A new retail category is worth the floor space when it solves a real customer need and produces enough economic contribution to justify the inventory, labor, and opportunity cost of the space.
Measure more than sales
- gross-profit dollars
- sell-through
- inventory aging
- reorder frequency
- staff time required
- customer requests and utility
Compare against the alternative
Floor space always has an opportunity cost. Compare the new category with the merchandise, storage, or open space it replaces using the same period and financial logic.
Protect the test from poor execution
A weak location, incomplete assortment, or repeated stockouts can make a viable category look bad. Before removing it, confirm that the store gave the test a reasonable chance to function.
Use a minimum performance rule
Define in advance what would justify continuation, expansion, a mix change, or removal. That keeps the decision from being driven only by how attractive the display looks.
Continue: Independent Retail Growth Through Small-Footprint Categories.