In a previous life, I owned 3 bookstores. The stores were made up sales wise by 1/3 games, 1/3 comics and 1/3 new and used books. But in linear space it was quite different. Books make up 90% of the space. As a matter of fact I had over 70,000 books in just the main store alone. Games and comics made up the other 10%. So one could ask, why all the space or books that made up the same amount of sales as the others? Because I had learned from a wise man years before that some departments or categories need more variety or space than others do. In other words, if you don’t have enough space dedicated to books, you aren’t a book store.
Its the same with many of the departments or categories in retail. I will relate the story that I heard from a senior member of a very large and very old retail company in Canada about shoes.
In the 1960s and 70s a very large department store chain was the key place to go for shoes. They sold more than 60% of all the shoes sold in their national market at the time.
An analyst realized that almost 85% of the sales were done in only 2 brands that made up less than 10% of the space that was currently allotted to shoes at the time. When this was brought to the attention of the personnel in charge, they determined to cut over 75% of the space out of shoes. Keep the brands that sold and increase the space they were being given. Then they would take the extra space and designate it to different departments. Within 3 years, the department store chain had lost its market share and struggled to be relevant ever again in the shoe category.
What happened? They were no longer in the shoe business. When consumers started demanding assortment, it opened the door for a flood of new shoe store chains to come in. And they brought assortment, price and service.
The learning is that we need to understand most of the time what kind of a category or department you have. Is it just about a commodity such as bathroom tissue, or is it about meeting the demand of assortment such as baking? As we work through our categories and department assortments, we need to determine the damage that can sometimes come from too little assortment in assortment or variety driven categories vs the commodity categories. Some people want chocolate cake and some people want swiss chocolate cake and some people want devil’s food cake. We need to understand what the needs and the buy cycles are of the consumer and ensure that we are meeting their needs as much as they are meeting the needs of the company. Because if we are too far removed from the consumer, we begin to make mistakes that could cost us market share just like the shoes.