DC Lecture Five :Store Layout and Design

MKTG 1058: DISTRIBUTION

CHANNELS

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Distribution Channels MKTG 1058LECTURE FIVE

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Store Layout and Design(Dunne Chapter Thirteen)

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Learning Objectives of Chapter 13

•List the elements of a store’s environment and define its two primary objectives.

•Discuss the steps involved in planning the store.

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Learning Objectives of Chapter 13• Describe how various types of fixtures,

merchandise presentation methods and techniques, and the psychology of merchandise presentation are used to increase the productivity of the sales floor.

• Describe why store design is so important to a store’s success.

• Explain the role of visual communications in a retail store.

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In Seconds…A shopper should be able to

determine a store’sNameLine of tradeClaim to famePrice positionPersonality

These are tests of how effective a store’s image is

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If you were looking for merchandise in for outward bound adventure, wouldn’t like to shop in a store such as this?

“ a store is much more than a place where merchandise is presented and sold”

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Store Design Objectives

Implement retailer’s strategy Influence customer buying behavior

Control design and maintenance costs

Provide flexibilityMeet legal requirements

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Impact on Customer Behavior Attract customers to store Enable them to easily locate merchandise Keep them in the store for a long time Motivate them to make unplanned

purchases Provide them with a satisfying shopping

experience

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An example of an attention-getting retail design (Bangkok Airport)

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Tradeoff in Store Design

Ease of locating merchandise for planned purchases

Exploration of store, impulse purchases

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Importance of the Store Image In an economy of time-poverty, this is

particularly important when customers enter the store with a negative attitude/emotionbecause they have other things they would rather be doing.

In fact, no other variable in the retailing mix influences the consumer's initial perception of a brick & mortar retailer as much as the retailer's store itself.

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Introduction to Store Layout Management

• Store Image is the overall perception the customer has of the store’s environment.

• Space Productivity represents how effectively the retailer utilizes its space and is usually measured by sales per square foot of selling space or gross margin dollars per square foot of selling space.

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The importance of store image Linked to the differentiation and

positioning of the retail store “Perception is reality” Retailer leverages on store image to

create perceived differentiation away from rival retailers

Customers visit the store to share experiences and not just buy merchandise

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•Elements of the Store Environment

•Objectives of the Store Environment

Introduction to Store Layout Management

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Introduction to Store Layout Management

Store image:Is the overall perception the consumer has of the store’s environment.

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Introduction to Store Layout Management

Space productivity:Represents how effectively the retailer utilizes its space and is usually measured by sales per square foot of selling space or gross margin dollars per square foot of selling space.

LO 1

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Elements That Compose the Store Environment

Exhibit 13.1

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Objectives of the Store Environment•Tasks to create desired store image and

increase space productivity: •Get customers into the store (market

image).•Convert them into customers buying

merchandise once inside the store (space productivity).

•Do this in the most efficient manner possible.

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Store Image (what happens when you don’t have a physical store- catalogue retailing)

L.L. Bean offers relaxed, classic apparel styles to its customers. To help convey this image, L.L. Bean’s catalog and advertising reinforces their image. For catalog customers, the catalog is the store environment.

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Store Image•By incorporating a

café as an integral part of Borders bookstores, a very relaxing and casual ambiance is created.

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Store Image By incorporating a café as an integral

part of Borders bookstores, a very relaxing and casual ambiance is created.

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Developing a Store Image

The ability to create and change store image through the store environment-becomes more important every day for a retailer's survival.Two key words- create and changeImplications?

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Elements of Retail Image

(source: Berman)

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Retailing Truism

•The more merchandise customers are exposed to, the more they tend to buy.

To what extent do you agree with this statement? Are there other factors to consider? Is there a direct correlation between merchandise quantity and assortment and actual purchase propensity?

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Increasing Space Productivity:

The more merchandise customers are exposed to, the more they tend to buy.

Many retailers are focusing more attention on in-store marketing, based on the theory that it is easier to get a consumer who is already in a store to buy more merchandise than planned, than to get a new consumer to get in the car and make a trip to a store.

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Space Productivity

To enhance space productivity, retailers must incorporate planning, merchandising, and design strategies that minimize shrinkage (the loss of merchandise through theft, loss, and damage).

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Store Layout (Apple Store)

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Store Front Presentation- Apple

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Store Planning•Allocating Space•Circulation•Shrinkage Prevention

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Store Planning

•Floor Plan is a schematic that shows where merchandise and customer service departments are located, how customers circulate through the store, and how much space is dedicated to each department.

•Stack-Outs are pallets of merchandise set out on the floor in front of the main shelves.

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These Warning Signs May Indicate a Space Problem

Exhibit 13.2

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Allocating Space•Types of space needed:

•Back room•Office and other functional spaces•Aisles, services areas, and other non-selling areas of the main sales floor

•Wall merchandise space•Floor merchandise space

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Highly trafficked areas Store entrances Near checkout

counterHighly visible areas End aisleDisplays

Prime Locations for Merchandise

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Impulse merchandise – near heavily trafficked areas

Demand merchandise – back left-hand corner of the store

Special merchandise – lightly trafficked areas (glass pieces)

Adjacencies – complimentary merchandise next to each other

Location of Merchandise Categories

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Allocating Space Warehouse stores are

able to take advantage not only of the width and depth of the store, but also the height, by using large “warehouse racks” that carry reachable inventory at lower levels with large pallets or cartons of excess inventory at higher levels.

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Store Planning Space Allocation Planning

Improving Space Productivity in Existing StoresSpace Allocations for a New Store

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Space Allocation Planning•Improving Space Productivity in

Existing Stores•When a retailer has been in business for

some time, it can develop a sales history on which to evaluate merchandise performance, refine space allocations, and enhance space productivity. Various quantitative measures, such as the space productivity index, can be used to develop a more productive space allocation.

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SPI : Space Productivity Index•Space Productivity Index is a ratio that

compares the percentage of the store’s total gross margin that a particular merchandise category generates to its percentage of total store selling space used.

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Merchandise Productivity AnalysisExhibit 13.3

1.58= 4.57/ 2.9

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Space Allocations for a New Store

When a retailer is creating a new store format, it bases space allocation on industry standards, previous experience with similar formats, or more frequently, the space required to carry the number of items specified by the buyers

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Circulation

Free FlowGridLoop Spine

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Circulation: Free FlowExhibit 13.4

Free Flow, the simplest type of store layout, is a layout in which fixtures and merchandise are grouped into free flowing patterns on the sales floor. This type of layout works well in small fashion stores, usually smaller than 5,000 square feet, in which customers wish to browse through all of the merchandise.

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Free-Form Layout

Storage, Receiving, Marketing

Underwear Dressing Rooms

Checkout counter

Clearance Items

Feature Feature

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Pan

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Open Display Window Open Display Window

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Circulation: Grid Layout

Exhibit 13.5Grid is another traditional form of store layout in which the counters and fixtures are placed in long rows or "runs," usually at right angles, throughout the store. The grid is a true "shopping" layout, best used in retail environments in which the majority of customers wish to shop the entire store, such as is in supermarkets.

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Grid Store Layout

Fruit

Vegetables

Office &

customer

service

Books, magazines, seasonal display

Rec

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stor

age

Exit

Entrance

Cart area

Checkouts

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Circulation: Loop Layout

Exhibit 13.6Loop layouts have become popular as a tool for enhancing the productivity of retail stores. A "loop” provides a major customer aisle that begins at the entrance, "loops" through the store, usually in the shape of a circle, square, or rectangle, and then returns the customer to the front of the store. The loop can be a powerful productivity tool, by exposing shoppers to the greatest possible amount of merchandise

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Circulation: Loop Layout

Loop Layout is a type of store layout in which a major customer aisle begins at the entrance, loops through the store, usually in the shape of a circle, square, ar rectangle, and then returns the customer the front of the store.

Advantages Exposes customers to the greatest

amount of merchandise

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Circulation: Spine Layout Spine Layout is a type of store layout in

which a single main aisle runs from the front to the back of the store, transporting customers in both directions, and where on either side of this spine, merchandise departments using either a free-flow or grid pattern branch off toward the back aisle walls.

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Spine Layout

Exhibit 13.7

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What kind of layout does the IKEA store in Singapore use?

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Shrinkage Prevention

When planning stores, the prevention of shrinkage due to theft, damage, and loss must be considered. Some layouts will minimize vulnerability to shoplifters by increasing the visibility of the merchandise

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Planning Fixtures and Merchandise Presentation

Fixturetypes

Merchandisepresentation

panning

Selecting fixturesand merchandise

presentationmethods

Visualmerchandising

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Planning Fixtures and Merchandise Presentation

On-Shelf MerchandisingIs the display of merchandise on counters, racks, shelves, and fixtures throughout the store.

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Fixture Types

•Hardlines Fixtures•Softlines Fixtures•Wall Fixtures

These are minor topics; just read briefly from text

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Fixture Types: Hardlines

Hardlines Fixtures: The workhorse fixture in most hardlines department is known as the gondola. The gondola can hold a wide variety of merchandise -- in fact, virtually all hardlines -- by means of hardware hung from the vertical spine. Tables, large bins, and flat-base decks are used to display bulk quantities of merchandise when the retailer wants to make a high-value statement

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Fixture Types: Softlines Softlines Fixtures. A large array of fixtures

have been developed to accommodate the special needs of softlines, which often are hung on hangers. The four-way feature rack and the round rack are the two fixtures most heavily used today. The round rack is known as a bulk or capacity fixture, and the four-way rack is considered a feature fixture, because it presents merchandise in a manner which features certain characteristics of the merchandise (such as color, shape, or style)

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Fixture Types: Wall

Wall Fixtures. The last type of fixture are those designed to be hung on the wall. To make a plain wall merchandisable, it is usually covered with a vertical skin that is fitted with vertical columns of notches similar to that on the gondola, into which a variety of hardware can be inserted. Shelves, peghooks, bins, baskets, and even hanger bars can be fitted into wall systems.

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Four-Way Feature Rack and Round Rack

Exhibit 13.8

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Methods of Merchandise Presentation: •Shelving•Hanging•Pegging•Folding•Stacking•Dumping

Merchandise Presentation Planning

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Merchandise Presentation Techniques

• Idea-Oriented Presentation

• Style/Item Presentation

• Color Organization

• Price Lining

• Vertical Merchandising

• Tonnage Merchandising

• Frontal Presentation

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Merchandise Presentation Planning

Psychological Factors to Consider When Merchandising Stores:

•Value/fashion image•Angles and sightlines•Vertical color blocking

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45-Degree Customer Sightline

Exhibit 13.9

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Vertical Color Blocking

Exhibit 13.10

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Visual Merchandising•Visual Merchandising

Is the artistic display of merchandise and theatrical props used as scene-setting decoration in the store.Berman: Proactive, integrated atmospherics approach to create a certain look, properly display products, stimulate shopping behavior, and enhance physical behavior

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Visual Merchandising: Here’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.

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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. We see this in most large

department stores such as Tangs and Isetan

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Visual MerchandisingIt’s all in the

display. • When an item,

such as a watch 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.

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Visual Merchandising•Color is king.

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

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Visual Merchandising

• Suggestion positioning. Once the customer has already purchased one item, it’s easier to sell an additional item. Thus apparel retailers strategically place complementary products so that there is better opportunity for selling across the product line.

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Question to Ponder

•How do fixtures and merchandise presentation interact to influence consumers in different types of retailers?

Do you have you own examples to add? What about unique or creative presentations of merchandise that you have seen in Singapore or in your travels to other retail cities in Asia?

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Store Design

StorefrontDesign

InteriorDesign

LightingDesign

Sounds andSmells

Total Sensory Marketing

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Store Design

•AmbienceIs the overall feeling or mood projected by a store through its aesthetic appeal to human senses.Sometimes known as “store atmosphere”

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Elements of Atmosphere

(source: Berman)

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AtmosphereThe psychological feeling a customer gets when visiting a retailer Store retailer: atmosphere refers to

store’s physical characteristics that project an image and draw customers

Nonstore retailer: atmosphere refers to the physical characteristics of catalogs, vending machines, Web sites, etc.

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Store Design (the “book analogy”) Storefront Design. If the retail store can be

compared to a book, then the storefront or store exterior is like the book cover. It must be noticeable, easily identified by passing motorists or mall shoppers, and memorable, and must clearly identify the name and general market positioning of the store and give some hint as to the merchandise inside.

Interior Design can be broken into architectural elements and design finishes, and encompasses floor covering, walls, and ceilings.

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How a retail concept is articulated by both the shop front and the interior of the store (Tissot watch store)

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The LV stores

“creating queues”

“over-sized visual merchandising”

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The Apple Stores

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Store Entrances

How many entrances are needed?What type of entrance is best?How should the walkway be designed?

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A simple, cost-efficient yet effective display. Why?

Ladies Shoe Display in MBK- Bangkok

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Gucci store in Siam Paragon Bangkok

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General Interior Flooring Colors Lighting Scents Sounds Store fixtures Wall textures Temperature Aisle space Dressing facilities

In-store transportation (elevator, escalator, stairs)

Dead areas Personnel Merchandise Price levels Displays Technology Store cleanliness

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Visual Merchandising at M&M World

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Store Design (cont’d) Lighting is one of the most important-

though often overlooked-elements in a successful store design. Retailers learned that different types and levels of lighting can have a significant impact on sales.

Sounds and Smells: Total Sensory Marketing. Research has shown that senses other than sight can be very important, too, and many retailers are beginning to engineer the sounds and smells in their stores

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Creating a store experience

World Cup Screening in a Sports Good Section in a Thai Department Store

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Visual Communications

•Name, Logo, and Retail Identity•Institutional Signage•Directional, Departmental, and Category Signage

•Point-of-Sale (POS) Signage•Lifestyle Graphics

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Directional, Departmental, and Category Signage•Directional and Departmental Signage

are large signs that are usually placed fairly high, so they can be seen throughout the store.

•Category Signage are smaller than directional and departmental signage and are intended to be seen from a shorter distance; they are located on or close to the fixture itself where the merchandise is displayed.

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Departmental Signage Departmental

signage serve as the highest level of organization in an overall signage program. These signs are usually large and placed fairly high to they can be seen throughout the store.

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Category Signage Category signage helps

consumers negotiate throughout the store to find the product categories they are looking for. The size of category signage varies widely from a lettering that is a few feet in height to merely inches.

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Digital SignageVisual Content delivered digitally

through a centrally managed and controlled network and displayed on a TV monitor or flat panel screen

Superior in attracting attention Enhances store environment Provides appealing atmosphere Overcomes time-to-message hurdle Messages can target demographics Eliminates costs with printing,

distribution and installing traditional signage

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Point-of-Sale (POS) Signage

•Point-of-Sale SignageIs relatively small signage that is placed very close to the merchandise and is intended to give details about specific items.

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Point-of-Sale (POS) Signage• POS signage for

clearance and sale items tend to be in more attention-grabbing colors in order to draw a consumer’s attention.

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Lifestyle Graphics The Limited uses

lifestyle graphics to convey the image of the product to the consumer. Here the Limited conveys the casual nature of one apparel line.

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Summary: Usage of Signage and Graphics

1. Locational – identifies location of merchandise and guides customers

2. Category Signage – identifies types of products and located near the goods

3. Promotional Signage – relates to specific offers – sometimes in windows

4. Point of sale – near merchandise with prices and product information

5. Lifestyle images – creates moods that encourage customers to shop

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What happens if your store front is in digital space?

Retail marketing on the webThe home page becomes your

“store front”

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Marks & Spencer Online

http://www.marksandspencer.com/gp/node/n/42966030/280-3584648-7534532

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Online Store ConsiderationsAdvantages Unlimited space to present

assortments, displays, and information

Can be customized to the individual customer

Can be modified frequently Can promote cross-

merchandising and impulse purchasing

Enables a consumer to quickly enter and exit an online store

Disadvantages Can be slow for dialup

shoppers Can be too complex Cannot display three-

dimensional aspects of products well

Requires constant updating

More likely to be exited without purchase

Past Year Examination Questions

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Chapter Thirteen: Store Layout and Design

April 2009

Note: these two exam questions remind us of the importance of reading the assigned chapter- thoroughly – and the fact that you cant pass this exam unless you read the book!!

Both the quotes are taken from excerpts from Chapter Thirteen itself.5-99