RMM Mod 5 - Store Design Layout Visual Merchandising Retail Promotion

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 consumer’s 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 Planning

Space Allocation Layout Circulation

Store Design

Exterior Design Ambiance Lighting

Merchandising

Fixture Selection Merchandise Presentation Visual Merchandising

Store Image and

Productivity

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 cross-shopping

Free-Flow Layout • Fixtures and merchandise grouped into free-flowing patterns on the sales floor – no defined traffic pattern

• 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

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

Storage, Receiving, Marketing

Dressing Rooms

Checkout counter

Clearance Items

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Open Display Window Open Display Window

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

customer’s 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 store’s 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 it’s 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”, the art of attracting patrons with visual cues, it is central to a retailer’s 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.

Visual Merchandising

Examples of Visual MerchandisingHere’s sampling of the techniques stores use to generate those sales:

Get’m 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 store’s most profitable

department, should always be at the main entrance to the store.


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.


“Bazaar? Behavior”. Even “high fashion” stores aren’t 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.”


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


Suggestion positioning. Once the customer has already purchased one item, it’s 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 display candy and magazines.

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 store’s 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 ChartMedium Market Coverage Particular Suitability

Daily Papers Single community or entire metro area; local editions may be available

All larger retailers

Weekly Papers Single community usually; may be a metro area

Retailers with a strictly local market

Shopper Papers Most households in one community; chain shoppers can cover a metro area

Neighborhood retailers and service businesses

Phone Directories Geographic area or occupational field served by the directory

All types of goods and service-oriented retailers

Direct Mail Controlled by the retailer New and expanding firms, those using coupons or special offers, mail order


Radio Definable market area surrounding the station

Retailers focusing on identifiable segments

TV Definable market area surrounding the station

Retailers of goods and services with wide appeal

World Wide Web Global All types of goods and service-oriented retailers

Transit Urban or metro community served by transit system

Retailers near transit routes, especially those appealing to commuters

Outdoor Entire metro area or single neighborhood

Amusement and tourist-oriented retailers, well-known firms


Local Magazines Entire metro area or region, zoned editions sometimes available

Restaurants, entertainment-oriented firms, specialty shops, mail-order firms

Flyers/ Circulars Single neighborhood Restaurants, dry cleaners, service stations, and other neighborhood firms

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

public’s 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 message’s 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 Doesn’t 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

retailer’s 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

PlatinumBestMost loyalLeast price sensitive

Customer Pyramid

Gold

Next bestNot as loyal

Customer Pyramid

IronDoesn’t deservemuch attention

Customer Pyramid

LeadDemands attentionMay 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 retailer’s 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 are used for three purposes:1. To get rid of unprofitable customers

2. To convert gold customers into platinum customers

3. To retain best/loyal/profitable customers.

RMM Mod 5 - Store Design Layout Visual Merchandising Retail Promotion

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