Post No.03 in the weekly newsletter series:
‘52 Steps to the Perfect Shop!’
You too can have ‘The Perfect Shop’ by this time next year!
If you want your shops to be commercially successful then you need to consider very carefully, right at the beginning of the process how much product you are going to put in your shop!
But the essential parameter to consider is not the total number of options but the option density. The option density is measured in options per sqm.
Selling in a shop is 4-dimensional. Making a profit will depend on the ‘value of product in every square metre block of space’ and ‘how quickly you keep selling that block of space!’
In fact, of course, how quickly you keep selling each sqm block of space! This is the ‘rate of sale!’
The option density (options/sqm) clearly defines how much product, and product value, in each sqm block of store space. However it also defines how quickly that product will sell.
Because options/sqm is not just a quantitative thing, it dictates how the product looks, and how the product looks defines how quickly it will be sold. (assuming it is an attractive product and value proposition of course.)
For example, too higher density and the displays are overcrowded and bursting. The customer finds this confusing and intimidating. The rate of sale is slow.
And if the option density is too low then the shop looks dull and boring and even very sellable products look unappealing.
Customers also tend not to buy more of exactly the same product so too low a density actually equals too little choice. So even if the products there sell well the overall density means the space will never realise the sales productivity that it needs to to make the shop commercially viable.
Options/sqm x Rate of sale/sqm = Sales productivity (£/sqmetre)
If you don’t make enough £/sqm then your shop will fail. It will close because you cannot cover your costs. And options/sqm & option value/sqm are at the heart of success and failure.
Of course, within this model there are many nuances that will define what the correct options/sqm figure should be. Factors such as average price, size of shop, customer demographic, frequency of visit and stock turnover will all help to define what the magic number should be for your shop.
But that’s a discussion for our next newsletter…see you soon!
’52 Steps to the Perfect Shop!’
For everyone looking to improve their physical shops, or thinking of opening their first pop-up or permanent shop.
The weekly newsletters, and the 10 content modules they feature, have been created from my experiences of opening hundreds of shops, of all different sizes, situated across the world, selling just about everything there is to sell.
Every week we explore the sequential process of physical shop development to help you deliver your perfect shop.