PROTOTYPE HAND-IN

I put this together this morning. Lane is going to send me the building costs portion, and once I add that in, I think we are ready to hand it in to Evan and get our 10% bonus!

I copied and pasted it from my word doc, so the formatting is a little goofy - don't worry, it looks beautiful!
Let me know what you think of the content and the "ask" at the end....

His Man Friday has created a prototype using a prospective rectangular floor space with 2169sq ft, in Chinook Centre. With our projected annual sales of $898,000, we are looking at sales of $414/sq ft in our first year. To calculate floor space utilization, we must use the amount of floor space dedicated to sales, and exclude the amount dedicated to storage.

Back Room Floor Space Utilization Plan

969sq ft of this location is dedicated to unseen storage and backspace. It will be a generally open space that we will use this space for storage of cleaning supplies, excess inventory that can't be stored in the front, promotional materials, a small open break room, a private office for management, and a safe for cash.

969 sq ft backspace:

1. Office - 400sq ft (20ft x 20ft). The office will include a work desk, computer, and the store's safe.

2. Shelving - 20 sq ft of shelf space for excess inventory (10ft x 2ft). Most of the inventory will be held up front in locked cabinets underneath the shelving. This will be used to store excess product, especially product that we need extra inventory of. For example: Storage of product that we may have on sale during a specific period.

3. Cleaning closet - 25sq ft (5ft x 5ft). Here, we will store brooms, mops, cleaning solutions, and any other materials needed for general cleaning of the store.

4. Break room - 400sq ft (20ft x 20ft). This will be an open space in the back room where we will have a table and chairs for our staff to sit during their break.

5. Free space - 124sq ft. Walking room, and extra storage for promotional materials.

Front of House Floor Space Utilization Plan

With 969sq ft of this location dedicated to the back, we have 1200sq ft of usable customer-friendly space to play with. To determine the most efficient use of our floor space, we must calculate how much revenue will be created through each service/product offering. Doing this will allow us to accurately allocate specific amounts of floor space to specific offerings based on the amount of revenue they bring in.

Cologne Bar - Revenue will come from sales of cologne. Note that cologne has the highest margin among all His Man Friday products, and will be crucial in creating the desired store atmosphere - tv's, stools and overall comfort and escape.

·      Cologne sales are projected to be responsible for 15% of annual sales ($134,700)

·      Cologne products will have an industry standard profit margin of 200%.

Shave Cave - Revenue will come from shaving services and haircuts. Important to remember that these services, while only being responsible for a small portion of our sales, will be KEY in creating the experience that His Man Friday wants to give to it's customers.

·      The Shave Cave's services are projected to be responsible for 30% of annual sales ($269,400)

·      The Shave Cave will provide a 25% profit margin due to high labor costs.

His Man Friday Products - Revenue will come from sales of His Man Friday's main product line: Mug Scrub Facial Cleanser, Buff Your Bod Body Wash, Maintain Your Mane Shampoo and Conditioner, Smooth Operator After Shave, TLC Face Hydrator, and Keep It Up Wax.

·      The main product line is projected to be responsible for 55% of annual sales ($493,900)

·      Products, on average, will provide a 100% profit margin. Consistent with industry standards. Emphasis will be placed on Keep It Up Wax, Buff You Bod Body Wash, and TLC Face Hydrator, which have a 120% profit margin.

It's time to look into some key metrics! We need to look at sales per sq ft, and sales per station. This will be crucial to determine how much of our floor space we will allocate to each service and product line. Also, calculating our sales per sq ft will help us to project sales in different sized locations.

****Sales assumptions are based on those outlined in the Pro Forma****

His Man Friday has decided to dedicate floor space to respective offerings based on their projected revenue contributions:

1.  Cologne Bar will have 12.5% of the floor space (150sq ft/15ftx10ft space in back left of store)

2. Shave Cave will have 20% of the floor space (240sq ft/20ftx12ft space in back right of store)

3. Product Shelves will have 6% of the floor space (74sq ft/displayed throughout  the store)

5. The Lounge (including sofas and TV's, will have 12.5% of the floor space (150sq ft/15ftx10ft space in the center right of the store)

4. The remaining 51% of the floor space (612sq ft) is left for walking space to ensure that our customers don't feel crowded.

Shelf Space Utilization

Let's get even more specific when it comes to utilizing floor space to drive revenue. We have a great layout that will help us to push our biggest revenue drivers, but we have to look at how our shelves will by designed and laid out to further utilize our space. How can we best utilize our shelf space in His Man Friday to drive revenue?

As explained earlier, we will designate 74sq ft to product exclusive shelf space. This includes 3 sided shelves, 4 sided shelves, and tables.

·      3 sided shelves are those that are rested against the wall (creating a front side, and 2 ends). This shelving style allows us to efficiently use our wall space, but only provides us with 3 sides of product. The 2 ends are quite insufficient since they are only 1ft wide, but is available if needed.

·      4 sided shelves are those that are self-standing away from any walls (creating a front side, back side, and 2 ends). This shelving style allows us to offer 4 sides of displayed product to our customers - making extremely efficient use of available floor space.

·      Tables will be placed around the store to further display our products. Tables are great because they allow you to creatively display products, but they don't allow you to store as many as shelving units do. We will focus on using tables to display featured or special products so that we can strategically display them, without the space limits that come with shelving units.

·       

74sq ft of shelf space will allow us to have:

·      4, 10ft x 1ft 3 sided shelving units (40sq ft). These will rest against the west wall. They will each be 10ft long, 1 ft deep, and 6ft tall (including the lower 3ft tall locked cabinet). 1 ft deep ensures that we don't store an excessive amount of rows of product on our shelves, and since we have the locked storage cabinets below, storing respective products, we won't run out of a product on shelf.

·      2, 3ft x 3ft 4 sided shelves (18sq ft). These will be placed behind the lounge, east of the 3 sided shelving units, where our customers can comfortably access all 4 sides. They will be 3ft wide on all 4 sides, and 6ft tall (including the lower 3ft tall locked cabinet).

·      1, 4ft x 4ft table (16sq ft). This table will be placed in the southeast corner of the store - specifically focussing on product specials and promotional products. It will be just over 3ft tall since the table top will simply be resting on the 3ft tall locked cabinet.

With our average product taking up 9sq inches of space, we can comfortably conclude that we can fit 99 products on our shelves/tables at one time ({12inches/9inches}x74sq ft). With our average product price of $8, we will be looking at having $792 in product available on our shelves at one time. That's $10.70/sq ft of shelf space. This ratio will be extremely useful when debating more or less shelf space. It will allow us to calculate the cost or benefit, in available product dollars, of adding or removing shelves.

Locked Cabinet Space

Each type of shelving unit will be rested on 3 ft high locked cabinet space where we will store the respective product inventory. This will allow us to restock quicker, which will ensure we always have product available and well-presented. Also, by having our product inventory stored in the front, we have more space available in the back.

·      In the 4, 10ft x 1ft 3 sided shelving units (40sq ft), we will have a 3ft tall locked cabinet underneath that will have a volume of 30 cubic feet available, per shelving unit, for product storage. If we assume the average product is 3"long x 3"tall x 3"wide, we can conclude that each product will take up 27 cubic inches. 27 cubic inches is 0.0156 cubic feet. 30 cubic ft/0.0156 cubic feet = 1923 products that can be stored in the 3 sided shelving unit's locked cabinet. That's a total of 7,692 stored products in the locked cabinets of the 4, 3 sided shelves.

·      In the 2, 3ft x 3ft 4 sided shelving units (18sq ft), we will have a 3ft tall locked cabinet underneath that will have a volume of 27 cubic feet available, per shelving unit, for product storage. If we assume the average product is 3"long x 3"tall x 3"wide, we can conclude that each product will take up 27 cubic inches. 27 cubic inches is 0.0156 cubic feet. 27 cubic feet/0.0156 cubic feet = 1730 products that can be stored in the 4 sided shelf's locked cabinet. That's a total of 3,460 stored products in the locked cabinets of the 2, 4 sided shelves.

·      In the 1, 4ft x 4ft table (16sq ft), we will have a 3ft tall locked cabinet underneath, that will have a volume of 48 cubic feet. If we assume the average product is 3"long x 3"tall x 3"wide, we can conclude that each product will take up 27 cubic inches. 27 cubic inches is 0.0156 cubic feet. 48 cubic feet/0.0156 cubic feet = a total of 3077 products that can be stored in the table's locked cabinet.

That's a grand total of 14,229 products stored in our 105 cubic feet of locked cabinets.

RetailPro Inventory and POS System

This is a great system - There are over 52,000 retailers using it today. It seems to be the best option for us out of the ones we have been researching. This one will keep track of our inventory at point of purchase (as discussed before), it tracks and presents any customers purchase history from any His Man Friday store worldwide, is simple to install, is priced right, and is extremely user-friendly. I got in contact with the Calgary Store Manager at Betsey Johnson, a very high-end and well-known clothing retailer with hundreds of locations - They use this system in all of their locations and after trying it out myself at the store, I strongly believe that this is the system for His Man Friday!

They offer different packages based on our needs. There are different options for franchises, apparel, footwear, gifts and toys, home furnishings, jewelry, sporting goods, and most importantly hardgoods. Looking into their hardgoods offering, they meet the important needs that would be critical for a store like His Man Friday - including:

1. The ability to track a large number of products

2. Organize them based on style, color, size, or season.

3. Place items on backorder

4. Automate inventory replenishment based on restock levels that we set.

5. Create purchase orders based on current information.

6. Organize and present customer demographics right at the POS

7. The ability to suggest relevant up-sells and cross-sells to a select group of customers based on their purchase history or demographic

8. Automated, targeted mailing

9. The system has the ability to handle sales related transactions even when the network is down.

The His Man Friday Team has done an extensive amount of research and put in over 20 hours of extra-curricular work into our prototype and it’s respective calculations. We strongly believe that we have captured a vast amount of relevant information that would be vital for us to have if we were to open His Man Friday in the near future. If we were to open HMF, we would further the prototype by calculating $/linear ft of shelf space to relate to current industry ratios, and we would determine the most efficient use of shelf space based on each product’s individual profit margin. With that said, we strongly believe that we have put in the effort and thought to get our proposed prototype bonus of 10%.

Thank you,

HMF Team.