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Wednesday, May 30, 2012
Tuesday, May 29, 2012
People make decisions all the time. What sandwich to order, whether to walk through that puddle or around it, what school to go to and so on. However, psychologists disagree on how good we are at making decisions.
“In the literature on human decision-making, there are two almost parallel stories,” said Andreas Jarvstad of Cardiff University. “One goes, ‘humans are terrible at making choices.’ The other goes, ‘humans are close to being as good as they possibly can be.’”
Jarvstad is an author of a new study on decision-making published in Psychological Science, a journal of theAssociation for Psychological Science. His study is about choosing how long to spend on the task at hand.
The view that humans are both terrible and great at decisions may not be as strange as it seems. Psychological scientists have made a distinction between different kinds of decisions: low-level perceptual choices versus choices that involve higher level reasoning. For example, choosing where to put your feet is a low-level choice, whereas choosing where to invest your savings is a high level choice.
“Imagine you’re running up a really rocky path. For each step, you have to decide which stone to step on. Some stones will be poorer choices than other stones,” Jarvstad said. Previous studies suggest that people are good at this kind of decision, but poor at decisions that require a higher level of analysis like choosing between financial options.
However, Jarvstad’s study suggests that this difference doesn’t always exist. Together with colleagues, Simon K. Rushton and Ulrike Hahn of Cardiff University and Paul A. Warren of the University of Manchester, he set out to determine how well people make “time-on-task” decisions — that is, decisions about how long to spend on the task at hand. Participants took part in a number of computer-based tasks involving either low-level (e.g. judging the direction of motion of a cloud of dots) or high-level (e.g. mental arithmetic) processing.
Getting an answer right earned a reward point; getting it wrong incurred a penalty point (points were later translated to money).
After spending time becoming familiar with the tasks, participants were given a fixed amount of time to complete as many or few trials as they liked. “Doing lots of trials very quickly might not be the best approach since the less time you spend on the task the greater the chance of an error. But spending a lot of time on very few trials might also be a bad idea since you limit the number of points you could possibly earn. The trick is finding the right balance between the two.”
It turned out that people were good at finding the right balance. “It didn’t seem to matter whether people were doing a low-level or a high-level task—they were equally good at deciding how much time to spend on these tasks,” Jarvstad said. In fact, their participants ended up with nearly the same amount of money they would have earned if they had in fact made perfect decisions – and that was true for low- as well as high-level tasks.
These findings suggest that perhaps humans really aren’t intrinsically bad at high-level decision making and intrinsically good at low-level decision making after all. On reflection, noted Jarvstad, the idea that they would be is perhaps a little strange after all.o
Upplagd av Magnus Ohlsson kl. 9:19 PM
Friday, May 25, 2012
At the Paris lingerie shop Empreinte you can watch a ghost trying out the merchandise after the store is closed, or is it a hologram?
Upplagd av Magnus Ohlsson kl. 10:00 PM
Wednesday, May 23, 2012
Just a few years ago, the large retailers really needed major brands, making them vulnerable to pressure from suppliers.
Brand hybris is a thing of yesterday. Retailers are no longer only a distribution operation run by small scale merchants, but have evolved into branded companies themselves. Understanding of the retailers own respective strategy, on an overall global, country and concept level is a key issue for anyone who wants to have their products on display in any store.
The role of the supplier is to help the customer to reach their respective goals of differentiation by giving tools of relevance, to the customer in the situation the customer (i.e. retailer) meets the consumer. That means that the supplier should walk the same shoes as their respective retailer, and align its production according to the direction where the retailer is going, thus provide SKUs that is engineered and priced to fit the retailers strategy.
Retailers want to be understood. The first role of the branded goods supplier is to understand.
Brand owners are stumbling under the pressure of shorter product cycles and lesser media attention, along with hard core SKU rationalisation.
There are no power brands – only brands that sell more, and brands that sell less. The traditional view of brands as sacred assets that must be allowed to exist just because they have a long history or are cherished by key officers in the organisation, or by small groups of consumers at some time of the years is no argument for keeping a brand or SKU in production. Mind space that cannot be converted to shelf space is of no use whatsoever. There is no room for politics in internal discussions or defending babies that should be able to stand on their own. Sales figures are the only relevant measurement of real brand strength. Mind space is not paying the bills.
The role of the supplier is to help the retailer to reach their respective goals of differentiation by giving them tools of relevance. Brands are still assets but needs distribution to be able to bring value to their owners.
To get to the shelf relevance to the retailer and thereby the understanding of the retailers goals and how the specific SKU should help to reach that goal, is crucial. There is no substitute to distribution.
Therefore any internal discussion on any supplier should start with the question, "in what channels do we deserve to be on the shelves?"
Discount grows by the minute
The discount channel is virgin land for many suppliers. A traditional view on branding as well as seeing discounters as a threat rather than a potential volume channel has hampered the development of the distributions via this channel. The fact that the Stockholm office is situated far from where the action is, is also a fact that has to be considered. Category Directors and Brand Managers, along with their consultants, must understand the dynamics of local markets and move away from 20th century branding theory were everybody can build a brand.
Discount is gaining power. If suppliers do not choose to align with the needs of this specific channel, and the threat it constitutes to others, the share on the markets with a growing number of discounters will decline as Every Day Low Prices gets to be the standard on these markets.
The role of the supplier is to provide SKUs that could be priced in accordance to the need of the market. No retailer sets the price level on its own. The market does collectively. But for the branded goods provider trying to push its brand portfolio to anybody this means bad news.
To understand and act to address the needs of the discounters is a major task on several markets.
PL is an essential part of key retailer’s strategy
Price and differentiation are two different reasons for launching a private label, and the PL share is on the rise on a global scale as competition sharpens.
Private Labels means that the retailer is taking charge of several functions such as marketing, certain product development and other things, and that the supplier to a large extent merely is a production facility. In special cases branded good has been converted into PL buy being offered exclusive distribution.
There are several key questions that need to be taken into consideration.
-The volumes that retailers PL have and their rate of growth as consumers accept them at a larger scale. PL-opportunity means large volumes.
-The question of available capacity at plants. Do we have spare capacity that makes us loose money?
-If a retailer approaches with the possibility of PL-production, any cost based calculation must be stripped from normal administration, product development, and internal procedures and so on. PL-production requires a dedicated organisational function.
-If a retailer wants a PL, he will get it. Saying no will bring the volumes to anyone else.
In a world where the supplier understands the needs of the retailer, he will also understand the need for a private brand, and be able to provide it if asked.
Addressing the retailers relevant needs for differentiations are crucial to stay and grow in the market.
So how do you build your brand portfolio to suit the needs of the retailer, and how could you build a new segmentation of the brands/SKUs and at the same time evaluate the channel strategy? Well here are a few ideas:
Ask yourself: What will the role of the particular brand/product be in the assortment? What effect will be the consequence when adding it to the offer from a total branding perspective? Ingvar Kamprad demanded that the hot dogs in the snack bar at the end of an IKEA store should be priced at levels of 50% lower than expected in order to project a breathtaking offer, contributing to the low price image of the company. The finance department screamed at the unresponsible action, meaning that this would take away any possibility of making the snack bar operation profitable. Needless to say, Kamprad won the discussion and the profits went sky high as volumes went the same way. This led to the definition of a "hot dog product" at IKEA, namely a product that the customer has a clear point of view on of what it ought to cost, and then priced at 50% of the expected price. Today, there should be a hot dog in each category to enforce the price position of IKEA. This is a great example of hoe product/price mix is translated into a branding tool.
Beeing a brand owner, it sometimes is hard to keep ones head cold when it comes to kill low performing brands, as well as seeing the potential of limited distribution for the real premium ones. An effective way is to categorize the brands and SKU according to brand strength, sales potential and the role in marketing, from a perspective where the brand fits in the retailers assortment. Borrowing the idea of Kamprads sausage, one could easily create other tactical tools by defining the role of the product brand, and then take appropriate actions.
- Category Icon
Description: This brand is a staple of the local/international market. Its history and reputation makes it a definition of the category itself. The category icon is a top level both in terms of brand strength and high volume and could sustain rough handling of its brand, since it defines the market.
Role: The category icons are the main weapon for any company with aspirations in being market lead-ing.
Actions: Defend/develop at all costs. Should be treated with care, but could due to its cult status be used with some force, also in terms of price aggres-siveness. This is possible as the market uses the brands as a definition of the category itself and would not disregard it at any time.
- Category Driver
Description: The category driver is a healthy and innovative newcomer, which brings vitality and new interest into the category, usually from a premium or top premium position. It attracts attention to the category from new target audiences and makes them stronger with the fans of today.
Without the category drivers a category could degenerate as a whole.
Role: The category icon is a tool that identifies the companies that is developing icons of tomorrow and drives the market in a forward direction.
Actions: Use with selected channels to build a premium image.
Description: B and C type of brands which brings width & depth to a portfolio.
Role: Creates volume as a whole and also show that their owner aspires to be a complete suppliers and a market leader.
Actions: Activate whenever possible in retailer campaigns. For certain brands it could be considered that it should be converted into a PL.
Description: B or C brands that suffers from decreasing profit/volumes and are considered having a hard time to recover, despite moderate/high knowledge in the market.
Role: To add to total volumes as long as listed in the portfolio by harvesting any brand value in the public.
Example: Various sub brands in all categories.
Actions: Activate in discount segments if possible, without any considerations taken to future branding issues or traditions. The only consideration whatsoever is volume today.
Retailers would love a supplier taking their time to really understand the problems and challenges they are facing. Just like all customer loves understanding.
Upplagd av Magnus Ohlsson kl. 8:09 AM
Monday, May 21, 2012
Friday, May 18, 2012
Since the presentation, "The end of the retail world as we know it, and what to do about it", made a few readers ask for more hands on advice on how to develop a better competitive strategy, I decided to repost a few earlier articles on positioning, store layout, range presentation and service development:
1. Retail positioning warfare
No matter if you are a merchant of a crowded market in Beijing or a retailer in shopping centre in Birmingham or the Streets of Copenhagen, you can be absolutely certain of one thing: That your customers have never had so many options as they have today.
To say it frankly, there are few retailers, or suppliers for that matter, that would be missed if they suddenly, over night, would be extinguished from the face of the earth. As consumers, we are overwhelmed with possibilities and offers. One store, or chain, more or less, would considerably change our possibilities to buy what we wanted, at any given moment we wanted it. The world is full of similar retailers, selling similar products. The market is flooded with standardised goods in standardised concepts. So one of the biggest issues facing 99% of all retailers today is, in a world when we are no longer needed, how can we see to that we are wanted?
Globalization, the fact that retailers cross borders at an increasing scale and speed, is giving more options to consumers than they had yesterday. And during the same period that the retailers has grown from their respective local origins into the global monsters they are today, the availability of production resources has developed even more, as modern technology has found its way even into the otherwise labour intensive Asian factories.
After WW2, and during the golden consumption decades of the 50s and 60s, production resources of the world had a hard time coping with the demand of the growing consumerism of the west. All this is now a thing of the past. To say it at the very least, there are already too much products and production capacity to meet a real need, from consumers of the world. And as the earlier less quality minded Asian industries are moving into high tech and providing design up to the level of their western adversaries, they have moves up to being equivalent.
So what is the logical consequence when similar product sare being distributed by retailers under heavy pressure to increase volumes and saturate the market before their competitors do?
Needless to say, this affects price. And why shouldn’t it? In a world of abundance of equally good products, performing equally well the only difference lies in the price. And as the low price alternatives has moved up in quality, the medium price segment has been the target for many of the big box retailers, using their international presence to by volumes at the right place for the time, and then distribute it to the place where the buyer is. As one spokesperson choose to put it: “Bad products are´nt just that bad anymore.”
And when the market don´t grow as fast as the retailers expand their already vast distribution networks with yet another store, price is certainly in the focus.
But there is yet another aspect than bad product quality that has to be overcome if consumers should be willing to increase the share they buy on discount, and that it the psychological one. Namely, the fact that consumers have used their ability to pay a little more, and thereby expressing themselves as being at a certain level on the career ladder. In many western countries a large middle class, has led to a majority of the traditional retailers being in the medium price segment. And in a world with a direct correlation between price and quality, who would like to be the one buying at the low end.
However, the aspect of quality has changed along with the rising quality in general. Look at fashion retailing as one example. A few decades ago clothing were largely bought as durable investments that should last over a certain period of time. Fashion was at the high end, a not really at the reach of the large mass of consumers. Since then personal expression and individualism has evolved the public into being more interested in showing who they are. The durable aspect of clothing has given away to the fashionable aspect, and clothing is not really worn to the end of the technical lifecycle of the textiles.
The Spanish fashion gigants Zara and Swedish H&M have been the ones which have harvested from this transformation, and have to a large extent made it happen. While the traditional clothing retailer used to work with a few collections each year, Zara and H&M are constantly pushing new fashion to their store at a price level much lower than otherwise expected from a fashion retailer. Zara has a reputation of copying trends and model from the catwalks and then get them to the stores faster than the famous fashion brands themselves. The Spanish retailer has some 200 designer working full time to get the right models out to the stores faster than anyone before them. In a Zara-world, getting a top or a pair of trousers from the drawing board and to the stores in less than three weeks is an everyday operation. Zara launches two minicollections each week, using no promotions or tv-commercials whatsoever. There is no fixed assortment and as a true fashion retailer, it changes with what is hot right now. The store being their only medium, they are situated in a building with an “interesting architecture” and as consumers learn that they are launching new stuff at the speed of light, their customers come there often.
H&M has been growing internationally the last decades into being a hot fashion retailer, and hardly anyone buying from their 5th Avenue store in New York, where the windows change during the days to show a different offers to the people passing by at their way back from work, than what they saw when they walked buy on their way there, could guess that H&M still struggle with a low quality image of the elderly consumers in Sweden that remember its first years in a time were clothing where meant to last.But now, when fashion is changing faster than ever, who needs durable cloths? And can anyone doubt a retailer that has sold both Lagerfeld and Stella Mc Cartney outfits at discount prices?
The horn of plenty is leading to a situation where consumers have understood that whatever I want to buy, there is probably a better price somewhere else. And when they have slowly realised that low price necessarily do not mean low quality, the bargain hunting has reached a new level. Because, if one could find a product with the same function and similar perceived quality, at a considerably lower price, but without the frills of the market leading brand, would´nt that be a smart thing to do? And at the same time, wouldn´t one be a total moron to pay more for a similar product if one had the choice? This psychological change has made the low end to become the “smart buy”-segment.
To borrow the words of Allen C. Questrom, JC Penney Company: “While there once was a stigma at-tached with bargain hunting, the only thing consumers seem to be embarrassed about is paying the full price”.
That about sums it up…
From mainstream to extreme
So EDLP – Every Day Low Prices – retailers have challenged the medium price segment from below, possible by rising average product quality and boosted by consumers changed perception of what quality is all about. As discounters of all categories has moved across the continent, there is almost always a discount alternative within reach of all consumers.
- German Aldi and Lidl within the supermarket segment.
- Swedish IKEA within interior decoration
- Finnish K-Rauta and German Bauhaus within DIY
- British Dixon and German MediaMarkt within brown and white goods
- Swedish H&M and Spanish Zara within fashion
- American Toys R US within toys
The ones having the hardest time to cope with the newcomers are often the local, by tradition, medium price segment, mainly because the discounters of today use their massive purchase power to buy the same brands as traditional retailers do but at a lower price and then selling it buy less margins. And often having newer and better looking stores, who would want the old ones?
The medium price segment has, in general, been to similar in terms of quality and perception compared to the discount alternatives to be able to compete on the same level. That is the difference in price has not been up to par with the value it deliver. The medium price segment have not been able to deliver value for money, the option of self expression or any of the criteria needed to compete at the same level as the big box discounters.
So if you really want to stand out in a crowd it is the upper segment you have to go to, not necessarily luxury, but up to the premium level. The arrival of the discounters came timely as consumers demand of new products began to rise on every level. In a time where more and more wants to define their personality and show who they are, and at the same time have it all, buying some of the things you need at a lower price is almost necessary to be able to buy the things you want.
Looking at all the things any European fills (or litters) their home with, continuing buying everything at medium price level would not make room for all the consumption that any middle class wants these days. Anyone would expect to own a car, or two, a mobile per person, a DVD, a comfortable home, an ok closet given the line of work you do, the possibility of going on vacation at least once a year, and so on. The income of the working force has not risen in the same pace as the possibility to spend it. It usually takes some degree of compromise to get all the things you want. And this is where today discounter comes in handy. Discounters make it possible to by standardised products, with an ok quality at a low price, and thereby make room for some consumption in the premium segment within prioritized areas, primarily those who really define the consumer as an individual. So one person could by a BMW and the go to Lidl for cereals, while another person buy a luxury fishing gear and an Armani suit, while skipping the car totally.
Buying discount is no longer a thing for the poor, and buying premium is not only for the rich. The consumers jump from one extreme to the other depending on what the category and the product or brand means for oneself as an individual. If it helps define who you are in a good manner, then it is bought at the premium segment, and if it is considered an unprioritized commodity it could just as well be bought at the lowest price possible. And this is a major difference from yesterday, when everyone consumed at the same level as you were on the income ladder. The rich were buying luxury and the poor at discount heaven.
Markets with increasing sameness and competition, diverges from mainstream to extremes, that is the bulge that the medium price segment consists of, is flattened out and replaces by to minor bulges, one at the smart buy, and one at the premium segment. And at the same time markets diverge in another dimension as out of town category killers at the same time as convenience concepts pop up in neighbourhood and city centres. The extremes are growing, thinning out the middle.
This development has led to dramatic changes in the retail concepts of the mature markets of the world.
As a consequence of the increasing competition retailers are bringing new formats into the action. To a large extent, those formats could be fitted into four main categories of development, each with their own characteristics and success factors.
Discounters are the fastest growing retailers today as an overcrowded marketplace logically breeds price competition. The discounters generally offer a smaller range to be able to create an efficient supply and logistic engine to feed the stores. For some consumers they are a supplement of the ordinary super market for specific items, and for other people the main store.
Considering that 90% of a typical shopping basket for a family is built by choosing among some 150 articles, it is understandable to grasp the ongoing behind the recent growth of the discount sector.
Discussing discounters it is also critical to realise that discounters are not all the same. Some hard discount concepts like Aldi carry 90-100% private labels, while other like Lidl supplement PL with the market leaders in every category, if possible, giving the consumer a reasonable offer even if brand con-sciousness is a factor. Other growth strategies includes small scale, small village locations, such in the case of the German Schlecker.
The psychological factor behind the public acceptance of buying cheap in terms of a polarized consumption has been discussed earlier.
Also, several discounters has moved up on the image ladder projecting themselves as “a real supermarket” by shaping up store environment, shopping experience and adding certain products to build a quality image. An example of the latter is Danish Nettos incorporation of ecological products. Through better logistical systems the number of SKU:s can also be set at an higher level to meet consumer demands and play the game of being, the real thing.
Being a true hard discount operator, controlling costs within the organisations are critical to be able to achieve financial goals. For companies such as Aldi typical staff costs is around 3-3,5% of total turnover, and the small range combined with a well oiled logistical machinery are keeping stock costs at some 0,01% while marketing stays around 0,1% of the turnover. Total operational costs (excl. goods) are kept below the 10% level. Keeping costs down are essential to be able to keep prices down.
Dealing with discounters
Discounters are serious about their price image and totally committed to preserving their image as an every day low price provider. Any branded goods supplier trying to tell them stories about brand strength being a reason to sell their goods at a higher price are shown to the door, and suplemented buy a non-branded product.
From a brand owner and supplier point of view, this is bad news at first look. On the other hand, neglecting to se the upside of discounters, could prove disasterous given the fact that discounter share of many markets are up to 30-50%, leaving a small volume for “the others” to battle over.
This being the fact, lets look at discounters from a positive perspective:
Their size and market share make turnover/SKU reach fantastic figures if compared to their competitors. Discounters are good customers if correctly understood and treated as what they are – a logistic battle cruiser always looking for their next target.
- A campaign together with a discounter will move large volumes
- They know what the want and usually leave little room for understanding.
- Centralized organisation makes negotiations uncomplicated
Discounters can, due to their large share create fast penetration of new products and move markets shares, as well as help getting over stocked items out of the warehouse.
On the dark side of things, discounters are price leaders, closely monitored by other operators, and to some extent the ones setting the standard on key products. Discounters must be treated with respect.
Out of town hypermarkets
As demand grows so does the stores. For the car owner, having a time conscious family, making weekly shopping trips, hyper markets are the format of choice.
Providing a range of more than 30000 SKUs, a number which in some cases in Germany and the US could be multiplied with two or even three, the multitude makes all the difference.
Typically situated out of town, the hyper markets offer a huge assortment of both food and non-food articles, striving to get as much share of wallet of their customers as possible. With this in mind they are also the number one developer of service products such as loans, insurances and so on.
Having a range with a multitude if choices in every category, some hyper markets exists as premium suppliers of ecological fresh produce while others are in the lower price segment. Having a large degree of families and given the market development as a whole, hypers on the European arena usually leans towards the discount side, rather than being the premium provider, at least as an image. The size of the assortment leaves room for at price/quality ladder were both the high end products fits along with the bulk family pack at discount prices. As families are a key target segment, price is always in focus, in terms of being able to bring a low price offer to the market at any time, in any category. There is always a good offer of the week.
Dealing with hypers
Hypers have two main differential factors:
Size and price. That is the ability to provide the entire need for even the picky consumer looking for a special brand, as well as providing an EDLP-offer to pay for the gasoline needed to go to the store.
As with discounters hypers move huge volumes, but mainly on campaign-SKUs. Due to logistical reasons hypers also make cuts in their assortment, putting C-brands out in the cold in favours of PL.
Hypers are an interesting partner to get the level below top sellers to the market as they need it to build the image of the total provider. The potential of being a campaign-SKU provider needs not to be addressed.
Neighbourhood stores turning into convenience providers
Yesterday’s neighbourhood stores providing the basic needs for the customers are slowly adding products and services to attract an ever more demanding, time conscious audience.
Stopping by at the convenience store these days could mean gripping a cup of latte, or a snack engineered to fit on-the-go consumption or a quick stop on the way home from work to get something for dinner. On many markets a large degree of the popula-tion eat out at night or deciding what to have for din-ner at the last possible moment, creating the need for a large “pantry” at close range, as going to the super market seems as a major event as a daily routine. To “dock” into the convenience station at the corner requires much less time, and energy.
This has created the modern convenience store with a wide but shallow range of staple goods often complemented with some form of MRTE - Meals Ready To Eat, on the go or at home.
The petrol stations are often providing the same service and function for the driving audience.
Dealing with convenience stores/petrol stations
Convenience stores are interested in one thing only, to be able to provide convenience at any time, thereby providing repeat visits.
This means that they have to carry well known brands in many categories, with package sizes adapted to either smaller households or on-the-go consumptions. No one goes to 7-Eleven looking for a 20 kg sack of flour.
They are also interested in bringing in new interesting products giving new convenience experiences for their customers.
Premium players create innovative shopping environments
While discounters roam the market with their lean and mean assortment/price-combination, other types of players emerges in the other end of the market.
Premium providers, either in the form of evolved super markets, product specialists, serving a small niche, have “everything” within a category or experience shops inviting the consumers to be involved in the product itself.
The premium segment grows as a counter weight to the discounter. However, the volumes cannot be compared to the discounters, but still, the premium providers are an interesting factor adding vitality to the market, above the level of the traditional supermarket.
One premium providers that deserves mentioning are M-Preis, an Austrian supermarket having the pay off, the Seriously Sexy Super market. Combining an astonishing architecture, unique for every store, with a wide assortment lifts M-Preis far above the average.
Others include Vom Fass, niche operator selling unbranded oil, vinegar and spirits enabling their customers to pick from over a hundred bottles, combining it with their liquid of choice and thereby creating their personal product, at the same time as they have an interesting chat at the store.
Dealing with the premium provider
Premium providers survive by being special, enabling them to charge more due to the shopping ex-perience as a whole.
Therefore selected and small exclusive brands always should find their way into the premium alternatives, which also add life to the category as such, as it is often frequented by connoisseurs and early adopters looking for the next kick.
Needless to say, price comes second.
Logistics and branding
Apart from the four main development directions there are also the branding and logistics powerfield to take into consideration. There is a common misconception that low price operators cannot use branding. Anyone that have visited a flagship store of an discounter knows this is not true. On the other hand, a streamlined logistic optimizes concept could be a part of a premium concept. Beeing a premium player does not exclude cost optimization!
2. How to create a optimized store layout
The layout of any store is critical to obtain profitability. The main goal of layout planning is to handle customer flow, goods flow and to create as many hot spots as possible in order to control the focus of the customer around the store. A good layout ensures that the customer gets in contact with as much of the range as possible during the visit, in order to make certain that any craving could be satisfied. The fact that the customer actually get an overview of the entire offer and stays as long as possible in the store is crucial in order to obtain a high turnover from each customer. It seems logic to presume that if we show as much as possible, something will fit the need or lust of any visitor. You can only by what you see.
(Black = Customer flow, Red = Hot spots, Blue = Decompression zone)
Basically, there are to separate types of layouts, a controlled layout and freeflow. In the latter, no attempt is made to stear the customers path around the store.
Here are the laws of layout planning:
1. The goal is to, in a natural way, lead the visitor so that the entire sales area is covered during the tour around the store. In larger stores the main aisle should be stretched as close to the outer walls as it takes to get an overview of the departments presented on the wall.
2. Secondary aisle should make it possible to enter the departments along the main aisle thus making the range easy accessible.
3. Special consideration should be taken in order to get traffic into the corners which often are overlooked in the planning phase, making them unefficient sales space.
4. The mail aisle should not be to straight. As humans have eyes attached to the front of the head, we look forward if nothing attracts our attention. This means that we sometimes need to break the straightness which can be done in a number of ways. Creating roundabouts by putting merchandise in the center of the mail aisle, and thereby force the visitor to slow down and change direction is one way and making the main isle turn by predetermined intervals is another way. Placing mirrors is another way of controlling customers speed, as humans are selfloving creatures, and bound to slow down for a better look at oneself.
5. The layout should present the departments in a logical order. The most important and brand critical range should be placed as to create a first impression.
6. Aside from customer flow, goods flow before and during opening hour must be planned for.
7. At turns and "hooks" in the aisle, consideration should be taken how to make best use of the hot spots created and that customers have in front before they turn. This is often the best selling areas of the store.
8. Some stores have many seasons in their commercial calendar. Flexibility and activitydriven range must be taken into the equation. A solution could be a permanent part of the store and some flexible areas in order to make room for seasonal changers.
9. Customers tend walk to the right when you walk into a store. Then we turn to the left and way back to the counters. Along the entire customer flow there shoul be activitity areas and any change in the directions of the customer flow should be used with smartness.
10. The earlier in the store the visitor is converted into a customer the more effective will the entire store be. A good offer that fits a lot of the visitors needs is a simple tool to get it done. Inside the doors of any store there are a "decompression zone" were visitors in their minds still are on their way into the store, with the same pace as outside the store and were the customer is trying to orientate. This zone should be made as small as possible. A good offer is a good and easy way of doing this.
11. A possibility to sit down is a good investment in order to release the stress of followers not beeing a part of the actual buying process. It takes the pressure down and leave the buyer at peace.
12. Make the walls accessible and interesting so that there are a reason to take a step of from the aisle and move into the department.
3. Range presentation
Range presentation is a crucial tool of visual communication and often a missing piece in the communication strategy. The visual experience and interaction with the product is the brand come true in a very practical way.
Range presentation can be used to solve the following tasks:
1. Create interest, engage and inspire the visitors
2. Induce impulse sales
3. Support mechanical or personal sales
4. Project the relevant brand values
5. Lay the foundation for future sales
6. Bring knowledge and advice
7. Create the impression of an innovative store
8. Help customers in choosing the right product
2. Induce impulse sales
3. Support mechanical or personal sales
4. Project the relevant brand values
5. Lay the foundation for future sales
6. Bring knowledge and advice
7. Create the impression of an innovative store
8. Help customers in choosing the right product
Needless to say, this does not happen by accident, but through careful analysis, positioning decisions and hard work.
Visual communication means getting involved in very basic functions of the brain, often below the concious level, for exampel by using lightning to steer the attention to lightened areas, thereby bypassing any logical filter. The interpretation of the store´s brand promise goes beyond reason when using visual communication at it´s best.
Example of messages to project through range presentation is listed below:
"There are a lot of options here" - an open store layout gives an overview of the range an the offerings and makes it possible to digest a major part of the range in a single eyeglance. The more the customer is able to watch at once the wider will the range seem. The experienced width of the range is easily increased by 25% by means of correct merchandising, thereby easing purchasing and inventory management, keeping down costs.
"There are a lot of offers here" - large merchandise density implies a low price image.
"There is a range that fits together here, I get a coordinated offer" - Well selected and coordinated products, shown together in a way that invite the customer to pick a whole bunch of products that fits.
"They really seem to have the latest in my favourite category" - New products on display early and frequently all around in the store.
"This store really communicates expertise" - the customers should be shown a well structured assortment with an idea for whom/what the different items are targeted to. Structure in merchandising also helps building an expert image.
"This store is for the whole family" - everything is children safe and if needed, parents can change diapers or have a snack without having to end the shopping tour.
"This store sells products with high quality" - selected products are shown as jewelry on display and with information about the quality features. The lesser the merchandise density, the more quality appeal.
"This store helps me to find what I need" - Top 10-lists and displays of top sellers/most wanted products making buying decisions easy. Logical navigation is a must.
Branding, out of store communication, concept development must be done in coordination with range presentation in order to bring the brand alive.
4. Redefining service
Apart from price and assortment, service has been a key competetive factor in any retail concept. The question is; how much energy do retailers of today innovate their service offer, or even define what good service is? Up until a few years ago, service could be defined by the picture above - a wide assortment to suit any taste, and a top of that, a sales person ready to please.
Is this a universal definition that could last for all times? Most probably not. How many sales persons have you met in your life that really delivered something above the ordinary? How many retailers have categorized the range so that it is easy to find and choose among the merchandise? In a time where a lot of customers do not want to be bothered by a sales person at all, but make his or hers buying decision alone is time to redefine and widen the defintion remarkably.
People are still important, but cannot and should not compensate for bad store planning or signage. The store should be arrange to speak by itself, enabling consumer to choose if and when to interact with sales person.
1. Visualize the service offer
Making it possible to get an understanding of the complete offer saves time, both for the consumer and the staff, as well as it is strengthens the image of giving a wide array of possibilies.
2. Let discount offers speak for themselves
This makes it possible for sales personnel to focus on the consumers wanting the more advanced options.
3. Show that all products are not the same
Making suggestions on what to by in a specific situation, making top lists and arrange combination offers to make it possible to buy a complete function is different than only display products for consumers to discover for themselves or need to ask a person for help to find what they want.
4. Make the offer reachable in time and space
Vendingmachines are making their into new categories including fashion, mobile phones, food and shoes...
5. Use technology to show alternatives
Michel Giullon, an optician has a wide range of glasses but uses simple technology to help people choose.
6. Invite consumers to interact with the store
Build A Bear Workshop, REI, Vom Fass and other retailers make the visit itself a true experience and a part of the product itself.
7. Use education as a possibility to build relations and make consumers even more aware of the possibilities
Apple host seminars in their stores and brittish DIY-retailer BBQ offer tool training to women and children. Guess why? It works!
8. RFID will mean everything in service development
Metro Group have worked with RFID and other high tech devices in order to take service to a whole new level.
9. Don´t fake it-Make truly unique solutions
CB Perfumes takes personalized products to the extreme. Christopher Brosius, founder and owner states "People who smell like everyone else disgust me" indicating that everybody ought to have their own personal scent. And not surprisingly, this is what he offers. At CB Perfumes you can either choose to go through an interview of some 30 minutes where your preferences and personality is evaluated whereafter your unique blend from more than 5000 scents are mixed as you wait. You can also go for the option of recreating a "scent memory" from your child hood or other period in life when you felt comfortable. How about re-live your feelings by sniffing into a bottle of "Grandma´s kitchen"? This is true personalization.
So, take a look around you. Is showing up and smiling in your stores enough anymore?
Upplagd av Magnus Ohlsson kl. 3:37 PM