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Store Layout, Design & Visual Merchandising

Prof Smita Gaikwad

Shopper found dead in local store; cause of death boredom Stanley Marcus, Chairman-Emeritus, Neiman Marcus
No other variable in the retailing mix influences the consumers initial perceptions of a retailer as much as the store itself. The store is where the action is and includes such minor details as the placement of the merchandise.

Objectives of the Store Environment

Get customers into the store (store image)


Serves a critical role in the store selection process Important criteria include cleanliness, labeled prices, accurate and pleasant checkout clerks, and well-stocked shelves The store itself makes the most significant and last impression

Once they are inside the store, convert them into customers buying merchandise (space productivity)

The more merchandise customers are exposed to that is presented in an orderly manner, the more they tend to buy

Retailers focusing more attention on in-store marketing marketing dollars spent in the store, in the form of store design, merchandise presentation, visual

displays, and in-store promotions, should lead to greater sales and profits (bottom
line: it is easier to get a consumer in your store to buy more merchandise than planned than to get a new consumer to come into your store)

Elements that Compose the Store Environment


Visual Communications Retail Identity Graphics POS Signage Store Image and Productivity Store Design Merchandising Store Planning

Space Allocation Layout Circulation

Exterior Design Ambiance Lighting

Fixture Selection Merchandise Presentation Visual Merchandising

Objectives of Good Store Design

Design should

Be consistent with image and strategy Positively influence consumer behavior Consider costs versus value Be flexible Recognize the needs of the disabled

Types of Floor Space in Store

Back Room receiving area, stockroom Department stores (50%) Small specialty and convenience stores (10%) General merchandise stores (15-20%) Offices and Other Functional Space employee break room, store offices, cash office, restrooms Aisles, Service Areas and Other Non-Selling Areas Moving shoppers through the store, dressing rooms, layaway areas, service desks, customer service facilities Merchandise Space Floor Wall

Store Layout (and Traffic Flow)

Conflicting objectives

Ease of finding merchandise versus varied and interesting layout Giving customers adequate space to shop versus use expensive space productively

Grid (Straight) Design


Best used in retail environments in which majority of customers shop the entire store Can be confusing and frustrating because it is difficult to see over the fixtures to other merchandise

Should be employed carefully; forcing customers to back of large store may frustrate and cause them to look elsewhere Most familiar examples for supermarkets and drugstores

Curving/Loop (Racetrack) Design


Major customer aisle(s) begins at entrance, loops through the store (usually in shape of circle, square or rectangle) and returns customer to front of store

Exposes shoppers to the greatest possible amount of merchandise by encouraging browsing and crossshopping

Free-Flow Layout
Storage, Receiving, Marketing
Dressing Rooms
Accessories Tops

Fixtures and
merchandise grouped into free-flowing patterns on the sales floor no defined traffic pattern

Hats and Handbags

Casual Wear

Checkout counter Tops

Works best in small stores (under 5,000 square feet) in which customers wish to browse Works best when merchandise is of the same type, such as fashion apparel

Stockings

Pants

Feature

Feature

Skirts and Dresses

Clearance Items

Jeans

Open Display Window

Open Display Window

If there is a great variety of merchandise, fails to provide cues as to where one department stops and another starts

Spine Layout

Variation of grid, loop and free-form layouts Based on single main aisle running from the front to the back of the store (transporting customers in both directions) On either side of spine, merchandise departments branch off toward the back or side walls Heavily used by medium-sized specialty stores ranging from 2,000 10,000 square feet In fashion stores the spine is often subtly offset by a change in floor coloring or surface and is not perceived as an aisle

Location of Departments

Relative location advantages

Impulse products
Demand/destination areas Seasonal needs Physical characteristics of merchandise Adjacent departments

Feature Areas

The areas within a store designed to get the customers attention which include:

End caps displays located at the end of the aisles Promotional aisle/area Freestanding fixtures Windows Walls Point-of-sale (POS) displays/areas

Fixture Types

Straight Rack long pipe suspended with supports to the floor or attached to a wall Gondola large base with a vertical spine or wall fitted with sockets or notches into which a variety of shelves, peghooks, bins, baskets and other hardware can be inserted. Four-way Fixture two crossbars that sit perpendicular to each other on a pedestal Round Rack round fixture that sits on pedestal Other common fixtures: tables, large bins, flat-based decks

Fixture Types

Wall Fixtures

To make stores wall merchandisable, wall usually covered with a skin that is fitted with vertical columns of notches similar to those on a gondola, into which a variety of hardware can be inserted Can be merchandised much higher than floor fixtures (max of 42 on floor for round racks on wall can be as high as 72

Merchandise Display Planning

Shelving flexible, easy to maintain

Hanging
Pegging small rods inserted into gondolas or wall systems can be labor intensive to display/maintain but gives neat/orderly appearance Folding for softlines can be folded and stacked on shelves or tables - creates high fashion image Stacking for large hardlines can be stacked on shelves, base decks of gondolas or flats easy to maintain and gives image of high volume and low price

Dumping large quantities of small merchandise can be dumped into baskets or bins highly effective for softlines (socks, wash cloths) or hardlines (batteries, candy, grocery products) creates high volume, low cost image

POS Displays

Assortment display open and closed assortment Theme-setting display Ensemble display Rack display Case display

Cut case
Dump bin

Three Psychological Factors to Consider in Merchandising Stores

Value/fashion image Trendy, exclusive, pricy vs value-oriented Angles and Sightlines Customers view store at 45 degree angles from the path they travel as they move through the store Most stores set up at right angles because its easier and consumes less space Vertical color blocking Merchandise should be displayed in vertical bands of color wherever possible will be viewed as rainbow of colors if each item displayed vertically by color Creates strong visual effect that shoppers are exposed to more merchandise (which increases sales)

Visual Merchandising
Visual Merchandising, the art of attracting patrons with visual cues, it is central to a retailers ability to generate sales. Visual Merchandising got its start at the turn of the century, when department stores began using theatrical set design and lighting to create exotic displays.

Today, the way the departments are arranged, the location of the escalators, the lighting--all are carefully planned to earn the store more sales per square foot.

Examples of Visual Merchandising


Heres sampling of the techniques stores use to generate those sales:

Getm coming and going. Escalators are a focal point of many stores. That makes them ideal locations for promotional signs and for impulse items like perfume.

Examples of Visual Merchandising

Lead them to temptation. Department-store design incorporates a gauntlet of goodies to stimulate impulse buys. Cosmetics, a stores most profitable department, should always be at the main entrance to the store.

Examples of Visual Merchandising

Its all in the display. When an item, such as a watch or a scarf, is displayed in a glass case, it implies luxury. An item in a glass case with a lot of space around it implies real luxury.

Examples of Visual Merchandising

Bazaar? Behavior. Even high fashion stores arent above using the dumping method to display gloves, leather goods, scarves, and other small items the same way bargain stores do. These bins have a way of suggesting a good buy.

Examples of Visual Merchandising

Color is king. Retailers believe consumers are more apt to buy clothes that appear in full size and color assortments.

Examples of Visual Merchandising

Suggestion positioning. Once the customer has already purchased one item, its easier to sell an additional item. Thus apparel retailers strategically place impulse buys like hair bows and costume jewelry by the cashier the same way supermarket checkouts

StoreFront Design

Storefronts must:

Clearly identify the name and general nature of the store Give some hint as to the merchandise inside Includes all exterior signage In many cases includes store windows an advertising medium for the store window displays should be changed often, be fun/exciting, and reflect merchandise offered inside

Atmospherics

The design of an environment via:


visual communications lighting color sound scent

to stimulate customers perceptual and emotional responses and ultimately influence their purchase behavior

Visual Communications

Name, logo and retail identity Institutional signage Directional, departmental and category signage Point-of-Sale (POS) Signage Lifestyle Graphics Coordinate signs and graphics with stores image Inform the customer Use signs and graphics as props Keep signs and graphics fresh Limit sign copy Use appropriate typefaces on signs Create theatrical effects

Lighting

Important but often overlooked element in successful store design

Highlight merchandise

Capture a mood
Level of light can make a difference

Color

Can influence behavior

Warm colors increase blood pressure, respiratory rate and other physiological responses attract customers and gain attention but can also be distracting. Cool colors are relaxing, peaceful, calm and pleasant

Sound & Scent

Sound

Music viewed as valuable marketing tool Often customized to customer demographics Can use volume and tempo for crowd control

Scent

Smell has a large impact on our emotions Can be administered through time release atomizers or via fragrance-soaked pellets placed on light fixtures

Total Sensory Communication


Sight How good is the display Sound - What background music is playing? Smell - Tobacco, stale food, fish. Major influence on buying emotions. Touch - Is product open to consumer to feel texture? Taste - Free samples of new products at Supermarkets

Summary

The store itself is the most meaningful communication between the retailer and the customer

The store environment must: Create an Image Increase Productivity

RETAIL PROMOTION

Objectives

To explore the scope of retail promotion To study the elements of retail promotion: advertising, public relations, personal selling, and sales promotion To discuss the strategic aspects of retail promotion: objectives, budgeting, the mix of forms, implementing the mix, and reviewing and revising the plan

Elements of the Promotional Mix

Advertising Public Relations Personal Selling Sales Promotion

Advertising

Paid, non-personal communication transmitted through out-of-store mass media by an identified sponsor Key aspects Paid form Non-personal presentation Out-of-store mass media Identified sponsor

Advertising Objectives for Retailers

Lifting short-term sales Increasing customer traffic Developing and/or reinforcing a retail image Informing customers about goods and services and/or company attributes Easing the job for sales personnel Developing demand for private brands

Advertising
Advantages Attracts a large audience Gains pass along readership (for print) Low cost per contact Many alternatives available Control over message content; message can be standardized Message study possible Editorial content surrounds ad Self-service operations possible Disadvantages Standardized messages lack flexibility Some media require large investments Geographic flexibility limited Some media require long lead time Some media limit the ability to provide detailed information

Advertising Media Comparison Chart


Medium Market Coverage Particular Suitability

Daily Papers

Single community or entire metro area; local editions may be available Single community usually; may be a metro area Most households in one community; chain shoppers can cover a metro area Geographic area or occupational field served by the directory Controlled by the retailer

All larger retailers

Weekly Papers

Retailers with a strictly local market Neighborhood retailers and service businesses All types of goods and service-oriented retailers New and expanding firms, those using coupons or special offers, mail order

Shopper Papers

Phone Directories

Direct Mail

Advertising Media Comparison Chart


Medium Market Coverage Particular Suitability

Radio

Definable market area surrounding the station Definable market area surrounding the station Global

Retailers focusing on identifiable segments Retailers of goods and services with wide appeal All types of goods and service-oriented retailers Retailers near transit routes, especially those appealing to commuters Amusement and touristoriented retailers, well-known firms

TV

World Wide Web

Transit

Urban or metro community served by transit system Entire metro area or single neighborhood

Outdoor

Advertising Media Comparison Chart


Medium Market Coverage Particular Suitability

Local Magazines

Entire metro area or region, zoned editions sometimes available Single neighborhood

Restaurants, entertainmentoriented firms, specialty shops, mail-order firms Restaurants, dry cleaners, service stations, and other neighborhood firms

Flyers/ Circulars

Types of Advertising

Steps in a Retail Advertising Campaign


Select Advertising Objectives Budget for the Campaign Design the Campaign Select the media to use Schedule the ads Evaluate the results

Planning a Cooperative Strategy


What ads qualify, in terms of merchandise and special requirements? What percentage of advertising is paid by each party? When can ads be run? In what media? Are there special provisions regarding message content? What documentation is required for reimbursement? How does each party benefit? Do cooperative ads obscure the image of individual retailers?

Public Relations and Publicity

Public Relations - Any communication that fosters a favorable image for the retailer among its publics Non-personal or personal Paid or nonpaid Sponsor-controlled or not Publicity Any non-personal form of public relations whereby messages are transmitted through mass media, the time or space provided by the media is not paid for, and there is no identified commercial sponsor

Public Relations Objectives for Retailers

Increase awareness of the retailer and its strategy mix Maintain or improve the company image Show the retailer as a contributor to the publics quality of life Demonstrate innovativeness Present a favorable message in a highly believable manner Minimize total promotion costs

Public Relations
Advantages Image can be presented or enhanced More credible source No costs for messages time or space Mass audience addressed Carryover effects possible People pay more attention than to clearly identified ads Disadvantages Some retailers do not believe in spending on image-related communication Little control over publicity message More suitable for short run Costs for PR staff, planning activities, and events

Personal Selling

Oral communication with one or more prospective customers for the purpose of making a sale

Personal Selling Objectives for Retailers

Persuade customers to buy Stimulate sales of impulse items or products related to customers basic purchases Complete customer transactions Feed back information to company decision makers Provide proper levels of customer service Improve and maintain customer satisfaction Create awareness of items also marketed through the Web, mail, and telemarketing

Personal Selling
Advantages Message can be adapted Many ways to meet customer needs High attention span Less waste Better response Immediate feedback Disadvantages Limited number of customers handled at one time High costs Doesnt get customer in store Self-service discouraged Negative attitudes toward salespeople (aggressive, unhelpful)

Typical Personal Selling Functions

Sales Promotion
Encompasses the paid communication activities other than advertising, public relations, and personal selling that stimulate consumer purchases and dealer effectiveness

Sales Promotions Objectives for Retailers

Increasing short-term sales volume Maintaining customer loyalty Emphasizing novelty Complementing other promotion tools

Sales Promotions
Advantages Eye-catching appeal Distinctive themes and tools Additional value for customer Draws customer traffic Maintains customer loyalty Increases impulse purchases Fun for customers Disadvantages Difficult to terminate Possible damage to retailers image More stress on playful selling points Short-term effects only Used as a supplement

Selected Reasons Why Retail Sales Are Lost

Types of Sales Promotions

Planning a Retail Promotional Strategy

Possible Promotion Objectives in Retailing

Improve Long-Run Performance

Improve Short-Run Performance

Store Image and Positioning

Public Service

Attract New Customers

Increase Patronage of Existing Customers

From Existing Trade Area

Expand Trade Area

Promotional Objectives

Increase sales Stimulate impulse and reminder buying Raise customer traffic Get leads for sales personnel Present and reinforce the retailer image Inform customers about goods and services Popularize new stores and Web sites Capitalize on manufacturer support Enhance customer relations Maintain customer loyalty Have consumers pass along positive information to friends and others

Procedures for Setting a Promotional Budget

All-you-can-afford method Incremental method Competitive parity method Percentage-of-sales method Objective-and-task method

Promotion and the Hierarchy of Effects

Implementation Decisions

Media Timing Content Makeup of Sales Force Sales Promotion Tools Responsibility for Coordination

Monitoring Promotional Campaign

Effectiveness Producing desired results. Efficiency - Results achieved with minimum financial expenditure.

Summary

The correct promotion mix of advertising, sales promotion, publicity and direct selling is important to retail success

However, such promotion is expensive and must be well planned and monitored to ensure maximum benefit

Customer Relationship Management

Can Offering Price Discounts Achieve Customer Loyalty?

No!

Retail strategies like these can be copied by competitors

These strategies encourage customers to be always looking for the best deal rather than developing a relationship with a retailer

McGraw-Hill Companies, Inc./Gary He, photographer

Customer Relationship Management (CRM)

All customers are not equally profitable, and more or less profitable customers need to be treated differently

Retailers now concentrate on providing more value to their best customers using targeted promotions and services to increase their share of wallet the percentage of the customers purchases made from the retailer

CRM Process Cycle

Customer Pyramid
Platinum Best Most loyal Least price sensitive

Customer Pyramid

Gold Next best Not as loyal

Customer Pyramid

Iron Doesnt deserve much attention

Customer Pyramid

Lead Demands attention May have negative value

CRM Programs
Retaining Best Customers Converting Good Customers to Best Customers Getting Rid of Unprofitable Customers

Customer Retention Programs

Frequent Shopper Programs Special Customer Services Personalization


1-to1 Retailing

Community

Royalty-Free/CORBIS

Elements in Effective Frequent Shopper Programs

Tiered rewards based on customer value Offer choices of rewards


No all customers value the same rewards Non-monetary incentives, unselfish rewards

Reward all transactions to ensure the collection of all customer transaction data and encourage repeat purchases Transparent and simple so that customers easily understand when they will receive rewards

Issues with Effective Frequent Shopper Programs


Expense Difficulty in Making Changes Impact on Loyalty Questionable Easily Duplicated Difficult to Gain Competitive Advantage

Need to offer invisible benefits

Converting Good Customers into Best Customers


Customer alchemy: converting iron and gold customers into platinum customers Add-on selling as a way to achieve customer alchemy

Involves offering and selling more products and services to existing customers and increasing the retailers share of wallet with these customers

Shopping Buddy

Dealing with Unprofitable Customers

Offer less approaches for dealing with these customers Charge customers for extra services demanded
Don Farrall/Getty Images

Implementing CRM Programs

Need systems, databases Close coordination between departments marketing, MIS, store operations, HR Shift in orientation
Product Centric Customer Centric

Summary

CRM programs are the loyalty Programmes which are one-to-one. CRM programmes purposes:
1. 2.

are used for three

3.

To get rid of unprofitable customers To convert gold customers into platinum customers To retain best/loyal/profitable customers.