The current controversy ref retailers’ advance booking of commercial income and its impact on profit forecasts will be the subject of increasing press coverage in the coming months, especially as other major retailers feel the need to reassess and explain how their procedures differ…
In the meantime, Shopper-scientist Herb Sorensen, in his work The Problem: "Parked" Capital, and his use of shopper-density maps of retail stores, questions retailers’ use of large space.
The above extract is an accurate map of the time shoppers spend in the store. All those blue, and especially the dark blue areas, represent what he calls ‘parked capital’, defined as money tied up in real estate and inventory.
The data and map above are relevant to both inefficient use of floor space capital, but are also directly related to the massive unmoving inventory on most stores' shelves.
Sorensen goes on to suggest that the building of larger and larger stores has been driven more by the desire to offer more inventory - requiring more space - on behalf of the brand suppliers, who are paying for the space and other marketing services, than consumer need.
In other words, large space is NOT needed to accommodate the demands of the crowds of shoppers.
If this is the case, then following the UK's ‘re-audit’ of Commercial Income, redundant space may not be the only casualty…
Hat-tip to Mike Anthony for the pointer
1 comment:
Hi Brian,
What is interesting is that the commercial income game has made this possible. A reliance on fees and payments from suppliers, rather than returns on sales, is what has distracted retailers from their core job.
If brands start reducing commercial income the whole house of cards could come down faster than expected.
Cheers
Mike
(PS - thanks for the hat-tip!)
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