“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.
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 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.”
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, 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
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
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
Advertising Media Comparison ChartMedium Market Coverage Particular Suitability
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
Advertising Media Comparison ChartMedium Market Coverage Particular Suitability
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
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)
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
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
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
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 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