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The Importance of Location Analytics in Supporting the Space Planning Capability

Space planning is a key component of the merchandising process. At Esri, we consider space planning in merchandising as those capabilities that support the allocation of space and placement of products in the retailer’s stores.
Best-in-class retailers tightly integrate space planning with their assortment planning and fulfillment capabilities. The amount of space given to a category or product drives the shelf stock by store, which is used, along with demand forecasts and available inventory, to calculate need for fulfillment and ordering.
There are two key capabilities that space planning teams in merchandising support: macro space and micro space.
Macro Space Planning                                                                                                                
Retailers typically will create macro space plans that describe the layout of their stores at the category level. This process is hierarchical in nature; store planners and merchants tend to start at the total store and divide up available store space into by merchandise divisions or departments. They will then further break down their space into categories.
For example, in a big box retailer, a department might be Pet Care. Categories within pet care might be dog food, cat food, cat litter, small animal and pet beds, leashes and accessories. Store planning teams will determine the total amount of store footage to allocate to Pets, and to each category. Considerations will be store performance by category, aisle and fixture configuration and the relationship between highly trafficked and less trafficked store locations.
Micro Space Planning
Once the department and category space allocations have been made the micro-space team takes over. Also called planogramming, micro space planning is the process of creating fixture-specific schematics that store merchandisers use for seasonal and new product sets in their stores. Planograms describe the number of facings a given product might have on a shelf, how many items to put on the shelf, what signage is needed, what shelf labels are needed, and where to place them.
How Esri Can Support Space Planning
One of the key strategies that brick-and-mortar retailers are trying to solve today is localization, how to make their individual stores more relevant to the communities and neighborhoods they serve. To accomplish this, retailers need to intersect attributes and data about customers, products and location in order to create a full understanding of who is shopping in their stores and, just as importantly, who is not. Being able to effectively leverage this data enables retailers to more successfully engage and retain their existing customers while creating assortments or marketing messages to reach new customers and grow market share by leveraging their existing investments in store square footage.

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