Retail Merchandising And In Store Operations

Introduction

Many companies have acknowledged that improving their store layout; they will be able to increase their number of sales per square foot. Even the architecture of a store can lead to an increase in sales. Within the store layout marketing strategy, there are a number of different aspects to take into consideration such as – architecture, store ambiance and location, visual merchandising and most importantly the store layout.

Visual merchandising can be anything from the store window display to store ambience, all of these artefacts are put into action when companies wish to increase their sales per square foot.

There are both positive and negative ways in which a change to a store layout can increase the sales per square foot for a company, as because of this numerous actions must be considered before a company drastically changes their layout.

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Executive Summary

The purpose of this report was to research how store layouts and improvements to a store can increase the sales per square foot. “Store layout and visual merchandising are two important factors that add to the distinctiveness of a store. The interior design of the store plays a more vital role” as show on Indian MBA (2008).

Also mentioned on Indian MBA (2008) “Space is always an extremely expensive and scarce resource. Retailers try to maximize the return on sales per square foot.” This is the best way to describe why retailers see the interior of their store as the best way in which they can increase these sales per square foot. There are various types of store layouts which retailers would consider to increase their sales per square foot.

This report will analyse and explore how retail design, store layout and visual merchandising can help increase sales per square foot, by the use of research into trade publications as well as newspapers and other sources. Also in this report, examples of stores that have successfully managed to increase their sales per square foot will be mentioned.

Findings

Retail architecture is a vital mechanism in the function of market intermediation. Retail architecture is defined as those market spaces that affect the relationship between supply and demand. Architecture can directly illustrate some stores social significations of retail relationships; its brutality as well as its warmth, and its social class. For example Harrods has a high level of retail architecture, as it is not only a tourist attraction due to its external historical architecture but it also denotes people’s social class as people who are of a higher social status or social class would be most likely to shop at Harrods.

Liberty the British department store has a high level of appreciation for its buildings history, as Creative Director Tamara Salman of clothing brand Liberty of London adds to her collection the stores extraordinary 130 year heritage. Liberty store is able to build upon their heritage to ensure that they increase their sales per square foot figure. With being such a strong and historical store it is hard for many new and upcoming companies to be able to have such a strong fall back for increasing sales.

However, retail store layouts are important determinants of customer behaviour. UK fashion retailers are able to gather critical information regarding their target consumers which in turn enable them to create interiors which successful attract these groups.

In the context of the store layout, time-poor and highly mobile consumers require different spaces than shoppers who leisurely shop at discounts, and selectively during sales periods at various stages in the business cycle. Also, gender differences in shopping can justify quite specific changes to fashion store formats and space allocation.

Store layouts and the merchandise offered are matched to the targeted consumers to the extent that customers ‘buy into’ branding statements. It is important that the retailer gains a positive reaction to the new layout of its merchandise within the store as a negative reaction would then cause sales to decrease.

To ensure that a company is using the right type of store layout, the retailer would look into their own store layout analysis. Within a store layout analysis, careful consideration is given to the products being sold and their location; this can also be seen as basic psychology used to entice customers to spend more money usually through impulse buying.

Retailers can also increase their competitiveness by closely targeting and fulfilling their customers’ needs. Tauber (1972) hypothesised three reasons for shopping; personal motives, social motives and impulse buying. Creating consumer satisfaction involves delivering quality products that meet their needs and is core in highly competitive environments.

The allocation of space within any store can be on the basis of many factors such as historical sales, daily average sales, profits, margins, industry averages and strategic reasons. A store layout must also include space for essential functions such as inventory, customer service desks and changing rooms.

For any retailer to have success in increasing their sales per square foot, the must look at a number of aspects such as their fixtures and fittings, colours of the store interior, lighting, and window displays.

Store interiors are designed in a way which influences consumer behaviour which is referred to as Visual Merchandising. Company visual merchandisers control the use of equipment, displays, colours, illuminations, music, ambience and floor management within a store.

Music:

Music can be used to increase sales per square feet, as music sets the tone of the environment within the store and as peoples moods change throughout the course of the day it is essential to also have music which reflects the mood of the customers. Music which is played during the morning should be high energy based as customers have lots of energy and this would mean that a company would have more people coming in and purchasing items during the morning hours. Music during the afternoon should be more mellow as peoples energy levels are decreasing and they are more reluctant to browse through the store looking for their wanted items compared to those in the morning. Similarly to the morning during early evening hours, customers respond better to slightly more up-tempo songs. Retailers should also take into consideration their target consumers when deciding on what type of music they should have playing in their stores.

Colour:

Colour is another factor that can entice customers into shopping at a specific store, colour is immediate, emotional and memorable. Colours bring out emotions and feelings automatically to customers, therefore it is essential to retailers to get the correct colour balance for their store.

The colour blue is seen as a natural element, but it is also connected with trust and stability, therefore retailer who use blue within their interior design in informing customers that they are trustworthy and understandable as well as confident.

The colour green is found to be a successful colour when linked to hygiene and beauty, which is the main colour for the company Body Shop. All Body Shop fronts are green and have some form of a green colour within their interior. The Body Shop also consists of natural colours and woods making customers feel a sense of freshness, healthiness, youthfulness and the colour green can also be linked to money.

Colours within the Purple category can be linked to the emotion or sense of royalty, luxury and spiritual. Again the store Liberty link purple into their company in the use of their website, correspondence as well as their company gift bags, this enables their customers to leave the store with a sense of luxury which also makes them more likely to come and purchase from Liberty again.

Fixtures and Fittings:

Within any retail store, the fixtures and fittings are another key element to increasing sales per square foot. For shelves, eye level and slightly above is the best position to sell garments from, as colour of the garment can catch customers eyes making them stop to look at the item.

Displays should be kept simple, and have a theme to them. It is also effective to include the products in use or as a collection which can be paired up e.g. in Primark or Marks and Spencers, many items of clothing a paired together such as shirts are sectioned with trousers, skirts and blazers as this enables the consumer to see what the item will look like paired with something else, this also shows that they do not have far to go to obtain a matching jacket for a work skirt. Also in Primark, shoes are usually opposite the formal or business wear but situated closely to accessories such as handbags and purses; again this is done so that the consumer doesn’t have very far to travel in order to complete the outfit they required.

It is also important to have impulse items which are usually located close to the tills so that customers are more likely to purchase these along with their inital shopping, this could be anything from socks to lip glosses.

Window display:

Bright and colourful window displays can make the company store window stand out from other competitors, however the use of too many colours can make the store look cheap and put customers off going into the store. The lighting used within a store front should be bright as this makes it more attractive and appealing to passing customers.

A store window is an ideal way of attracting new and existing customers as you can use a store window to build the company image, showcase new arrivals as well as products that are in high demand. Window displays should be changed frequently to keep target customers and new customers interested in the company, and to make them stop and purchase something. The department store Selfridges is the most competent store for their window displays as each window can tell a different story based on whatever theme maybe inspirational at the time. As Selfridges window display tells a store more and more customers are intrigued to know what it is about and where they can find the items shown in the window, this is how Selfridges gains an increase in their sales per square foot.

Lighting:

Proper lighting can increase sales by up to 20%, therefore all retailers will benefit from using the best bulbs possible when updating their store layout. In 2010, John Lewis changed their store lighting as the dim lighting which was previously in store caused consumers to be less likely to spend money as dim lighting can cause customers to feel tired.

Retailers should make use of spot lights, as these can be used to highlight key areas or even key products which may be commission based, therefore the more sold, the more money the company makes.

Conclusion:

As mentioned throughout this report, companies need to selectively decide which options will be best for them to be able to increase the sales per square feet as the initial reaction of the customers to a new store layout is the deciding factor as to whether the company will target more customers or lose customers as a result.

Companies should pay close attention to the information they already poses about their customers and use this to their advantage, they should also be aware of their competitors so that they are able to always be one step ahead, boosting sales as they go.