•Inventory turnover affects space allocations by:
•First, both inventory turnover and gross margin contribute to GMROI—a measure of the retailer’s return on its merchandise inventory investment.
•Thus, merchandise categories with higher inventory turnover merit more space than merchandise categories with lower inventory turnover.
•Second, the merchandise displayed on the shelf is depleted quicker for fast-selling items with high inventory turnover.
•Thus, more space needs to be allocated to fast-selling merchandise to minimize the need to restock the shelf frequently to reduce stockouts.
•Display Considerations The physical limitations of the store and its fixtures affect space allocation.