Store Grading

A method of ranking retail stores based on factors such as sales performance, size, or location, used to prioritise inventory allocation.

What is Store Grading?

Store Grading is a retail strategy that involves categorising and evaluating stores within a retail chain based on various criteria. These criteria can include factors like location, store size, sales performance, and customer demographics. The goal of Store Grading is to allocate resources, inventory, and marketing efforts more effectively by tailoring strategies to the specific needs and potential of each store.

How Store Grading works

  • Data Collection: Retailers collect data on various aspects of their stores, such as location, store size, historical sales data, foot traffic, and customer demographics.

  • Criteria and Grading: Retailers establish criteria for grading stores. These criteria can be specific to the retailer's goals and may include sales performance, profitability, customer satisfaction, and other relevant factors. Each store is then graded based on these criteria.

  • Segmentation: Stores are categorised into different segments or grades based on their performance and characteristics. For example, stores may be grouped as high-performing, average, or underperforming.

  • Resource Allocation: Once stores are graded and segmented, retailers can allocate resources more effectively. This can involve adjusting inventory levels, marketing strategies, and staffing based on the specific needs of each store segment.

  • Strategy Tailoring: Different strategies are developed for each store segment. High-performing stores may receive more marketing investment and a wider product range, while underperforming stores may require cost-cutting measures or different marketing approaches.

  • Regular Evaluation: Store Grading is an ongoing process. Retailers continually evaluate and adjust their grading criteria and strategies to adapt to changing market conditions and store performance.
The goal is to optimise the performance of each store and the overall retail chain.

Pros of Store Grading

  1. Resource Optimisation: Store Grading allows retailers to allocate resources more efficiently. By tailoring strategies to the specific needs of each store segment, they can maximise sales and profitability.
  2. Improved Decision-Making: It provides data-driven insights for decision-making. Retailers can identify high-performing stores and replicate their success while addressing issues in underperforming locations.
  3. Enhanced Customer Experience: Store Grading helps retailers align product assortments, staffing, and promotions with the preferences and behaviours of local customers, resulting in a better shopping experience.

Cons of Store Grading

  1. Complexity and Implementation Challenges: Implementing a store grading system can be complex and time-consuming. Retailers may struggle with defining grading criteria, collecting relevant data, and ensuring consistency across stores.
  2. Resource Intensive: It requires a significant amount of resources, both in terms of time and financial investment, to gather and analyse data, develop grading criteria, and implement strategies tailored to different store segments.
  3. Resistance from Store Teams: Store grading might face resistance from store managers and employees who may feel that their stores are unfairly labeled or that corporate decisions don't consider their unique challenges.


Below you will find answers to common questions
Why should our retail chain invest in a store grading system?
Implementing a store grading system can significantly benefit our retail chain. It allows us to assess and segment our stores based on various criteria like location, size, foot traffic, and sales performance. This segmentation helps in tailoring strategies for each store category, optimising inventory management, and enhancing the overall customer experience. By doing so, we can increase sales and profitability across our stores.
What are the key criteria for grading our stores?
The key criteria for grading our stores may include sales performance, location, store size, foot traffic, and profitability. These criteria help us categorise stores into different segments, such as flagship, high-performing, standard, or underperforming. Each segment is then treated with customised strategies and resource allocation to maximise results and better meet the unique needs and challenges of each store.