How can Michaels Stores balance the need for in-store craft classes to drive foot traffic against the profitability of dedicating floor space to product displays?

Introduction

The trade-off between in-store craft classes and product displays at Michaels Stores presents a classic retail dilemma. We need to balance the foot traffic generated by experiential offerings against the revenue potential of maximized product space. I'll analyze this challenge through the lens of customer engagement, space utilization, and overall profitability.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about the current store layout and performance. Could you share how much floor space is currently allocated to classes versus product displays, and how this varies across store sizes?

Why it matters: Helps understand the current balance and potential for optimization Expected answer: Roughly 10-15% for classes in most stores Impact on approach: Would inform the scale of potential changes and their impact

• Business Context: Based on recent retail trends, I'm assuming experiential offerings are a key differentiator for Michaels. How do in-store classes align with the company's overall strategy and revenue goals?

Why it matters: Ensures solution aligns with broader business objectives Expected answer: Classes are a strategic priority for customer engagement and loyalty Impact on approach: Would influence the weight given to non-financial benefits of classes

• User Impact: I'm curious about the customer overlap between class attendees and regular shoppers. What percentage of class participants make additional purchases during their visit?

Why it matters: Helps quantify the indirect revenue impact of classes Expected answer: 60-70% of class attendees make additional purchases Impact on approach: Would affect the calculation of class profitability and overall impact

• Technical: Considering the rise of omnichannel retail, I'm wondering about the integration of in-store classes with Michaels' digital offerings. Is there a plan or capability to offer hybrid or online versions of these classes?

Why it matters: Could impact space requirements and reach of class offerings Expected answer: Early stages of digital integration, but not fully implemented Impact on approach: Might suggest a phased approach that incorporates digital expansion

• Resource: I'm thinking about staffing implications. How does the current team structure support both class facilitation and regular store operations?

Why it matters: Affects operational feasibility and cost considerations Expected answer: Dedicated class instructors with some overlap in responsibilities Impact on approach: Would influence recommendations on staffing models and cost allocation