|Data Management: Reset for refreshment|
|Written by Erik Ernstrom|
|Wednesday, 04 November 2015 04:25 PM EST|
Understanding your sales by department can help your store grow
You’re almost there! Your store is packed with merchandise and the crowds are coming. But before we know it, the craziness will be behind us. What then? Obviously some deep breaths and a nap. But then how do we get ready for 2016? And how can data help?
I recommend that you evaluate the space you have dedicated to each department in your store. Consider the last time you truly reset your floor plan. Have you moved shelves around in the last year? Two years? Ever? Well, maybe this is the year for a refreshing change. Let’s walk through some steps to help you make these decisions.
Step One: Pull sales by department from either your POS system or your accounting software, then calculate each department’s percentage of your store’s total sales. For example, if you did $75,000 in book sales and your total sales for the year was $300,000, books would account for 25 percent of sales. Now look around your store and do a gut check compared to each of your percentages. Do you appear to be dedicating the right amount of floor space to each department based on the sales each department is generating?
Step Two: Calculate the floor space per department to compare with your sales. The gut check you just did is important because it will probably point you in the direction you need to start, but using an actual number will help you see the big picture. This one will take more time, but it’s necessary. The easiest way to do this is to take a tape measure and calculate with either square footage or linear feet per department.
Whichever method you choose, do it for the entire store. Then, just as you did for sales, calculate each department’s percentage of your total floor space. Taking the same example as above, we’ll look at books. If you determined that books take up 300 square feet, and your total floor space is 3,000 square feet, books comprise 10 percent of your selling space.
Now ponder this: Are you OK with only giving 10 percent of your floor space to books even though they are generating 25 percent of your sales? What if it were the other way around? After pulling all these numbers in, what if you see that your gift department is taking up 45 percent of your floor space, but only producing 22 percent of sales? Are you willing to give up twice as much space as gifts are earning when you might be able to make some adjustments and bring better balance to your store?
These are the questions you need to wrestle with after you see what your numbers are. Don’t try to make it perfect. You can’t give exactly the same calculated shelf space that you generate in sales. Some departments, like gifts, require more space due to the way they are displayed. Books can be shelved more efficiently than Bible covers. But if an area of your store is growing, give it the space it’s earning. If a department has slowing sales, maybe it’s time to reduce its footprint.
Be sure to rely on your store’s numbers rather than your instincts. I know owners who have made some drastic changes to their inventory balance based on a fear of physical book sales shifting to e-books. That depletion hasn’t happened as it did with music, but inventories have been slashed in a gut reaction as opposed to what the numbers showed. But don’t avoid your instincts. Your store is still open because you continue to make wise decisions. But use these calculations to double-check.
Step Three: If you’re ready to take the plunge, do these same calculations within each department. Determine your total linear feet for books, then the linear feet for each category within books and pull sales numbers by category to compare. Do devotionals deserve more shelf space? You might think fiction is shrinking in sales, but is it actually flat in your store and needing to remain as is? What about Christian Living? This category tends to be the graveyard of Christian books. Have you let it grow too big? If you do this with each department, you’ll find some key nuggets of growth you have missed before. Take advantage of this new information and expand the product areas that are growing.
Have fun refreshing your store! Hopefully it will lead to improved sales in 2016. But right now, even though it’s the craziest time of the year, remember it’s also the best. The number of life-changing products that are put into the hands of customers and the level of giving that is focused around Christ-centered products is significant.
Regardless of how stressful the Christmas season gets, remember why you open your doors each day. Authors, publishers, suppliers, distributors and retailers—each in their own role—are changing lives with every piece of merchandise that goes out your store’s front door. We are blessed to work in an industry that focuses more on greater things than the bottom line. Thank the Lord that we get to be a part of His work each and every day.
Erik Ernstrom has worked in the Christian products industry for 24 years. He started as a receiver in the backroom of an independently owned Christian retail store, eventually managing that store. He has also managed a customer service department that served 300 Christian retail stores. He now works for The Parable Group, managing the business analytics department that yielded nearly 100 million customer contacts last year.