Store layout optimization

What is store layout optimization?

Store layout optimization is a retail concept which aims at improving store sales through store layout changes. Think of this as rearranging the store in a way that every product gets maximum attention from customers. It makes it easy for customers to find the right product without having to look for it. A day-to-day example of store layout optimization is grocery stores placing essential items at last, so you add more items to the cart.

Why does store layout optimization matter?

1 - Better arrangements mean more organized footfall and easily managed crowd, especially around peak hours. 2 - Customers find it easy to navigate and find products without frustration. 3 - Test, analyze, and use data to improve conversions.

Is store layout optimization the same as visual merchandising?

Store optimization and visual merchandising are similar concepts but done slightly differently and for different purposes. While layout optimization is about setting up the store layout, aisle, counter, and categories to make it easier for customers to navigate, visual merchandise is all about how a product is presented in the shelf.

Both concepts work hand-in-hand to promote sales and allow customers to see for themselves what they need to buy, in simplest way possible.

How to identify poor store layout?

There are ways you can recognize a poor store layout, something that’s affecting customer experience and sales. If you are noticing one or all signs below, then your store needs a layout optimization.

Lost sales opportunities: With high-value and high-sale potential products being stuck in cold, ignored zones, there will be lost sales opportunities and poor performance.

Uneven foot traffic: Some areas being over-crowded than others.

Frustrated customers: Customers often come across and ask questions about where to find a product. Higher retention rates, less cart value and shopping time, poor reviews from frustrated customers, and similar negative metrics.

Disorganized shelves and storage areas: A cluttered storage signals poor layout, which involves more time and energy into fixing rather than improving.

Getting started with store layout optimization

So you have identified gaps in store layout utilization. Here's how you can fix them – a quick retail manager’s guide to store layout optimization.

Start with an audit: Take a walk through the store, surveying every way like a customer. Ask questions like ‘can I find essentials easily?’ or 'what areas feel overcrowded or need improvement?’.

Collect essential data: With simple data collection tools like cameras and tracking sensors, start collecting footfall data. This will give you more insights into where they shop, what the hot and cold zones are, and more.

Connect sales with the footfall data: Now, you can compare the POS sales data with the collected footfall. This means plotting the sales of a particular time period with how many people walked in/present during that time. A simple dashboard can help you access this data automatically without having to measure it manually.

Note down your observations: The above insights will highlight the busiest hours, the most profitable hours, high, and low traffic zones. Based on this, you can make changes to the existing layout. For instance, moving a high-margin product to a busier zone or placing promotional displays near high-traffic paths.

AI to make things better: predictive and prescriptive powers can elevate your store layout, allowing you to make dynamic store layout changes with ease. This can even recommend the best product placement strategy for every store depending on its sales, footfall, and previous store layout changes made.

Foot traffic and store layout

Store layout plays a huge role in foot traffic. Store layout decides how a customer walks in and travels through the store. You can implement store layout optimization best practices. But foot traffic is essential for identifying the effectiveness of store layout, as it shows hot zones, cold zones, dwelling time, and more.

Here’s how you can measure foot traffic and use footfall analytics to improve store layout and sales.

1 - Track total visitors vs buyers using cameras and data from POS systems. If the ratio shows more visitors and less buyers, then the layout isn’t effective. 2 - Measure high traffic and low traffic zones, by mapping where customers go. 3 - Include dwell time to your retail store metrics. This is the average time customers spend before making a purchase. 4 - Connect footfall with sales data. You can use footfall analytics dashboards, which will integrate data from different systems to plot sales per zone vs. traffic per zone. 5 - Track the ‘before’ and ‘after’ results and identify if there is any uplift in sales.

Common mistakes to avoid in store layout changes

It's easier to get overwhelmed when it’s about changing something major in a large-scale retail store. Here are some points to avoid, which have been shared by data-driven retail managers.

Ignoring footfall data: Many stores perform layout changes only based on gut feeling and aesthetics, rather than using heatmaps and footfall data. This will not reveal where customers dwell, where they stay, and what makes them leave.

Not connecting traffic to sales: Measuring data separately but not connecting one to another will lead to siloed result

Treating all stores alike: Every store is unique, hence, copy-pasting layouts across branches without considering local customer behavior will not be effective enough.

Ignoring tech-enabled layout optimization: Relying only on manual counts or outdated CCTV, which could lead to missing blindspots and hidden patterns.