Consumer Business

Space allocation for AP homes

Space allocation is an important criteria which determines the sales of a
category of product displayed. It is important to understand whether category which is displayed
has high sales movement and high profit margin so the following methodology is adopted for
space allocation
1) Determine the sales per unit time and profit margin of the category
2) Average profit per square feet of a segment and volume flow of the segment
3) Consideration of factors: - Category growth, Lifetime value and return on investment
4) Determining the floor space allocation by maximizing the profitability per square feet &
product movement (weekly sales)
5) Assortment of the segment for the vertical and horizontal occupancy based on previous data
The Space allocation also account the aesthetics of the product placement and the customer path
flow which should be taken into account while performing space allocation
Review system: Based on the Return on the investment, overhead analysis as well as profit per
square feet change the product mix as well as the space allocation for each category can be
determined and they can be done by the following methodology
1) Determining the sales to space relationship based on the regression analysis of previous sale
2) Determine the seasonality, space elasticity and category growth within category
3) Re-assortment of space from one category to another based on volume & value sales
Volume sales basis: Spacing based on the change in demand & space elasticity (space
proportional to sales). The matrix which has Demand volatility in the X axis and Space elasticity
in the Y axis will give the product sales focus based on changing the product space as well as the
inventory level of the goods in case of high space elasticity and high demand volatility there
must be high product space as well as high inventory level thus the product categories can be
reasserted based on the change in the volume sales per square unit
Value sales basis: Spacing is determined based on the analysis of the Investment on the profit
per space allocated for a category. The graph would be split to three segments in which the high
investment and profit per space allocated would be given a high focus when there is low
investment as low profit per space then the spacing and the labor allocation for the particular
category must decreased proportionately

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Team- winSOMe