inside a fashion store

Category space & store size optimisation

We identified profit opportunity totalling more than AU$50m.

The challenge

The client – a leading Australian department store chain – came to us with two key questions: What is the optimal allocation of department & category space by store (on current or future store space)? And, to guide space handback negotiations, what total size for each store should be targeted for optimal profitability?

The solution

Our first step was to group stores into clusters that reflected distinct customer groups, markets & store types, each with differing category demand patterns.

We built a category space optimisation model, which identified significant opportunities to move space from lower to higher productivity areas across and within departments.

We assessed the relationship between space costs & margin improvement opportunity for each store, which identified potential for double-digit percentage space handbacks.

Lastly, we modelled optimal use of space for a five-year future scenario to account for margin forecasts & rental projections.

The results

We identified profit opportunity totaling more than AU$50m through space-related cost reductions & gross profit optimisation from category resets.

Share this post

Share on linkedin
Share on facebook
Share on twitter
Share on email