PL Buyer: Infrastructure-Store Design
Through a special arrangement, what follows is a summary
of part of a current article from Private Label Buyer, presented here
for discussion.
Supermarket remodeling can start at $50,000 and climb to $500,000 per location
depending how much work is done. The upside — sales in a remodeled store can
increase as much as 40 percent over the course of several years, claims Christopher
Studach, director of design for King Retail Solutions, a retail design company.
"Most stores see a seven to 10 percent increase in sales within a year
when they do an upgrade," he said.
A remodel can be also sharply lower operating costs thanks to installation
of more efficient lighting, heating and cooling equipment, he notes.
To make sure any remodeling investment is spent wisely, retailers should consider
creating a logical plan for overall store layout and then sweat the remodeling
small stuff such as where to put private label products, what types of lights
to use to make them look enticing for passing shoppers and even what kind of
shelf tags will best grab shoppers’ attention without making the shelves look
overly cluttered.
Laying out a store consists of not only knowing what color schemes or what
type of décor to use, but also how to place products on the shelves.
Better lighting alone can help a store increase its sales by a few percentage
points, according to Ken Stevens, vice president, information technology, for
H&H Industries.
Once the store layout and lighting choices are made, stores can start thinking
on a more macro level — where should private label products be located to
maximize sales?
One way to attract consumer attention is by using a color shelf strip that
matches the color of the product’s packaging to help draw attention to the
product, said Mr. Studach. By using the strips, retailers can be assured they’re
following the design of planograms. Another bonus to using image strips is
the fact that when an item is out of stock it can quickly be reordered and
restocked in the right place every time.
Private label retailers should also look at promoting more cross-merchandising
in the store, said Dan Phillips, project manager and designer for Phillips
Enterprises, a marketing firm. "Giving consumers the chance to test your
products helps them make up their mind."
Using advanced technology is also helpful in laying out a store diagram and
providing a schematic of where items should go to help retailers.
Undergoing a remodel can be well worth the investment to keep customers excited
about shopping the store. Simple changes such as lighting can help retailers
accomplish two things: save on energy costs and properly highlight their private
label products.
"The very process of remodeling generates enough excitement to spark
sales," said Mr. Studach.
Discussion Questions
Discussion Questions: What core advice would you give to a retailer or store exploring a remodel? What remodel investments typically deliver the most/least ROI?
The expense of remodeling for remodeling sake without first devising a plan and truly identifying what new experience you intend to generate with the shopper base could prove futile. I do agree that there will be an incremental lift even if the lighting is changed if walls are freshly painted or if gondolas are shifted slightly. But to capture the true imagination of the shopper and drive sustainable sales and profit increase, a solid plan with a thoughtfully-developed strategy is paramount.
First, make the store “fun, easy to shop and interactive.” Boring stores make for boring shopping which leads to shopping being perceived as a burden.
Second, make sure the remodel easily answers the following questions/issues:
1. Where is it? Don’t make the shopper work too hard to find things.
2. Oh yeah, I forgot. Make sure signage, displays and features remind shoppers of forgotten items.
3. Which one do I buy? Give the shopper a compelling reason to buy whether it is a branded or private label product.
4. How does it work? Make sure new and innovative products provide shoppers with information to make an informed decision.
5. Do I need it now? Don’t let shoppers postpone purchase decisions. Provide a value to purchasing now.
Good luck!
The first consideration is “what makes the most sense to my target customer?” While this seems obvious, my experience has been that retailers (particularly CEOs) tend to want to make it visually appealing to themselves without first understanding who their customers are and what are the most important attributes to them as described in the article – how easy is the store to navigate, is it well lit, is it logically arranged, etc.
As an old operator, I can also tell you that the next most important aspect is to make the store flexible in terms of fixturing, flooring, and lighting. Layouts change, new product lines come and go, life changes. Effecting these changes falls on the store operations group. Making these inevitable changes in the future simpler and easier will pay dividends down the road.
Finally, all the potential investments should be run through a rigorous cost/benefit analysis. While it is true that a good remodel can produce a big jump in volume, that is hardly guaranteed. You’re much better off using a lower expectation to make sure that there is a real ROI.
In the early 80s while consulting for Kroger, we built an experimental store near Myrtle Beach, S.C. The décor was all white with a sparing use of black, wrought iron supports and fixtures. The objective was to evaluate the effect on shoppers if product packaging were allowed to do all the “talking.” After all, we reasoned, CPG manufacturers spend $millions designing and testing packaging to appeal to consumers, so why should we go to great expense to outshine these proven designs with our instore décor? No additional stores like that were built, signaling either a failed test (customers said they liked it but the test was designed poorly — so no measurable results), or disinterest in Cincinnati. I vote for the latter.
Some years later I was part of a three-man team to oversee the design of a flagship location for Raley’s in Sacramento. Man, did we overdesign that puppy! Our mandate was to incorporate ALL the bells and whistles. We believed that less is not more; instead, more is more. It turned out to be the most expensive décor package ever purchased by Raley’s, and one of the least effective vis-a-vis ROI.
Somewhere between minimum décor and crazy, overkill, let’s-build-a-monument-to-ourselves design lies an understated yet effective shopper invitation with just the right amount of romance. My hard-won advice is to back away from any design proposal and sleep on it. Never view it as a potential winner in design contests or a feature story in a trade rag or local newspaper. Restraint is the key. You can always add more stuff later. My dissertation evaluated the effectiveness of the largest (at the time) in-store weekly signing program anywhere — 7-Eleven stores. We learned a lot from my experiments, but a long-time franchisee summed it up best: When asked if ceiling signs were effective because shoppers naturally look up, he replied, “We have ceiling signs because that’s the only space left.” And that, among other findings, is what my research demonstrated. Our signing program was very expensive as one might imagine, so we decided to cut back on overhead signing. There was no measurable effect on sales. Permanent décor is clearly different from weekly signage, but both help set the retail “tone” for a store. And for both, again, restraint is the key.
Overheard from a senior exec after an extensive remodel/upgrade: “Ten million dollars for a whole lot of nuthin’!” On the other hand, 40% lifts seem modest, but not for people who think, “ceiling signs were effective because shoppers naturally look up.” [I don’t think Jericho was saying this.] Shoppers not only do not “naturally look up,” but as every eye-tracking study ever done shows, they rarely look up. And the old canard, “eye-level is buy level,” is also as phony as a $3 bill.
Shoppers naturally spend the majority of their time looking down, and most of their purchases will come from 3-4′ shelf height. As someone has said, “Error can make its way twice around the world, while truth is getting on its boots.”
Years ago Kodak published a study of the attractiveness of photo scenes, from the viewpoint they convey. Photos looking down on the subject win over photos looking UP at the subject, hands down. We are all like the primitives who don’t like to be stared in the eye, especially by merchandise sitting on the shelf. We expect to look DOWN at this stuff.