1. Retailing Management 8e© The McGraw-Hill Companies, All rights reserved. 17 - 1 CHAPTER 2CHAPTER 1CHAPTER 17 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Store Layout, Design, and Visual Merchandising CHAPTER 17

2. CHAPTER 2CHAPTER 1CHAPTER 17 17-2 Store Management Managing the StoreStore Layout, Design, and Visual MerchandisingCustomer Service

3. CHAPTER 2CHAPTER 1CHAPTER 17 17-3 Questions What are the critical issues retailers consider in designing a store? What are the advantages and disadvantages of alternative store layouts? How is store floor space assigned to merchandise departments and categories? What are the consideration in where to display products in a category? What are the best techniques for merchandise presentation? How can retailers create a more appealing shopping experience? How exciting should a store environment be?

4. CHAPTER 2CHAPTER 1CHAPTER 17 17-4 Store Design Objectives Implement Retailer’s strategy Build Loyalty Increase Sales on Visits Control Cost Legal Considerations—Americans with Disabilities Act Design Trade-Offs

5. CHAPTER 2CHAPTER 1CHAPTER 17 17-5 Store Design and Retail Strategy The primary objective of store design is implementing the retailer’s strategy (c) Brand X Pictures/PunchStock C. Borland/PhotoLink/Getty Images Meets needs of target market Builds a sustainable competitive advantage Displays the store’s image

6. Retailing Management 8e© The McGraw-Hill Companies, All rights reserved. 17 - 6 CHAPTER 2CHAPTER 1CHAPTER 17 Retailing Management, 8/e© The McGraw-Hill Companies, All rights reserved. 1 - 6 Retailing Management, 8/e© The McGraw-Hill Companies, All rights reserved. 1 - 6 McDonald’s remodeled its stores to better appeal to European customers

7. CHAPTER 2CHAPTER 1CHAPTER 17 17-7 In India, a retailer finds key to success is clutter

8. CHAPTER 2CHAPTER 1CHAPTER 17 17-8 Build Loyalty Store design provides utilitarian benefits when it enables customers to locate and purchase products in an efficient and timely manner with minimum hassle Store design provides hedonic benefits by offering customers an entertaining and enjoyable shopping experience. H. Wiesenhofer/PhotoLink/Getty Images

9. CHAPTER 2CHAPTER 1CHAPTER 17 17-9 Increase Sales on Visits Store design has a substantial effect on which products customers buy, how long they stay in the store, and how much they spend during a visit.

10. CHAPTER 2CHAPTER 1CHAPTER 17 17-10 Control Cost Control the cost of implementing the store design and maintain the store’s appearance Store design influences Shopping experience and thus sales Labor costs Inventory shrinkage

11. CHAPTER 2CHAPTER 1CHAPTER 17 17-11 Legal Considerations Americans with Disabilities Act (ADA) Protects people with disabilities from discrimination in employment, transportation, public accommodations, telecommunications and activities of state and local government Affects store design as disabled people need “reasonable access” to merchandise and services built before 1993. After 1993, stores are expected to be fully accessible.

12. CHAPTER 2CHAPTER 1CHAPTER 17 17-12 32 inch wide pathways on the main aisle and to the bathroom, fitting rooms elevators and around most fixtures Lower most cash wraps and fixtures so they can be reached by a person in a wheelchair Make bathroom and fitting room fully accessible Reasonable Access What does that mean? Keith Brofsky/Getty Images

13. CHAPTER 2CHAPTER 1CHAPTER 17 17-13 Design Trade-Offs Ease of locating merchandise for planned purchases Exploration of store, impulse purchases Royalty-Free/CORBIS (c) image100/PunchStock Giving customers adequate space to shop Productivity of using this scarce resource for merchandise

14. CHAPTER 2CHAPTER 1CHAPTER 17 17-14 Layouts Signage and Graphics Feature Area Store Design Elements

15. CHAPTER 2CHAPTER 1CHAPTER 17 17-15 Store Layouts To encourage customer exploration and help customers move through the stores Use a layout that facilitates a specific traffic pattern Provide interesting design elements Types of Store Layouts Grid Racetrack Free Form

16. CHAPTER 2CHAPTER 1CHAPTER 17 17-16 Easy to locate merchandise Does not encourage customers to explore store Limited site lines to merchandise Allows more merchandise to be displayed Cost efficient Used in grocery, discount, and drug stores: Why? Grid Layout

17. CHAPTER 2CHAPTER 1CHAPTER 17 17-17 Racetrack Layout (Loop) Loop with a major aisle that has access to departments Draws customers around the store Provide different viewing angles and encourage exploration, impulse buying Used in department stores

18. CHAPTER 2CHAPTER 1CHAPTER 17 17-18 JCPenney Racetrack Layout

19. CHAPTER 2CHAPTER 1CHAPTER 17 17-19 Fixtures and aisles arranged asymmetrically Provides an intimate, relaxing environment that facilitates shopping and browsing Pleasant relaxing ambiance doesn’t come cheap – small store experience Inefficient use of space More susceptible to shoplifting – salespeople can not view adjacent spaces. Used in specialty stores and upscale department stores Free-Form (Boutique) Layout

20. CHAPTER 2CHAPTER 1CHAPTER 17 17-20 Usage of Signage and Graphics Location – identifies the location of merchandise and guides customers Category Signage – identifies types of products and located near the goods Promotional Signage – relates to specific offers – sometimes in windows Point of sale – near merchandise with prices and product information Lifestyle images – creates moods that encourage customers to shop H & M effectively uses graphic photo panels to add personality, beauty, and romance to its store’s image

21. CHAPTER 2CHAPTER 1CHAPTER 17 17-21 Coordinate signage to store’s image Use appropriate type faces on signs Inform customers Use them as props Keep them fresh Limit the text on signs Use appropriate typefaces on signs Suggestions for Effectively Using Signage

22. CHAPTER 2CHAPTER 1CHAPTER 17 17-22 Digital Signage Visual 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

23. CHAPTER 2CHAPTER 1CHAPTER 17 17-23 Areas within a store designed to get the customers’ attention Feature areas Entrances Freestanding displays Cash wraps (POP counters, checkout areas) End caps Promotional aisles Walls Windows Fitting rooms Feature Areas PhotoLink/Getty Images

24. CHAPTER 2CHAPTER 1CHAPTER 17 17-24 Space Management The space within stores and on the stores’ shelves are fixtures is a scare resource The allocation of store space to merchandise categories and brands The location of departments or merchandise categories in the store

25. CHAPTER 2CHAPTER 1CHAPTER 17 17-25 Space Planning Productivity of allocated space (sales per square foot, sales per linear foot)sales per square foot, sales per linear foot Merchandise inventory turnover Impact on store sales Display needs for the merchandise

26. CHAPTER 2CHAPTER 1CHAPTER 17 17-26 Highly trafficked areas Store entrances Near checkout counter Highly visible areas End aisle Displays Prime Locations for Merchandise

27. CHAPTER 2CHAPTER 1CHAPTER 17 17-27 Location of Merchandise Categories Impulse merchandise – near heavily trafficked areas Impulse merchandise Demand/Destination merchandise – back left-hand corner of the store Demand/Destination merchandise Special merchandise – lightly trafficked areas (glass pieces, women’s lingerie) Adjacencies – cluster complimentary merchandise next to each other

28. CHAPTER 2CHAPTER 1CHAPTER 17 17-28 Location of Merchandise within a Category: The Use of Planograms Supermarkets and drug stores place private-label brands to the right of national brands – shoppers read from left to right (higher priced national brands first and see the lower-priced private-label item) Planogram: a diagram that shows how and where specific SKUs should be placed on retail selves or displays to increase customer purchases

29. CHAPTER 2CHAPTER 1CHAPTER 17 17-29 Learning customers’ movements and decision-making Videotaping Consumers Learn customers’ movements, where they pause or move quickly, or where there is congestion Evaluate the layout, merchandise placement, promotion Virtual Store Software Learn the best place to merchandise and test how customers react to new products

30. CHAPTER 2CHAPTER 1CHAPTER 17 17-30 A.Straight rack B.Rounder (bulk fixture, capacity fixture) C.Four-way fixture (feature fixture) D.Gondolas Visual Merchandising: Fixtures

31. CHAPTER 2CHAPTER 1CHAPTER 17 17-31 Straight Rack Holds a lot of apparel Hard to feature specific styles and colors Found often in discount and off- price stores Royalty-Free/CORBIS

32. CHAPTER 2CHAPTER 1CHAPTER 17 17-32 Smaller than straight rack Holds a maximum amount of merchandise Easy to move around Customers can’t get frontal view of merchandise Rounder

33. CHAPTER 2CHAPTER 1CHAPTER 17 17-33 Holds large amount of merchandise Allows customers to view entire garment Hard to maintain because of styles and colors Fashion oriented apparel retailer Four-Way

34. CHAPTER 2CHAPTER 1CHAPTER 17 17-34 Gondolas Versatile Grocery and discount stores Some department stores Hard to view apparel as they are folded Royalty-Free/CORBIS

35. CHAPTER 2CHAPTER 1CHAPTER 17 17-35 Idea-Oriented Presentation Style/Item Presentation Color Organization Price Lining Vertical Merchandising Tonnage Merchandising large quantities of merchandise displayed together Frontal Presentation display as much of the product as possible to catch the customer’s eye Merchandise Presentation Techniques

36. CHAPTER 2CHAPTER 1CHAPTER 17 17-36 Present merchandise based on a specific idea or the image of the store Encourage multiple complementary purchases Women’s fashion Furniture combined in room settings Sony Style mini-living rooms Idea-Orientation Presentation Fifty percent of women get their ideas for clothes from store displays or window shopping

37. CHAPTER 2CHAPTER 1CHAPTER 17 17-37 Creating an Appealing Store Atmosphere The design of an environment through visual communications, lighting, colors, music, and scent to stimulate customers’ perceptual and emotional responses and ultimately to affect their purchase behavior

38. CHAPTER 2CHAPTER 1CHAPTER 17 17-38 Lighting Highlight merchandise Structure space and capture a mood Energy efficient lighting Downplay features The McGraw-Hill Companies, Inc./Lars A. Niki, photographer

39. CHAPTER 2CHAPTER 1CHAPTER 17 17-39 Warm colors (red, gold, yellow) produce emotional, vibrant, hot, and active responses Cool colors (white, blue, green) have a peaceful, gentle, calming effect Culturally bounded French-Canadians – respond more to warm colors Anglo-Canadians – respond more to cool colors Color The McGraw-Hill Companies, Inc./Lars Niki, photographer

40. CHAPTER 2CHAPTER 1CHAPTER 17 17-40 Music Control the pace of store traffic, create an image, and attract or direct consumers’ attention A mix of classical or soothing music encourage shoppers to slow down, relax, and take a good look at the merchandise thus to stay longer and purchase more

41. CHAPTER 2CHAPTER 1CHAPTER 17 17-41 Music J.C. Penney – different music at different times of the day Jazzy music in the morning for older shoppers Adult contemporary music in the afternoon for 35-40 year old shoppers U.S. firm Muzak supplies 400,000 shops, restaurants, and hotels with songs tailed to reflect their identityMuzak

42. CHAPTER 2CHAPTER 1CHAPTER 17 17-42 Has a positive impact on impulse buying behavior and customer satisfaction Scents that are neutral produce better perceptions of the store than no scent Customers in scented stores think they spent less time in the store than subjects in unscented stores Scent The McGraw-Hill Companies, Inc./Gary He, photographer

43. CHAPTER 2CHAPTER 1CHAPTER 17 17-43 How Exciting Should a Store Be? Depends on the Customer’s Shopping Goals Task-completion: a simple atmosphere with slow music, dimmer lighting, and blue/green colors Fun: an exciting atmosphere with fast music, bright lighting, and red/yellow colors

44. CHAPTER 2CHAPTER 1CHAPTER 17 17-44 Web Site Design Simplicity Matters Getting Around – Easy Navigation Let Them See It Example: Lands’ End My Virtual ModelLands’ End My Virtual Model Blend the Web Site with the Store Prioritize

45. CHAPTER 2CHAPTER 1CHAPTER 17 17-45 Web Site Design Type of Layout When shopping on the Web, customer are interested in speed, convenience, ease of navigation, not necessarily fancy graphics Checkout Make the process clear and appear simple Enclose the checkout process Make the process navigable without loss of information Reinforce trust in the checkout process

46. CHAPTER 2CHAPTER 1CHAPTER 17 17-46 Keywords shrinkage An inventory reduction that is caused by shoplifting by employees or customers, by merchandise being misplaced or damaged, or by poor bookkeeping. sales per linear foot A measure of space productivity used when most merchandise is displayed on multiple shelves of long gondolas, such as in grocery stores. sales per square foot A measure of space productivity used by most retailers since rent and land purchases are assessed on a per-square-foot basis. impulse merchandise Products that are purchased by customers without prior plans. These products are almost always located near the front of the store, where they’re seen by everyone and may actually draw people into the store. demand/destination area Department or area in a store in which demand for the products or services offered is created before customers get to their destination.