One of the most fundamental tools retail brands use to understand their marketplace positioning is point-of-sale data. From the moment a shopper places your product in their physical or online cart to the time they provide payment, the data you collect provides valuable information you can use to become more efficient and competitive.
What many retailers don’t realize is that they can leverage POS data in many different areas of a business. Take retail space utilization as one example. Here is how your retail business can use POS data to radically improve its retail space utilization.
Challenges With Retail Space Utilization
Your retail store layout and space utilization has a lot to do with your sales and bottom-line results. Your space should be designed so shoppers don’t have to work too hard to find what they need. It should also be appealing and make it easy for your business to operate. However, many retailers face a number of challenges with retail space utilization.
1. Choosing the Wrong Floorplan
The wrong floorplan can make your retail space challenging to navigate, which can be frustrating and confusing for customers. If people have to struggle to find products, they’ll have less time to browse for additional merchandise and may decide to look elsewhere.
2. Having Too Little or Too Much Space
Retail space must be functional as well aesthetically pleasing. Having too little space to display your most popular items or too much space for products that don’t sell at all can impact the customer experience.
3. Lack of Proper Flow and Pathways
Your customer’s path through your store shouldn’t be random. Instead, it should be a carefully-designed flow that allows you to maximize your product exposure. If you haven’t given any thought to this flow, you’re likely experiencing cluttered pathways and bottlenecks in your business, particularly during peak hours and holiday seasons.
4. Experiencing Overstocking, Stockouts, or Shrinkage
Retailers live and die by their inventory. A common challenge many retailers face is having the ideal amount of a product on the shelves at any given time. If you have too much of a product, you have to find someplace to store it; too little, you are losing sales and underutilizing your space; and theft or spoilage is a completely different, yet costly, problem.
What is POS Data?
As a retailer, you’ll likely have access to four major types of point-of-sale data, which are defined by their origin and focus. For example, most POS data originates from a single retail chain, like Kroger or Walmart. This is often referred to as retailer directed data. Businesses seeking a broader picture of their market might focus on syndicated data, which contains metrics from multiple retailers. This data comes from companies like Nielsen or the National Retail Federation.
Instead of focusing on source, POS data can also be defined in other ways. For example, some data looks at consumer behavior or store-level data. Brands that want to better understand consumer behavior may look more closely at retailer direct or syndicated shopper data.
Improving Retail Space Utilization Using POS Data
Tracking POS data equips you with more insights to inform the decisions you make as you run your retail operation. The more data you have to interpret, the better equipped you’ll be to identify patterns, measure your store’s performance, and be more efficient with your operations. Here are several ways you can use POS data to improve your retail space utilization:
1. Peak Occupancy
Peak occupancy is a critical metric that indicates the days of the week and times of the day your retail space is the busiest. You can track peak occupancy for individual areas of your space or the entire building to ensure you have enough capacity to meet demand.
If demand during peak occupancy is high enough, you may wish to make some adjustments in your space utilization. For example, you can implement a more natural flow in your store design to minimize customer bottlenecks. Offer clear signage so customers can easily find the products they want. And consider using mobile checkout stations to optimize the checkout process.
2. Product Placement
If your most popular products are hidden or difficult to reach, it’s going to create bottlenecks or impact sales. Another way POS data improves retail space is to optimize product placement.
For example, you can track which of your products are frequently purchased together so you can place those items near each other in the store. You can also analyze your sales per square foot of space to determine if some sections, like shoes or produce, are performing better than others, like eveningwear or frozen foods. This data can signal an opportunity to expand or contract certain physical spaces to make them more efficient.
3. Inventory Management
Effective inventory management is the foundation of any retail business, and your POS data can help you get it right. What does this have to do with space utilization? A lot, surprisingly. High-turnover items should be allocated enough space and placed in high-traffic areas, while you might even consider removing slow movers from your product line to save space and costs.
POS metrics you can track include inventory turnover rates, sell-through rates during promotions, and days of supply for perishables, if applicable. Also, pay particular attention to POS data for holiday-specific and seasonal items so you can better plan for future dates.
4. Shrinkage Reduction
If your retail business is losing money due to shrinkage, it may be a sign that you haven’t optimized your space properly. You can use POS data to monitor shrinkage by departments and then narrow it down to individual products.
Are perishable items spoiling because no one can find them or because they simply aren’t popular? If you are losing items due to theft or inventory management errors, you can relocate items, add RFID tags, or consider using additional technology solutions to improve inventory accuracy.
Every action your customers take impacts your business in some way, good or bad. Optimizing things like inventory control, store visits, space utilization, and the customer experience can help your retail business improve its overall operations and bottom-line results. Fortunately, POS data provides your business with valuable insights, helping you make more informed and profitable business decisions.
Further Reading:
While we don’t normally send our readers elsewhere for more information, this topic is uniquely compelling enough that we recommend three additional articles about our mobile retail carts
- What Are the Most Effective Ways to Manage Retail Foot Traffic?
- Maximizing Retail Efficiency – Rethinking Mobile POS Systems.
- Strategies for Managing Increased Retail Traffic
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