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Retailers today face unrelenting pressure: deliver consistently great, personalised customer experiences, protect margins, and move faster and more efficiently than competitors. The instinctive response is to focus on assortment, fine-tuning ranges, chasing new products, negotiating with suppliers, and curating the “perfect” mix.
It feels like the right starting point. After all, retail is all about connecting consumer need with products on the shelf.
But Scalene’s work in Retail Space Intelligence shows the real unlock isn’t necessarily assortment – it’s space.
Space is a controllable, flexible asset that retailers already have. It can be adjusted relatively quickly, locally, and with immediate impact, without the long lead times and supply chain complexity of assortment changes. Space, when optimised for productivity, drives topline benefits through increased customer sales, and improves margins through efficiency gains.
Put simply: space-first strategies deliver faster performance gains and elevate customer experience, while maximising the value of existing assortments.
Further, any assortment work currently underway can carry on in parallel, with the new assortment landing into the right amount of space in each store.
Read on to understand why space can come before assortment changes, the tangible results space optimisation can deliver, and how retailers can embed space-first thinking into their operating model.
1. A misconception: ‘Assortment has to come first’
Retail has always been product-centric. Merchandising teams are organised around product categories, supply chains are optimised for SKUs, marketing promotes product offers and performance metrics track item-level sales. So, when performance lags, the instinct is to start with the range: reviewing SKUs, resetting planograms, renegotiating terms.
The problem? Major assortment mistakes are rare. Most assortments are already relatively strong. Assortment changes alone don’t shift the dial on performance. Meanwhile, space allocation is often overlooked, standardised, or misaligned with true customer demand and sales velocity. Best-sellers run out of stock, underperformers get too much shelf space, and stores miss opportunities to meet customer needs.
2. Why space can come first
a. Localisation
By flexing shelf allocation toward local preferences, retailers can serve neighbourhood demand without new supplier agreements or supply chain reengineering. Tilting space allocation towards local needs has an immediate positive impact on customer satisfaction and loyalty as well as basket size and frequency of store visits. In addition, optimal space allocations support better availability of popular categories, strong stock turns and lower waste and/or markdowns to move unsold products.
b. Space moves faster than assortment
Assortment change can drag. Supplier negotiations, production schedules, distribution resets, IT updates – there are lots of dependencies, and implementing change can take months at best, or sometime a year or more. Space change, on the other hand, moves in days. Modestly resizing category space, even in just a single department, can unlock sales, profit, store efficiencies and customer satisfaction in weeks, not months.
c. Assortment is already managed – space, not so much
Category management is a central, and mature function in retail. Range reviews are embedded into retail calendars. In contrast, until recently the ability to understand how your space is performing and analyse options to improve productivity was complex and expensive. Macro space plans would often sit static, for years. It’s one reason why modest changes to space allocation consistently deliver outsized gains.
Scalene clients typically see 3-8% improvement from space optimisation versus 2-4% from assortment changes. Some stores, particularly those not touched for years, see double digit sales and margin growth from a moderate space reset.
3. The impact: numbers that matter
The data is clear:
And space change can deliver these results faster, with fewer dependencies, and across each and every store in the network.
4. Strategic implications for retailers
Retailers who put space first unlock a new lever for growth, one that complements, not replaces, assortment planning and management.
What are the factors that a retailer needs to get right to unlock hidden gains through optimising for space productivity?
Culture:
• Treat space as a strategic asset to be optimised, and space planning as a critical discipline that is up there alongside category management and pricing.
• Be data driven and customer centric in planning decisions
Tools:
• Deploy intelligent tools, like Scalene Space Advisor, that provide insights and information enabling high quality space allocation decisions
• Ensure operational software supports implementation of optimised space plans
People:
• Build internal capability and capacity – range and space planning through to execution
• Leverage external subject matter experts to supplement internal teams’ capacity to deliver
Processes:
• Enable effective decision-making and cross-functional collaboration
• Support efficiency and agility
• Quick, accurate implementation of space change
The most successful retailers don’t win by endlessly chasing the perfect range, they win by getting the most out of the range they have. Optimising space for better productivity in each store is the fastest, most flexible lever to do exactly that.
Get in touch to discuss how we can help improve your business performance, store by store.