Last month we focused on understanding the market, competition and your products. In this article we’ll focus on the physical premises. We’ll take a quick look at location, then street and window displays, shop layouts, ‘sweating’ selling space (gondolas, front-ends, shelves, dump-bins, check-outs) and the use of in-store signage and ticketing. This is a technical area so we’ll go into some detail.
Traditionally retail locations have been regional, community or neighbourhood. Recently, though, the lines have become blurred, as discount shops now anchor shopping malls and traditional mall shops move to strip centres or into freestanding locations.
The old adage ‘location, location, location’ is evolving
Throw out your preconceived ideas about location. The old adage “location, location and location” is evolving. Accessibility (convenience), visibility and customer behaviour are the things to think about. “Customer, customer, customer” is now more appropriate. Ask not “is this a great location,” but rather “is this the best location, given our customer and competition?”
Historically retailers have sought locations with a minimum population within a defined radius, referred to as concentric rings (1, 3, 5, or 10 kilometres). Nowadays taking into account demographics only – size, growth and density – is not enough. Road systems, customer preferences and competition must be considered.
Customer behaviour, especially consistent, established behaviour, plays a big part in the decision-making process. Cluster analysis, which involves identifying both lifestyle and behavioural patterns within specific regions, has become topical. Shopping, in metropolitan areas (where parking, road access, and visibility are to be considered) is not the same as in suburban environments.
Collecting and interpreting information on existing, proposed, and potential competitors is vital when making final decisions. Retailers, developers, and brokers need to push the boundary and look beyond the obvious. Woolworths (food), for example, is to be found online, in shopping malls, at gyms, airport terminals, and high in our skies with BA Comair. Formally ’B’ choice locations like garages and Corporate HQs are getting a breath of new life as customers seek service and convenience.
It’s about accessibility, visibility and traffic
Don’t confuse high traffic areas with lots of customers. You need to be located in places where customers fit your definition of target market. Other questions to ask include. Is the area served by public transportation? Can customers and delivery trucks get in and out of parking areas easily? Is there adequate customer parking? Depending on the type of business, it’s considered wise to have between five to eight parking spaces per 300 square metres of retail space.
With respect to visibility, look at your location from a customer’s point of view. Can your shop be seen from the main traffic flow? Is your outside signage clearly visible? Compare it to that of an Engen Convenience Centre or Woolworths Foodstop. Is it as simple and enticing? In most cases, the more visibility your shop has, the less marketing you need to do. A shop located out of town in a stand alone location needs more advertising than a shop located in a mall.
The ‘Golden Inch’
Now over to the physical premises. There are some ‘golden’ rules and simple practices. The shop front (pavement, windows and front entrance) must always be clean and free of clutter. Trading times must be clearly communicated as well as emergency contact numbers. As regards displays they must be updated regularly with the latest information as well as core and new products. Windows must be given ‘fresh’ appeal at least twice a month. Shop entrances should be welcoming.
Once inside the shop it’s as much about flow as maximising selling space. Getting the flow wrong (and adjacencies) means some products will not be exposed to the customer. Experienced retailers talk of the ‘golden inch’. There are far too many variations to highlight one shop layout as opposed to another so you will need to stay alert and identify what works for your customer. Here’s a quite revolutionary one from a pharmacy in Germany. Their name is EasyApoteke.
Supermarkets typically lead with flowers, fresh fruit and produce. Wide ‘drive’ aisles encourage customers to shop from the back of the store out. Your main departments should be clearly signposted with ‘hotspot’ displays to attract attention. Customers must be able to see past aisle fixtures to back-walls. Products on back-walls should be within easy reach of customers.
If back-walls are used as stockrooms then the same products must be available lower down. The front ends of gondolas should be used for promotions or advertised specials. The most important shelf within a gondola run is the middle one. Best sellers should be at eye-level where customers can see and reach them.
Top shelves should be used for smaller items (still within reach) and bottom shelves for heavier, bulkier items. Dump-bins, typically with depleted ranges and marked-down items, should be located in high traffic zones, alongside gondola front-ends and on the way to tills.
Merchandising is a topic on its own. There are ribbon displays (same product along one shelf) and colour blocking (2 / 3 flavour variants on one or two shelves) for impact. Spend some time comparing food and supermarket merchandising with clothing and homeware.
In-store signage must be simple, of a standard size and font and professionally printed rather than hand written. Easy to understand messages like ‘new’, ‘reduced’, ‘special value’ or a specific price point communicate all a customer needs to know about products. Use management reports to track your rate of sale and be prepared to open up space for best sellers / key value items (KVIs) or lose poor sellers altogether.
The future of retailing
One last word. Irrespective of the future of e-commerce, shopping will remain a social or sensory experience. Customers shop to be with other people and to touch, taste and experience product. Branding and advertising of goods are important (especially with today’s digital technology), but people love to shop and when they shop the decisions they make are influenced on the shop floor and in the aisle.
To compete in the future entrepreneurs will need to pursue an “integrated shopping experience,” melding online shopping with physical stores, in a setting where selling and service comes first.