The Strategic Use of Space by Retailers: A Perspective from Operations Management

A retailer's selling space is one of its more important assets. While there are a number of approaches that can be adopted to define the space that is allocated to both products and customers inside the store, it is argued that few approach the problem of space allocation from the point of view of the customer. Many approaches are of tactical rather than of strategic value. A number of space allocation methods are reviewed and an alternative perspective drawn from manufacturing industry, that of Operations Management, is discussed. An observation survey of retail practice is used to illustrate how concepts from Operations Management could be applied to retail space allocation. An example of a floor plan for a grocery store is used to illustrate how such concepts can produce a radically different approach to space allocation.