The subject of this paper is space management in the modern retail operations. The paper analyzes the contemporary trends in the space management in the retail business, specifically space management in the online stores. Space management means increasing the functionality of retail space and placement of products on shelves by departments or categories. The space is managed in accordance with the size of the store, assortment, entrances and way of movement of customers per store. Space management is part of the category management business, which encompasses a variety of activities coordinated with the business plan and consists of eight steps: defining the categories, the role categories, the assessment categories, goals, strategies, tactics categories, implementation of the plan and assessment categories. Under the influence of the process of computerization, internationalization and globalization, retailers have begun to sell their products in online stores where retail space is measured in bits. Although the potential consumer is not going through a classic retail store, the internet should be seen as an endless passage in which it is also necessary to manage the space. Space management in the modern retail business is a challenge for retailers because online shops require application of IT knowledge and that it is necessary to pay attention to several aspects in the space management than in traditional retail stores. Effective space management in modern retail business means that the retailers encourage consumers to planned and impulsive purchase in their online stores, monitor the sale of products and that they at the same time change and improve the space in their online stores.