Space planning 2001�� the future is now

Discount retailers use space plan fling as a tactical, visual merchandising tool. If you're like most retailers, you probably began with hand-drawn planograms and have since moved on to a PC-based application. If your company is still at this stage, you know that the output of these planogramming systems is inflexible and difficult to distribute and update.

When the movie "2001: A Space Odyssey" came out, the real 2001 was a long way off-now it's just around the corner. In the mid-1980s, integrated space and merchandise planning was a long way off-now that, too, is just around the corner. The future of space planning is now. Fundamental technology advances have raised space planning above its current tactical status to real, value-added strategic analysis. These new capabilities leverage sophisticated relational database technologies, data warehouses and marts, enterprise and client server systems, and the Internet.

These new tools tie space planning directly to the merchandising, purchasing, replenishment and operational activities of the company. They also handle the unique requirements of fashion apparel in addition to traditional hard lines. The end result is an integrated merchandise planning environment that is not just a static planogram- or a picture of where to put products on shelves. Instead, it is a "space analysis plan," part of a continuous loop that feeds information back to buyers, financial managers and others in the planning process.

Interactive space planning tied into merchandise planning helps discount store planners determine how the products they buy will flow through their stores and return the highest profit margins. The space plan is only one of the results of the planning process; the real value is found in optimizing the profitability of the product mix, tailored to each store, through the integration of the merchandise financial plan, assortment plan, micro-marketing, space and inventory plan.

Some of the benefits of integrated space and merchandise planning for the new millennium include:

* Ensuring that retailers have the optimal space and fixtures leading to increased inventory turns and higher profits. In addition, especially for fashion items, retailers will know how much product to purchase before they make "the buy" so it's on the selling floor and not stored in a back room during the prime season.

* Identifying differences in store size, traits, demographics and sales history to develop assortment mixes that are most appropriate for the consumers in each market.

* Driving allocation or replenishment schedules based on what the selling capacities are for any given store. In other words, knowing which products will be displayed in which quantities at which stores during which time periods. There is no sense in shipping product to stores that can't display them, not to mention the cost and lost opportunity of interstore transfers to rebalance merchandise.

* Tightly integrating planning processes with Internet-based information systems to enable users across the enterprise to collaborate with their suppliers. This use of the latest technology leverages the information infrastructure that many companies will require in order to remain competitive.

In addition to helping the planning process, integrated merchandise and space planning is critical to healthy store operations. If there is no physical room for the product, or the sizes or colors are incorrect, there is virtually nothing that can be done to salvage bad merchandising decisions once they have been made. A plan that can't be implemented is not a plan at all.

By using space planning tools that take advantage of not only the best technologies but also innovative merchandise planning processes, retailers can gain the highest returns and position themselves for growth in the year 2000, 2001 and beyond.

COPYRIGHT 1999 Lebhar-Friedman, Inc.
COPYRIGHT 2000 Gale Group