needs and has the Category Manager’s blessing, to flesh out all needed planogram versions.”

How Macro and Micro Space Work Together

In ARC’s recent white paper “The In-Store Experience: Why the Fresh Category is Essential to Success,” the shopper behavior expert Kevin Kelley shared some macro space tips for grocery stores that are applicable to any category and retailer.

“We really want grocery stores to think in scenes, to break the store down into a series of scenes,” says Kelley, the co-founding partner and principal of Shook Kelley, a strategy and design consultancy that works with retailers around the world on enhancing their in-store experiences. “And we use the word specifically ‘scenes,’ because if you think of a movie, for example, a movie of a great book, they can’t tell everything. A book may take me a week, two weeks to a month to read, and a movie’s got to do it in a certain number of scenes.

“(Generally) a movie doesn’t do 200 scenes. They have about eight to 12 scenes, and each scene of a book, when you pick that scene, you don’t just pick it randomly. You think, this scene has an important value I wish to impart to the audience.

“When we generally think of a scene, we think of a beginning, a middle, an end, and a mini-climax. In a store, let’s say pizza is the theme for us. It has a beginning, a middle, and the climax could be the guy throwing the dough in the air or singing an operatic song, but that scene is very important to us and we are trying to convey a value. That value may be we’re Italian or we make our food fresh, or it’s all about the sauce. A pizza value could be people fight over in New York versus Chicago, pizza crust versus thick crust, square versus triangle, all those different things by this slice, not by this slice, traditional versus funky pizza.”

Kelley’s point? Stores must pick a lane, make a call on what they are. Once this is established, space planners can best do their jobs.

But there’s one more call-out to make: the space planners will have to understand micro and macro space. It’s essential for leadership to ensure micro- and macro-focused space planners have a foundation in both disciplines.

“Often, an organization has separate micro- and macro-space teams, and not always reporting to the same functional leader,” Tester says. “As a result, broad foundational training isn’t always as a part of the onboarding process. Fundamentals of macro-space analytics are often not taught to micro-space teams, and vice versa. As a result, teams do not always understand key analytic pieces of their business. Grounding teams in how macro space and micro space is evaluated is a key to setting up space planners for success. Discussing KPIs and evaluation tools across all areas of space are very important to grow a solid space planning team.”

That “solid space planning team” Tester asks us to imagine is one where people remain main players. Which is all the more reason that practitioners get grounded in the analytical best practices — starting with Space Analysis 101 — needed to make the right decisions.