Space Allocation in Retail Store by zwg42181

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									              XYZ COUNTRY STORE, INC.

   PURPOSE. The purpose of this Standard Procedure is to ensure the store is utilizing
    prime real estate both to invite potential customers to shop at XYZ’s Country Store,
    Inc. and, once potential customer are in the store, to showcase products in a manner to
    maximize customer spending. In short, both merchandising both the store and the
    products offered.

      o Store Image
      o Store Layout Management
            You have to remember that you are selling discretionary merchandise,
               thus you have to sell theater and excitement. Simply put, the store is
               where the action is.
            The two primary objectives around which all activities, functions and
               goals in the store revolve are Store Image and Space Productivity.
                    Store Image is the overall perception the consumer has of the
                       store’s environment.
                    Space Productivity represents how effectively the retailer
                       utilizes its space and is usually measured by sales per square
                       foot of selling space or gross margin dollar per square foot of
                       selling space.

       o Elements of the Store Environment
             First decision is how to allocate the scarce resource, space.
             The Store Layout shows the location of all merchandise departments
               and the placement of circulation aisles to allow customers to moved
               through the store.
             Merchandise Presentation must be exciting so as to catch and hold
               customers’ attention, be easy to understand and encourage shoppers to
               browse, evaluate and buy. Therefore, Presentation is a critical factor in
               the selling power of the store and has a significant effect on the store
             Effective store layout and design, including the storefront, creates a
               comfortable environment that enhances the merchandise and entices
               shoppers to browse and buy.
             In-store graphics such as art, photography and signs form an important
               visual communication link between the store and its customers by
               providing much needed information on how to shop in the store. For
               instance, you should mark each department with graphics documenting
               the departments name and what is housed in each aisle.
             You must remember that most consumers think right handed, thus the
               most valuable retail space of the store is the right hand side. 90% of all
               consumers walk to the right of the store. This is where your high
               margin merchandise should be housed. Move the cash wrap to the left
               of the front door when you walk in.

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                   When stocking like inventory items together, you want to stock
                    the inventory items with the higher margin to the right of the
                    inventory item with the lower margin. For instance, one tackle
                    box provides you a margin of 10%, while the other tackle box
                    provides you a margin of 90%, house the 90% tackle box to the
                    right of the 10% tackle box.
           End caps, the point-of-purchase displays at the end of each aisle and
            fixture are very important. You must remember the 25-25-50 rule.
                 25 percent of all endcaps should be advertised sale merchandise
                    that the customer will seek out
                 25 percent should be unadvertised sale items that will cause the
                    customer to be alert when looking at endcaps
                 50 percent should be regular-priced seasonal or impulse

                Visual                                     Store Planning:
                                                           Space Allocation
             Retail Identity                               Layout
             Graphics                                      Circulation
             POS Signage

                                    STORE IMAGE

              Store Design:                              Merchandising:
                                                           Fixture Selection
             Exterior Design                               Merchandise
             Ambiance                                         Presentation
             Lighting                                      Visual

      Two primary objectives of creating the desired store image and
        increasing space productivity amount to a simple description of the
        three basic tasks of retailing:
             Get customers into the store, MARKET IMAGE

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               Once they are in the store, convert them into customers buying
                merchandise, SPACE PRODUCTIVITY,
               Do this in the most efficient manner possible.

            The starting point of creating a store image is, of, course, the
              merchandise carried in the store, along with
                  o the retailer’s promotional activities
                  o customer service
                  o cleanliness
                  o sales force
                  o other important criteria are clearly labeled prices,
                      accurate and pleasant checkouts and well
                      stocked/organized shelves.
            Advertising and promotional activities leave an impression on
              your customers. Whether it is a positive or negative impression
              is up to you. Advertising and promotional activities get
              customers into the store and convince them to make a purchase.
              You need to remember that the entire store layout and image is
              built on the simple premise that shopping is a social experience.
              To work here your employees should know the products, be
              able to effectively communicate the product knowledge and
              demonstrate the products use.
                  o For instance, you should have Special Events to
                      demonstrate or kick off new product lines, training
                      session, hunter’s night, archery night, competitions, etc.
                      Make one event per month to draw the customer’s into
                      the store. Do not overload the customers with various
                      interests. Goal is to target one customer four times per
                  o Conduct a Customer Satisfaction Index (CSI) survey
                      regarding the most valuable and least valuable attributes
                      of the store to the customer, customer suggestions, etc.
            Store LOGO evokes your image. Influences are:
                  o Name (image)
                  o Color should suggest Quality
                  o Building should be masculine in appearance
                  o Windows to showcase “Hot” new merchandise
                  o Uniforms for all sales associates.

             The store’s image attracts the customers; however, when
              customers are visiting the store, the retailer must also convince
              them to make a purchase. A store environment must increase
              its space productivity, a goal that is summarized in a simple but

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                powerful truism in retailing: The more merchandise customers
                are exposed to that is presented in an orderly manner, the more
                they tend to buy.
                    o The typical shopper goes into only two to three
                        shopping areas per trip. You must encourage the
                        customer to flow through the entire store. This ties back
                        to how important in-store advertising and displays must
                        tell a customer what is happening in other departments
                        and encourage customers to visit to those areas.
                        Remember not to overload the store with too much
                        merchandise in every single nook and cranny of the
               One factor that detracts from space productivity is shrinkage, or
                the loss of merchandise through theft, loss, and damage.
                    o Remember when a store sells an item for $1.29; it earns
                        only a small percentage f that sale, perhaps ranging from
                        15 to 60 cents. When that item is stolen, lost or
                        damaged, however, the store loses the cost of that item
                        $1.29 – for example, 69 cents in the case of the $1.29
                        item – and this loss is deducted from the store’s overall
                        sales. Shrinkage ranges from 1 to 4 percent of retail
                        sales. Remember high shrinkage alone can result in
                        profit or a loss, because very few retailers make more
                        than 4%.

            Store planning is like writing a book. Store’s layout and design
              is like the organization of chapters, sections, and subsections of
              a book. Without these, the words and thoughts would me one
              long stream of words. These streams would be difficult and
              boring to read.
                   o Signs and graphics are similar to the headings and
                       punctuation, which give you cues to understanding the
                       organization of the book and the merchandise in a store.
                   o The photo’s, exhibits, charts and boxes are visual
                       displays and focal points, where merchandise is pulled
                       off the shelf or racks and displayed in theatrical
                            Successful retailers use these settings to break up
                               the store space, illustrate merchandise
                               opportunities in the store and visually
                               demonstrate how certain merchandise goes
                               together or can work in the consumers life.
                            All cues in a store must work subliminally to
                               organize the merchandise and guide shoppers
                               effortlessly through the store. Remember, when

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                            shoppers go into a store and they are confused,
                            they will become frustrated. The more frustrated
                            they get, the more likely they will walk out of
                            the store without purchasing something. It is
                            easier to sell to a customer currently in the store
                            versus trying to get the customer into the store.
                           Stores that seem to have it really together is easy
                            to shop, fun, and exciting; merchandise is easy to
                            understand and the sales associates are friendly.

             Floor plan indicates where merchandise and customer service
             departments are located, how customers circulate through the
             store and how much space is dedicated to each department. The
             floor plan is based around predicted demands of the store’s
             targeted customer, serves as the backbone of the store and is the
             fundamental structure around which every other element of the
             store environment takes shape.
                 o Merchandise must be placed in key strategic locations.
                     For instance, like items with like items (tackle box and
                     lure’s), and complimentary items (hat, t-shirt and
                 o Positioning tends to make customers more alert as to
                     what is available, and retailers well know that 0% of all
                     purchases are impulse buys. Is your store set up for
                     impulse shopping?
                 o Be careful with stackouts, pallets of merchandise set on
                     the floor. Yes these improve short-run sales of the
                     featured product, but they have a negative impact may
                     offset these marginal sales.
                 o “Butt-brush” is whereby female shoppers don’t like to
                     be touched by passersby. Retailers may lose sales when
                     shoppers ignore certain aisles.

            Space allocation is first determined by analyzing available store
             space (in square footage).
                o Types of space needed are:
                          Backroom – backroom percentages range from
                            15 to 20 percent of the entire store square
                          Office
                          Aisles, service areas and other non-selling areas
                            on the sales floor – create main aisles through
                            which shoppers will flow on their way through
                            the store and secondary aisles that draw
                            customers back into the merchandise.

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                           Wall merchandise – hold a tremendous amount
                            of merchandise but must be a visual backdrop.
                           Floor space – different types of fixtures are used
                            to merchandise on the sales floor. For instance,
                            bulk fixtures, gondolas, t-stands and four ways.
                            All of which will be discussed later.

            Space allocation planning must occur through the analysis of
             profitable and productive categories of merchandise. Around
             20% of the average retailer’s inventory is either obsolete or not
             wanted by the retailers target market.
                 o Improving space productivity must evaluate
                     merchandise performance, refine space allocations and
                     enhance space productivity. This can be accomplished
                     with the space productivity index compares the
                     percentage of the store’s total gross margin dollars for a
                     particular merchandise category to its percentage of
                     space utilized. An index rating of 1.0 would be the ideal
                     size. If the index is greater than 1.0, the category is
                     generating a larger percentage of the stores gross margin
                     than the percentage of store space it is using (you should
                     consider adding retail space to this category). If the
                     index falls below 1.0 (or negative), the product category
                     is under performing relative to the other merchandise
                     and you might consider reducing the amount of space
                     allocated. This is not a decision-making formula. Even
                     though a certain category may have a low index,
                     management may retain its full space because a new line
                     has come out or it is an important image builder. A high
                     index category might not be given more space if
                     management expects the trend to cool off or the area
                     doesn’t warrant more space.

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             Ensures efficient movement of shoppers through the store,
              exposing them to more merchandise, but also determines the
              character of the store. For instance, Disney Stores are designed
              to communicate fun and excitement of the theme parks and
              famous characters and to entice customers to walk to the back
              wall. Chances are when a customer gets to the back wall they
              will return using a different route. There are four types of
              layouts, the free flow, grid, loop and spine.

                   o Free flow is the simplest type of store layout. Fixtures
                     and merchandise are grouped into free-flowing patterns
                     on the sales floor. Customers are encouraged to flow
                     freely through all the fixtures, since there is no defined
                     traffic pattern.
                          Works well for stores under 5000 square feet
                          Fails to provide cues as to where one department
                              stops and another starts…this confuses the
                          Free flow example:

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             o Grid is when the counters and fixtures are placed in long
               rows or “runs”, usually at right angles throughout the
                    Customers can circulate up and down through
                       the fixtures.
                    Sometimes referred to as a maze
                    Best used in retail environments in which the
                       majority of customers wish to shop the entire
                    Difficult when customers want to see other
                       departments, but can’t see over the fixtures.
                    High margin items are located toward the front
                       of the store versus discounted items, which are
                       placed toward the back of the store.
                    Example of the Grid layout:

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             o Loop is sometimes called a racetrack layout. Has
               become popular in enhancing the productivity of retail
                    Provides the customers with a major aisle that
                       begins at the entrance and loops through the
                       store, usually in the shape of a circle, square or
                       rectangle and then returns the customer to the
                       front of the store.
                    Powerful space productivity tool.
                    Major benefit is that it exposes shoppers to the
                       greatest possible amount of merchandise.
                    Must encourage browsing and cross-shopping.
                    Main aisle should never stray more than 60 feet
                       from any merchandise. Create the main
                       circulation loop that mirrors the configuration of
                       the outside walls of the store.

                          FLOW OF TRAFFIC


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             o Spine Layout is essentially a variation of the free-flow,
               grid and loop layouts and combines the advantages of all
               three layouts.
                    Typically used in medium sized specialty stores,
                       either hardlines or softlines and ranging in size
                       from 2,000 to 10,000 square feet.
                    The spine is subtly set off by a change in floor
                       coloring or surface and is not perceived as an
                       aisle, even though it functions as such.
                    The aisle transports customers in both directions,
                       and where on either side of this spine,
                       merchandise departments using a variation of the
                       three layouts.
                    Spine layout example:

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            There are two basic types of merchandise presentation: visual and
              on-shelf merchandising.
                 o Visual Merchandising are analogous to the stage props that
                     set scenes and serves as backdrops. This is best learned on
                     the sales floor. Visual merchandising includes fixture types
                     and selection and certain techniques and methods of on-
                     shelf merchandising.
                 o On-Shelf Merchandising is the merchandise displayed on
                     and in counters, racks, shelves and fixtures throughout the
                          This is the merchandise the customer actually
                             touches, tries on, examines, reads, understands, and
                             hopefully buys.
                          Don’t forget that you must also display the
                             merchandise so it is easy to understand and
                             accessible. Additionally, it must be easy to
                             maintain, with customers themselves able to replace
                             the merchandise so it is equally appealing to the
                             next shopper.
                 o Fixture types
                          Hardlines fixtures
                                  The workhorse fixture in most hardlines
                                     departments is the gondola. The gondola is
                                     a long structure consisting of a large base
                                     and vertical spine or wall sticking up as high
                                     as eight feet, fitted with sockets or notches
                                     into which a variety of shelves, peg hooks,
                                     bins, baskets and other hardware can be
                                  Commonly used in promotional aisles to
                                     display advertised or other special-value
                          Softlines fixtures
                                  The gondola is inappropriate for fashion-
                                     oriented soft lines merchandise. Floor
                                     fixtures should not be higher than 42
                                  The Four-way feature rack and the round
                                     rack are the two fixtures most heavily used
                                     today. The four-way is a feature rack that is
                                     to showcase certain lines, whereas the
                                     rounder is a bulk or capacity fixture.
                                  This allows the opportunity to differentiate
                                     one style or color of garment from another,

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                                  which merchants have found is the key to
                                  selling more.
                                 The more of the garment you are exposed to
                                  and the more varieties of size, shape and
                                  color, the more you are apt to buy.
                                 Most merchants prefer “face-out”
                                  presentations over “sleeve-out”
                                  presentations. Face-outs take more space.

                          Wall Fixtures
                              Can merchandise in a various methods.
                                  Shelves, peg hooks, bins, baskets and even
                                  hanger bars can be fitted into wall systems.
                                  Hanger bars can be hung parallel to the wall,
                                  much like a closet bar to sleeve out
                                  merchandise or use an angled down bar
                                  (waterfall) to allow merchandise to be faced
                              Merchandise can be displayed much higher
                                  on the walls than on floor fixtures. No
                                  higher than 72 inches.

               o Fewer than 20% of store shoppers make an impulse
                 (unplanned) purchase. These purchases are made by only
                 60% of the shoppers who actually enter the store with the
                 intent to make a specific purchase. Thus 40% of the
                 shoppers who enter a store to make a purchase are “wasted”
                 because the store failed to use merchandise to generate
                 additional purchases.
               o Most profitable department is always near the main
               o Various types of merchandise presentation:
                      Shelving – flexible and easy to maintain
                      Hanging – apparel on the above fixture types
                      Pegging – small merchandise. Labor intensive to
                         display and maintain.
                      Folding – high margin or large, unwieldy softlines.
                         Can create a high-fashion image
                      Stacking – large hardlines can be stacked on
                         shelves, base decks of gondolas or on platforms.
                         Merchandise in a pyramid style

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                           Dumping – large quantities of small merchandise
                            can be dumped in bins or baskets. Highly effective
                            promotional method can be used for softlines
                            (socks) and hardlines (batteries, lures, screws) and
                            creates a high-volume, low-cost image.

                o There is a certain “psychology of merchandise
                  presentation,” which must be considered.
                       Value/Fashion Image – most important
                         psychological effects are to foster an image in the
                         customer’s mind of how trendy, exclusive, pricey,
                         or value oriented the merchandise is. By changing
                         the perception of a fishing rod display from
                         common, high volume and high value to an
                         exclusive selection of high quality merchandise.
                       Angles and sightlines – customers move through a
                         retail store, they view the store at approximately 45-
                         degree angles from the path of travel.
                               Most stores are set up in right angles
                                  because it is easier and consumes less space.
                                  Therefore signage and merchandise often
                                  wind up being at a 90-degree angle to the
                                  main aisle.
                       Vertical color blocking – to be most effective,
                         merchandise should be displayed in vertical bands
                         of color wherever possible. Light to dark from left
                         to right. The merchandise will be viewed as a
                         rainbow of color.

                o This is the second type of merchandise presentation. This
                  is the artistic display of merchandise and theatrical props
                  used as scene-setting decoration in the store.
                o Many low priced stores contain little visual merchandising
                  and they do appear more boring than their upscale cousins
                  who concentrate heavily on the visuals.
                o Key characteristics:
                        Not typically associated with a shopable fixture
                        Located in a focal point, feature area, or other area
                           remote from the on-shelf merchandising and
                           perhaps even out of reach of the customer
                        Goal is to create a feeling in the store conducive to
                           buying merchandise.

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                                Use of props and elements. The props must be
                                 interesting and somehow related to the merchandise
                                 or the mood the retailer is wishes to create.
                              Visuals tell the customer if this is a high-end shop,
                                 frivolous, fun shopping experience or a down and
                                 dirty, low-price shopping experience.
                       o To be most effective; however, visuals should incorporate
                         relevant merchandise. For instance, mannequins are used
                         to display merchandise as it might appear on a person,
                         rather than simply hanging on a hanger.

      The element most responsible for the first of our two goals in planning the
        store environment: creating a distinctive and memorable store image.
        Encompasses both the exterior and the interior of the store.
             Exterior – storefront, signage and entrance, all of which are critical
                to attracting shoppers.
             Interior – store design includes the architectural elements and
                finishes on all surfaces, such as wall coverings, floor covering, and
                ceilings. All create the store’s ambiance.
      Store Front Design – must be noticeable, easily identified b passing
        motorists and memorable. Must clearly identify the name and general
        nature of the store and give some hint as to the merchandise inside.
             Windows – should be changed frequently, are fun and exciting and
                reflect the merchandise offering inside.
      Interior Design can be broken into two different elements. One is the
        finishes applied to surfaces and two the architectural shapes. The floors,
        the walls and the ceiling.
             Floor coverings (vinyl, carpet, ceramic tile, marble or concrete).
                All of which leaves a different impression on the shopper.
                    o Vinyl – can vary from very downscale to very upscale
                    o Carpet – suggest a homelike atmosphere
                    o Title – suggest high end
             Wall coverings vary from paint and wallpaper to hundreds of types
                of paneling.
             The ceiling must also receive a design treatment
                    o Finished drywall – upscale because it’s expensive
                    o Suspended ceiling – common and economical, though not
                    o Open ceiling with all the pipes and wires above painted
                         black – suggests low-price warehouse approach.
                    o Moldings - thousands
      Lighting design can greatly enhance the stores sales.
      Sounds and smells is total sensory marketing. Appeals to sight, hearing,
        smell and touch.

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                For instance, Sam Walton has the greeter in every store. Not only
                 is the greeter to convey a warm welcome feeling, but also
                 ultimately the customer will slow down in the first 20 feet of the
                 store. This enables the customer to take in the merchandise at the
                 front of the store.
        Visual communications assist the stores in maintaining their reputation of
         high-level customer service. Because retailers have had to worry about
         decreasing margins, they have had to reduce the number of sales personnel
         thus increase alternative service strategies. For instance, signs, large
         photo panels, and other visual devices that serves as silent salespersons.
         Silent salespersons provide much-needed information and direction on
         how to shop the store, evaluate merchandise and make purchases. These
         inanimate objects stay permanently in place; they required a one time
         installation cost, low maintenance and can always be relied upon to
         perform their function, the same way for every shopper. Of course they
         cannot replace a good sales associate that provides the personal touch and
         makes the customer feel welcome and friendly. When carefully balanced
         with their reliability and low cost they create an effective selling
              Institutional signage is the first level of visual communications.
                 Describes the mission, customer service policies and other
                 messages on behalf of the retail institution. For example, credit
                 cards, return policies, etc.
              Directional, departmental and category signage serves as the
                 highest level of organization in an overall signage program. These
                 signs are usually large and placed fairly high, so they can be seen
                 throughout the store. Once a shopper locates and moves closer to a
                 particular department, category signage is used to call out and
                 locate specific merchandise categories. This signage is usually
                 smaller is intended to be seen from a shorter distance and is E on
                 or close to the fixture itself. For example, hunting, archery,
                 apparel, fishing, etc.
              Point of Sale (POS) signage is even smaller and placed closer to
                 the merchandise. The POS signage is intended to give details
                 about specific merchandise items. The most important function is
                 to clearly state the price of the merchandise being signed.
                      o POS signage should vary based upon the following,
                         regularly priced, sale, clearance and as advertised. Each
                         one would be in a different color (white letters, black
                         background, vice versa, etc). The signage is to highlight
                         these special values.

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               XYZ COUNTRY STORE, INC.


   The General Manager has the responsibility to ensure all employees in their respective
    location are fully trained on the company’s visual (merchandising) standards and

       o Develop a training manual from this information.
       o The General Manager will delegate to an employee a specific area of the store that
         employee is responsible for. For example,
              Jane Doe – Store Front – Guns and Ammo
              Etc.
       o Schedule a training session with applicable personnel. Additional training
         sessions should occur regarding the changes in floor sets for the seasons and other
         feature and benefits training sessions held by vendors and/or department
       o The employees are to sign off stating they have received the merchandising and
         visual standards training. Regardless of the employee’s position, all employees
         must go through the training. This is a team environment and we expect all
         employees to play as part of the team. The signed off training manual should be
         placed in the employee’s personnel file.
       o The merchandising and visual guidelines manual should be placed in an
         accessible area for all employees to refer to.
       o The General Manager has the responsibility to distribute areas and/or departments
         in each store to employees that would like to take the section and make it their
         own. Meaning, the employee is ultimately responsible for ensuring the area is
         kept clean, updated, and within visual standards and guidelines 100% of the time.
         They are to perform the floor changes as per company directive or as their current
         inventory levels dictate.
       o Department Leads/Managers have the responsibility of to assist the General
         Manager in maintaining their assigned area in the established standards. The
         employee is allowed to do the following:
              Change the format of the department to refresh the area. Make the
                 changes necessary to keep the area looking visually inviting and
              The employee is to inform the General Manager of the necessary
                 inventory needs due to the item being a quick seller, slow mover, customer
                 requests, etc.
              Assist the General Manger during the walkthroughs.
              This does not and should not change the team environment. All
                 employees are to assist in the changes or maintaining the company
                 checklists on a daily basis. Each employee is to maintain their
                 area/department when they are scheduled and provide direction to the
                 individual in charge when they are not working.

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               XYZ COUNTRY STORE, INC.

   The storefront windows are to showcase high margin items that are applicable for the
    season. Do not allow dust bunnies to form in the window.

   Floor moves: Every quarter the store layout is to change. The main areas/departments
    may not move except during the various season’s; however to keep the store fresh, the
    merchandise is to change. For example, at the first of the month, the President will put
    out a directive to change the archery department by the fifth of the month. The store is
    now responsible for completing the task within the timeline established. The department
    manager is to take a picture of the changes. Communicate this in the daily kick of
    meeting for the various shifts.

   The purpose of the daily kick of meetings is to communicate any changes to the floor,
    new items received, target add on items for the day, schedule for the day and of course
    the sales expectations of the day.

   Daily Walkthroughs: All employees are to do a walkthrough of the store prior to opening
    for business and closing at the end of the day. The purpose of the walkthrough is to
    straighten, organize, and develop a list of items necessary to be replaced, fixed, or re-
    arrange (create a fill list) to ensure each department is within the guidelines.
        o The employees are to complete a checklist regarding the specific duties
            management wants completed prior to the store opening or departing for the
            evening. This checklist should be part of the daily kick off meetings and part of
            the closing checklist for the company.

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              XYZ COUNTRY STORE, INC.


    All fixtures and accessories must be dusted daily

    All flooring must be swept, vacuumed, and/or mopped daily prior to the store
     opening for business.

    All windows, plexi-glass, pictures, and glass must be cleaned daily.

    Wipe down the cash wrap daily

    All accessories (vases, books, magazines, knick knacks, etc.) are to be organized
     and straightened daily.

    Every aisle in the store must be free of clutter, not blocked, and have a minimum
     access of double stroller wide (approximately 2 feet of clearance).

    All fixtures must not extend past the wall that is behind the item.

    All stock items are knobbed and shelved prior to the item hitting the selling floor.

    All stock items must be free of damage or all damaged items are to be repaired
     prior to the item going back out on the sales floor.

    No merchandise on the floor is to have the plastic wrapping still on the piece. If
     the item is a chair that has a white cushion, then the plastic covering is allowed.
     No other exceptions will be allowed.

    All entrances to showcase rooms, vignettes, etc. must not be blocked and have a
     clear direction in which to have the customer shop the room.

    No fixtures or furniture must be showing the backside of the fixture. Comparable
     height and width items must be placed back to back.

    All corner fixtures or furniture must be housed in a corner. Do not allow for the
     item to be housed with one of the sides showing the side.

    When placing floor lamps, trees, coat hangers, etc. the items are not to be placed
     next to one another. You do not want a tall floor lamp next to a tree.

    All items located in the center areas of the floor must be in a pyramid style or in
     some a circular form. Enable the customers to walk around the item and see all
     facets of the fixture or piece of furniture.

                                    Page 18 of 19
              XYZ COUNTRY STORE, INC.

    Footstools and/or step stools are to be placed up to another fixture or under sofa
     table. Please make sense in determining when the footstools or step stools are
     placed against the other fixture.

    There must be an accessory item on each table when housed in the vignette or as
     part of a group. You may utilize a lamp, vase, etc. Do not allow it to be bare.

    No more than two (2) of the same items are to be showcased on the floor for large
     pieces of furniture. For example, bookcases, dressers, etc.

    No more than four (4) pieces of furniture out on the floor for smaller items. For
     example, chairs (unless it’s with a table that needs six), rockers, end tables, etc.

    When entering a room, there must be a visual display that invites the customer to
     walk in the room.

        o Signage on each fixture must be on the accurate fixture and placed in the
          appropriate location.

        o No hand written or man made signage. Utilize company issued or
          approved signage only.

        o All pictures, mirrors, and other wall hangings centers are not to be higher
          than eye level for the average person. Approximately 5 feet to 5 ½ feet

        o All stores are to have a blank floor plan of their location. This is to be
          utilized in planning floor moves.

        o No inventory is to be stored in a manner that we consider a Run on
          Sentence. This is when you have merchandise stored in a manner that
          does not have any separation between each item and all items are
          different. See Attached example. The inventory stored in aisles or rows
          located in the center of the department or in a line, must be separated to
          give the eye an illusion the item is special and is one of its own.

                                     Page 19 of 19

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