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In the Trenches: Improving space allocation will drive sales and profit

There are a little over 2 million farms in America. According to statista.com, the average U.S. farm consists of 438 acres and that space is very precious. Therefore, farmers must make use of every acre wisely in growing their crops.

Hypothetically, let’s suppose a farmer specializes in growing five different vegetable items — cabbage, eggplant, green onions, tomatoes and beets. It would be illogical if the farmer planted all five items in an equal amount of acreage, as each has different market demands.

Since tomatoes will sell at a much faster pace than the other four vegetables, it would cause that section of acreage to be vacant in no time. That would result in a loss of additional tomato sales by the farmer. In this example, the space allocation was not planned according to the market demand of each item, especially tomatoes.

A similar situation sometimes occurs in the supermarket produce department. The selling space is limited and very precious. Every square foot has to be merchandised efficiently. Allowing larger-than-needed display sizes for slow-selling items is just wasting space. Likewise, allocating less space to the high-volume items will limit sales.

I have seen some produce departments with items equally divided in sections. For example, an equal amount of space allotted to all berries   in a section is not efficient, since the movement of each variety is diverse. Strawberries will normally outsell other berry varieties at a more rapid pace. If each berry variety were displayed evenly in two-foot-wide sections, the strawberries would have to be restocked more frequently using additional labor. Loss of strawberry sales due to an out-of-stock can also occur.

The berry example simply points out that the more popular items should be allotted greater selling space than slower movers. It makes little sense to apportion both slow- and fast-selling items in equal amounts.

It can be easy to determine item movement information by simply taking advantage of all the data from the sales system results. Analyzing item movement reports can reveal the highest sales items to the lowest in volume.

The data will clearly identify items that will generate the most sales and contribute the most profit to the produce department. Those items should then be considered for expansion when planning merchandising display space.

With all this in mind, the produce department space should be used wisely. Major sales-producing items such as potatoes, grapes, tomatoes, peppers, asparagus, berries, bananas, melons and value-added salads should be given the most display space. After the initial high-volume and fast-turnover items are allotted sufficient space, all other produce should follow based on their sales capability.

If display space is expanded on the major produce items, it could increase sales and profit by 30 percent or more combined. It all depends on the items, location, price and marketing area.

Consider the following points when allocating your produce items:

  • Best performers — Study your data reports. Expand space on all the higher sales volume items.  
  • Slow sellers — Carry items that some customers still want even if they are low-volume, but decrease the display size to make room for the power sellers.
  • Idle items — You know what these are. They’re usually found on the very bottom of your data analysis report. Delete them or accept the shrink loss.
  • Profit generators — By all means, give these items more selling space. Every additional foot is supplementary profit dollars.
  • Advertised specials — Obviously, space should be expanded, since it will require more frequent stocking.
  • New trends — Watch for new item growth and consider more merchandising space. Notice the surge on kale. Recognize also how rapidly fresh-cut salads and fruit expanded by trending.
  • Seasonal adjustments — Scrutinize space allocation when changing over categories during the seasons. Set display size of spring-summer and fall-winter items according to their sales volume for those periods.

Keep in mind that the merchandising objective is to allow more space for your best-selling items in order for them to generate more sales and profit at a higher movement velocity for your produce bottom line.

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