Q: My store has been around for a long time and I fear that some of our products have become old-fashioned or even obsolete. What’s the best way of going about an in-store trend analysis by classification? I would like to open up some floor space and budget for trendier products.
Steve Pruitt: This is an important question, but a complicated one. The first thing you need to do is perform a vendor analysis by category to figure out which vendors are driving profits and which aren’t.
Then you need to begin to understand your category performance per square foot. This will give you an idea of the dollars generated per square foot of floor space for each category. To take this further, you can analyze how much each vendor contributes to a category per square foot. Doing these types of analyses can help you uncover what’s working and what’s not.
So, for example, if a category such as dress shirts contributes $400 per square foot, but a single dress shirt vendor only contributes $200 per square foot, that vendor is under-performing compared to your $400 per square foot benchmark. And if a certain category only contributes $200 per square foot compared to an average of $400 to $500 for other categories, it’s time to consider switching out that under-performing product category and this is where you have the opportunity to bring in new, trendier items.
This kind of analysis is crucial if you want to keep driving sales, but I understand that it may be a little tricky to figure out exactly how to go about it. So, if you have any questions, please give Blacks a call and we can walk you through it.
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