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Author: John Howard
For US retailers, the current economic environment is far from business as usual. The magnitude and volatility of tariffs are driving up the cost of goods sold (COGS) and seizing up supply chains, creating unpredictability in both inventory availability and margins. The result is a squeeze on profitability that’s forcing retailers to re-examine every part of their operations – including how effectively they’re utilizing valuable, but expensive, in-store real estate.
Increasing profit per square foot becomes one of the most accessible levers for driving sustainable performance for those retailers with tools, processes and a clear strategic mandate in place.
While, as a retailer, you can’t control tariffs or global supply chain headwinds, you can control how you respond. By turning store space into a source of competitive advantage, US retailers can offset rising costs and maintain growth in a challenging climate.
For too long, store space has been allocated based on the art of retail, rules of thumb or outdated data analytics housed in excel spreadsheets. Retailers using Scalene’s Space Advisor change this by combining granular SKU-level performance metrics with predictive analytics to identify smarter, optimized space allocations. Retailers using Space Advisor see up to 8% sales and gross margin uplift.
Space Advisor enables space planners to identify which products are under-spaced (losing potential sales) and which are over-spaced (tying up valuable space with low commercial return). By optimizing space across every category, retailers can drive sales without increasing inventory costs, delivering a powerful competitive advantage when every penny matters. By driving more revenue from the same footprint, retailers can maintain or aspire to grow profitability even as input costs rise.
Tariffs are also disrupting product availability across the US, making it essential for you to be agile in how you plan and adjust space allocations. Space Advisor allows you to analyze and change space allocations to optimize for near term inventory availability, with reduced planning cycles and more confident decision-making. Furthermore, as potential price changes influence customer preferences that flow through to space productivity, having a current view on how to adjust space allows you to capture changing market demand.
This agility is particularly important and more challenging for large retail networks, where missing a space adjustment can produce a systematic misalignment that affects many stores and impacts overall business performance. Space Advisor provides store-specific recommendations at scale, allowing national and regional retailers to execute high-precision space planning quickly and consistently.
Curious to know how your store profitability can be improved?
We can give you an idea of what’s possible with an easily assembled data set.
Get in touch today.