the better retailing blog
The rule of space to cost
by Steve Denham on 19 July, 2010
To help me measure how much a product is costing us in occupation and running costs I have designed myself a ruler that shows me this. My challenge is driven by my need to understand which products are working for us and which are failing. The solution I wrote about here requires me to check how much shelf space each product takes up. I then calculate the cost of that space per week using our EPoS system, which is able to provide line-by-line profit performance as a ten-week average weekly figure.
I have realised that I need to simplify the process and with the use of a spreadsheet and desktop publishing program I have created my rule. As we have fixtures with different shelving profiles my rule has costings for between 5 and 10 shelves. I can now instantly check the weekly cost of the space for each product against how much profit it achieves.
I think that I now have the tool kit to help make our confectionery space more profitable. Time will tell just how much more successful!
| Bay Profile | Weekly cost per shelf | 5cm | 10cm | 15cm | 20cm | 25cm |
| 5.00 | £7.00 | £0.35 | £0.70 | £1.05 | £1.40 | £1.75 |
| 6.00 | £5.83 | £0.29 | £0.58 | £0.88 | £1.17 | £1.46 |
| 7.00 | £5.00 | £0.25 | £0.50 | £0.75 | £1.00 | £1.25 |
| 8.00 | £4.38 | £0.22 | £0.44 | £0.66 | £0.88 | £1.09 |
| 9.00 | £3.89 | £0.19 | £0.39 | £0.58 | £0.78 | £0.97 |
| 10.00 | £3.50 | £0.18 | £0.35 | £0.53 | £0.70 | £0.88 |
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[...] performers and therefore I need to understand how I should identify these products.I have produced my space/cost rule and have now measured each of the products in our range and compared their weekly cost against [...]