Neglected Backroom Space is Costing Retailers

Retailers are shooting themselves in the foot by failing to optimize the design of their backroom space.

Many retailers pay little to no attention to the optimal size and shape of their backroom space and it’s costing them more revenue than they might expect.

If your backroom space is too small, it’s likely you’ll experience more cases of stock supply not meeting customer demand, costing you sales.

On the other hand if you have too much spare stock in an oversized backroom, you could end up counting the cost of wasted stock, particularly if you’re storing perishable items.

The increased cost of labor and inventory holding in oversized backrooms should also be considered, as should the potential for poorer customer service when staff have to deal with congested backroom space. Systems like boltless shelving allow you to organize your backroom easily and efficiently.

How much backroom space do you need for maximum profitability?

A 2017 study published in Supply Chain Quarterly, which aimed to measure the relationship between backroom space and store profitability, concluded that the optimal amount of backroom space for a 1,500 square foot store was around 200 square feet (13%).

Profitability began to stagnate at this proportion, and would start to drop at around 500 square feet (33%), which indicates that this is the point where front-of-store operations begin to suffer.

Of course, the exact size of your backroom space depends on a variety of factors. If you’re in the food industry, it’s likely you’ll be stocking perishable items and that your backroom area will also serve as a production zone. This will have a tremendous impact on the optimal backroom size for your business. Consider a boltless system to see all your inventory with ease, minimizing waste and making the most of your backroom’s size.

The growing trend for retailers using their backroom space as to stock online orders should also be considered. This space used to be considered solely as a place for overflow of offline stock, but this is rapidly changing. As e-commerce becomes more and more integral into our lives and the success of a retailer, the untapped potential for backroom space will have to be realized.

It’s likely we’ll see more innovative approaches to how this space is utilized by retailers in the near future. Perhaps, it will soon be common for multiple stores to utilize the same backroom space. Storage solutions like boltless steel shelving make storage of your supplies and inventory simple and effective.

More research is needed on the overall impact of backroom space sizes, but at a time when online sales and omnichannel operations are redefining retail operations, it’s arguably more important to consider this area of your commercial property than ever.