Thursday, June 21, 2012
Today I want to tackle the very serious problem of space hogs. Some inventory takes up a disproportionate amount of space. How do we determine what's disproportionate? It's a sales per square foot metric.
We just completed a significant re-organization of the store. When we do this, as we did a couple years ago, I like to ponder if we're using our resources to our best advantage, so I created a new graphic to represent each department, with the square footage of the store divided by its sales contribution. Thankfully, the new layout has opened up a lot of space for us, about 100 square feet, but how does the existing inventory actually perform using this metric? If I were to expand into that 100 square feet, which departments would be most deserving?
This diagram uses sales per square foot so that it can be compared to the physical footprint of each department. Used games were added for the first time, which tends to squeeze the existing departments a little bit when compared to the previous chart. This type of diagram doesn't mean a lot until you envision the store and how much space each department takes up. Try to imagine that in your head, if you know the store layout. Then look at the diagram.
The first thing you notice is how collectible card games and their related supplies dominate, which is nice because they take up very little space, and certainly no more space than when they were average sellers.
Departments like miniatures, we see here, have ceased to perform, really, as well as puzzles and toys. Toys and miniatures don't take up a lot of space, unlike puzzles, and can be generally forgiven. However, puzzles seem like an enormous waste of space when you compare their physical footprint to their sales per square feet. This chart screams "dump puzzles!"
That's why I do these kinds of exercises. What might seem reasonable under a turn rate analysis (puzzles don't have terrible turns), show up to be insanely inefficient with a different metric, or just the opposite. The smaller your store, the more important this type of efficiency.