Within a succesfull branding process, a clear basic idea and the uniqueness of the products offered are not enough. The result should also be attractive in its elaboration. The quality of the translation of the basic principles into the store image is therefore an extremely important succes factor. In order to carry out this process in the best and most complete way possible Jos de Vries The Retail Company has developed a practical toolbox.
This toolbox contains all the tools to create a complete and distinctive store concept. Using this toolbox, you will avoid making random decisions about the store´s image. They will always be rooted in the basis principles of the formula.
The various parts included in the toolbox are:
Tool 1. Store lay-out
Tool 2: Store design
Tool 3: In-store graphics
Tool 4: Visual Merchandising
Tool 5: Shop front Design
The store Lay-out
A properly structures and intelligently developed layout is probably one of the most underrated characteristics of a successful store formula.This chapter will provide you with a systematic presentation of the layout. The layout will be discussed from all angles and specified in more detail on the basis of the "ten golden rules".
The importance of good layout
Why is good layout so important? Is it not sufficient to offer a well-adjusted product range at a good price in the right place? Surveys have shown that one of the most important criteria for customer satisfaction is the ease with which the customer finds his way in the store. Besides, the customer expects to be led along the main departments of the store. Therefore a good layout is a matter of customer satisfaction. Of course, there are also commercial factors that argue in favour of the importance of a good layout. A good layout provides you with the opportunity of influencing store turnover.
The appropriate shelf layout, the arrangement of the product range or a well-thought out spot for special offers all have a direct effect on turnover. So a good layout may very well create a boom in a store´s turnover!
Finally, of course, the layout also has an organisational component. Each store has its own best solution for logistic problems. This applies especially to stores with a fast turnover of goods, stores that sell products that are difficult to market or products that take up a large amount of space etc. Defining specific conditions is an absolute necessity for the sale of goods that require a certain (sales) ambiance. And, finally, it is important to keep both customers and sales employees satisfied.
Purposes of the store layout
A good store layout serves many purposes, such as for instance customer flow, the prevention of shoplifting and logistics. The main purposes are discusses in greater detail below.
1. Customer flow
One of the main purposes of the layout is undoubtedly to create smooth customer flow through the store. To achieve this, it is imporant to create the right balance between fast and smooth (customer) flow on the one hand and provision of space on the other. Creating smooth (customer) flow is necessary in stores that have a high frequency of customer visits. Well-organised routing and sufficiently wide aisles can achieve this.
The danger of too smooth a customer flow is the speed. If the customer is accustomed to walking through a store at a certain pace, it is important to slow down this speed deliberately, effectively and gradually. This can be achieved by means of certain ´tools´. It does not need to involve a different layout of the available space. It can also be accomplished by a special product-range or eye-catchers in the store.
A customer needs some time to decide to buy a product. The purchase of goods from particular product ranges is determined by ambiance. For instance, a customer doen not want to be disturbed by other customers when a choice has to be made between two types of lingerie.
The layout also has a preventive task. The more poorly organised a store, the more opportunities shoplifters have to take advantage of the unclear situation.
When developing the layout, precautions can be taken that make it more difficult for shoplifters to steal goods.
Examples of this are: not to install the shelves as a poorly organised maze, adjusting the height of the shelves or placing theft-sensitive goods within sight of sales employees. These are just a few examples. At any rate, both preventive precautions and a deterrent policy can reduce the risk of a negative cash balance.
You will also want to keep logistics under control. Studies show the so-called ´final 50 yards´ are the highest cost item of the logistics chain. This is where the turnover rate is highest and so are the proportionally increasing staffing costs.
A good layout cannot completely reduce these costs, but it can make them more controllable. Short supply routes, wide aisles where necessary and adjusting the warehouse build-up to the store are important factors that can result in an improvement of the cost structure.
4. Other functions
Naturally, a good layout has other purposes as well. In accordance with the principle that first impressions count, the layout can either attract customers or put them off. A layout can provide solutions or it can complicate matters. A logical product layout will help customers make a decision to purchase, whereas an illogical order creates confusion and dissatisfaction. Depending on the business type and the sales formula, there is an ever-growing need for increased flexibility. Product ranges change more and more frequently and you want to be able to respond rapidly to seasonal changes. A good layout allows for this. Flexibility is key where the need for space, margin in the market and presentation are concerned.
This chapter is part of the Book "Let me tell you a store"
10 years ago, a DIY store was a rectangular box, efficiently laid out with shelving.
The average DIY store sells tens of thousands of different articles. Consumers must be able to find precisely the product they are looking for. Surveys have shown that customers prefer not to read signs. This means they will have to be lead around the store in a different way. Currently, concept developments featuring ‘worlds’ are becoming increasingly important. Wood, construction, electrics and tools are a DIY store’s standard ‘worlds’. However, the decoration departments such as light, paint and décor are becoming increasingly important. Each ‘world’ has its own atmosphere. Thanks to these different atmospheres, the DIY centre is being divided into departments. These departments lie along the main aisle, which is capped by an inspiring focus point. This point entices the customer to walk the entire main aisle. This leads him past each world. In turn, each ‘world’ has its own focus point. This makes it even more interesting for customers to walk into other departments and make impulse purchases.
DIY centres that entice and inspire are successful
The inspiring focus point is an essential part of a ‘world’. But due to the diversity of the various worlds, it is important to maintain a house style. This creates unity in the store. At Jos de Vries The Retail Company, we continually work on developing these concepts further. My experiences to date have shown that DIY centres that work with enticing and inspiring formulas are most successful.
For many architects, ‘commercial architecture’ is a dirty word. ‘Commercial’ is linked to ‘compromise’ in the minds of many; the art and architectural vision must make way for commerce. People rich in money but poor in taste have the last word, and many spatial artists view this as selling your soul to the devil.
But I see this extra dimension as a challenge. In addition to the fact that a building must harmonise with the urban planning and meet reasonable requirements for prosperity, each building should strike a perfect balance between space, form and function. The challenge in designing a shopping mall is not only about seeking this balance, but also about adding that extra layer allowing it to become a commercial success. So, what factors come into play?
The building must be accessible, stimulate a certain degree of curiosity and be inviting. The goal is to encourage people to visit the building more often, how dynamically and flexibly can the building be used?
Addressing the desired target group
Awareness of your target consumer is no different than for any other public building. But the design may appeal to a certain group more than others. Modern or traditional? Show the visitor what he can expect, or will it remain a surprise, hidden behind a shining façade?
People are not only destiny shoppers, heading straight for a single store. Some of them are just looking for a day out; the shopping mall in lieu of the amusement park. Larger shopping malls often integrate services from other sectors, such as cinemas, performance spaces, metro stations, etc.
What retailers will be in line of sight, which ones can you hide away? Seduction and surprise begins with interesting routing. It must be varied, stimulating, but also provide easy shopping. A boring layout does not create return customers, while an exciting view is the key success.
Plenty to think about and play around with. It is important that a retail architect is involved in the early stages of developing larger buildings, hypermarkets and shopping malls. The success of the design can be determined at this stage, success that will ultimately be reflected by the turnover figures.
Brand building becomes exciting when the most well-known national retail brand in Austria, BILLA, has to be internationalised. Here it is a question of clarifying whether the core values of the brand that are valid in Austria can be directly transferred to countries such as the Ukraine or Bulgaria.
Anyone who knows former eastern block countries, of course knows that here other core values must be placed at the forefront. Therefore, above all, the consolidation of quality criteria is a must for communication on all fresh produce groups. In countries such as Romania or Russia the exertion of influence of international retail chains is developing rapidly, however customers first have to be convinced of the difference in quality of the meat products. Frequently here directly in front of the door of a Billa market there is an open meat market offering very questionable hygiene conditions. Here Billa has to actively communicate to its customers all its quality assurance measures to clarify the difference in hygiene – a condition that Billa surely doesn’t have to stress to this extent in Austria.
Standardisation of POS is also part of the internationalisation of a brand. As the biggest supermarket – operating in 10 countries in Central- and Eastern Europe, Billa is currently expanding with markets of a size of 600 to 2500 m². The markets have been clustered according to size into different standard layouts and range sequences. These standards form the basis for the POS appearance. Thus, for example, markets in Vienna are designed according to the same principles as those in Moscow.
In order to stress the brand promise of Billa, the shop image reflects this directly. The customer is, independently of the size of the market, always guided first through all the fresh produce groups. This fresh produce area covers about 50% of the sales area. Here there are of course corresponding variations between small supermarkets and larger Billa markets similar to discount stores. The latter are characterised by a more liberal design e.g. the location of the fruit and vegetable section.
In order to stress the value for money aspect at Billa in every market there are promotions in the most frequented areas. Here, the best offers from the current flyer are displayed by a large presentation of the goods. In addition, the low-cost brand “Clever” is given sufficient space in all Billa markets for positioning.
To sum up, the management of an international retail brand works by creating standards that incorporate core values that go beyond national borders. In addition however, it is necessary to be able to react to specific national characteristics, for this a certain level of leeway is to be created.
Under the roof of EUROBILLA AG, based in Austria, all foreign activities in the supermarket section of the REWE Group in central- and Eastern Europe will be coordinated. The European expansion started in the beginning of the 1990‘s and increased step by step in the last years.
Meanwhile Billa is represented in Italy, Bulgaria, Croatia, Rumania, Poland, Slovakia, Czech, Ukraine and in Russia. Eurobilla AG is responsible for the production spreading management strategies as well as for the guidance of the countries and the disposal of regional teams of all countries as a service center.
Rewe group gained in the year 2006 in Italy and had a conversion of 1,91 Bln., in the central countries and East Europe a conversion of 1.61 Bln.
Since October 2007 Martin Gaber has been Eurobilla Business Development Manager and Marketing Manager. Before, Mr Gaber was project manager and Sales/Purchasing Coordination Manager at Merkur Warenhandels-AG, a subsidiary of Rewe Group Austria. Apart from having an economics degree, Martin Gaber also has a MBA specialising in retail.
Let me tell you a story about Russian retail – one of the most rapidly developing and interesting markets at the moment. Do you know something about Soviet retail? I do, I remember it very well. It’s unforgettable when there is absolutely nothing in the stores! No bread, no milk, no meat... To buy food, people had to stand in queues for hours. Maybe they were lucky and there would be enough food for the family today, maybe not.
At that time being a salesman in a store or a manager in a warehouse was a very prestigious job; it meant free access to many goods. People were ready to overpay or bribe to get certain products or the clothes they needed. This situation was caused by failing production and distribution politics and resulted in a total crisis in the Soviet system. In 1991, the Soviet Union came crashing down. Nobody could imagine how it would develop in the future.
When the Russian borders opened, a massive inflow goods followed. For the first time in their lives, most people could taste products from abroad. Despite high inflation and the majority of the population’s very low income, everyone wanted to buy and taste new products from abroad. Coca-Cola, Snickers, chewing gum – it was all so new and attractive for us!
Everybody tried to be a businessman. People with money invested in clothes from China or Turkey and sold it quickly in the market place. Nobody cared about quality, only the cheap price mattered. It was a time of fast and high-risk money. And it was the time that most modern retail companies started. We call this period “Crazy 1990”. Most people continued to buy everything on the markets or in small kiosks until the first supermarkets opened in 1996. There were no special retail technologies or good lay-outs. Only price and assortment were important.
Today, Russian retail remains one of the most rapidly developing and specific markets. The official sales volume in 2006 was 150 billion dollars. Unofficial statistics estimate that number is closer to 240 billion. The modern retail formats have a market share of only 15% of the entire retail market. This shows competition between modern stores is not very strong yet. It also means that Russian retail is not consolidated at all. In fact, there are no chain stores in Russian cities. The reason for this is the enormous distance between cities, placing sever strains on distribution systems. But Russian retail is developing very quickly and retailers are studying and learning to build stores that match European standards. Product and service quality are becoming increasingly important.. Stores need an efficient lay-out, a strong corporate identity and added value compared with competitors. It is predicted the Russian retail market will be the fifth largest rapidly development market in the world by 2011. Hypermarket formats are also set to take a leading part, with an increase in their numbers of 40% per year.
As you probably know this weblog is not only available in the English language, but also in Dutch, Spanish and Russian. Soon we will present you also the German version. Ofcourse we will inform you on any changes.
We want to thank you for interest and invite you to share your opinion on firstname.lastname@example.org or via the comment fields below every article.
Every single day, we, the human species, ask ourselves: “where is this world going?”. As far as I’m concerned, the answer is simple; I have no idea, but wherever it is, it’s going there at a breakneck pace! Likewise, in the world of consumerism, we no longer live in an era of consumers but rather in the era of “prosumers” and “transumers”.
A “prosumer” is the fusion between a consumer who is also a producer seeking to sell the goods or services he/she has produced or owns to other consumers. Take the eBay phenomenon, for example, or even more surprisingly, sports retailer Decathlon, where second hand products are being sold in the store!
“Transumers”, on the other hand, are consumers driven by a transient lifestyle, freeing themselves from the hassles of permanent ownership and possessions. So-called “pop-up stores” are springing out of the ground to cater to these new demands, as well as traditional luxury retailers renting their goods instead of selling them (e.g. Beg, Borrow or Steal).
So how do you keep up with this quickly changing world? While everybody seeks their answers in that magical word, Innovation, I believe there is no innovation without creativity. Generating innovative products or services requires a preliminary phase, namely the creation of new ideas that could be (and not should be) converted into a final product. Unfortunately, many companies today tend to overlook or ignore this fundamental preface to Innovation as they consider it a waste of time. I understand this preoccupation, as it has been statistically proven that only 1 out of every 89 new ideas is actually converted into a “possible solution”. But it is so easy to do! There are many techniques that can help you generate new ideas. Take SCAMPER, for example. This technique, developed by Bob Eberle, is a checklist that helps you to think of changes you can make to an existing product in order to create a new one. You can use these changes either as direct suggestions or as starting points for lateral thinking. SCAMPER stands for:
S - Substitute – What can I substitute i.e. components, materials, people
C - Combine – What can I combine with other assemblies or services, integrate
A - Adapt – What can I adapt/alter, change function, use part of another element
M - Modify – What can I increase or reduce in scale, change shape, modify attributes (e.g. colour)
P - Put to another use – What can I put to other use
E - Eliminate – What can I remove, i.e. elements, simplify, reduce to core functionality
R - Reverse – What can I turn inside out or upside down, also use of Reversal.
So go on, try it with any product, service or idea you have in your mind right now. Just ask yourself these 7 simple questions and see where it takes you… and remember one thing: leaders of today anticipate the demands of tomorrow, for which you first must be creative and then innovative.
Let set the record straight first: we are not store designers, we are strategy and communications advisors on retail concept development.
That’s yet another misunderstanding. A good layout, the right merchandising and strong store communication are no more expensive than the same things done badly.
In store development, it’s not just about the prettiest, but about developing a successful retail concept.
In terms of developing a ‘Retail Brand’, the Edeka Group has the biggest lead, because they think in a customer, sales and marketing-oriented way. The Globus concept, which we developed three years ago with Ogilvy in Ludwigshafen, is another good example. By comparison, most competitors are product-oriented.
What were the considerations for the new Globus sales concept?
Successful retail concepts are built on three pillars: price, assortment and added value. To date, most hypermarkets only take price and assortment into account, leaving added value by the wayside.
What concrete task did Globus set?
Make the stores more pleasant for customers, so they would visit not only for the product, but also for the shopping experience, like at Ikea. We also wanted to shake the image of outlet as a ‘Brandplace’, visited only by customers of industrial brands, and move towards an emotional ‘Marketplace’ where Globus could come into its own as a ‘Retail Brand’.
That’s easily said, but not so easily done. What’s so special about the Globus brand?
Strong experiences are created, and customers go from shopping experience to shopping experience. They are repeatedly confronted with the following core message: “At Globus, the World is still all right.”
What do you mean by that?
Globus customers find traditionally made foods in each department. This central message is in no small part supported by a variety of product guarantees and product information.
What retail concepts can you recommend to our readers as ‘experience material’ in Europe?
In terms of supermarket chains: Ahold daughter Albert Heijn and the independent company Jumbo, as well as small outlet exploiter ‘Iper’ in northern Italy. In terms of convenience stores, Tesco and Sainsbury’s in Great Britain, and the Tesco ‘Extra’ markets for larger stores.
You mentioned Ikea. What is it the Swedes do so well?
Ikea begins communicating with customers in the parking lot. From that point on, Ikea is in constant dialogue with them, until or even after they’ve driven away again.
Other than Edeka and Globus, you hardly mention any examples in Germany.
In general, German retails hardly communicate. They often only tell their customers their products are cheap. They underestimate the importance of communication. That’s a mistake, because it’s what allows business to profile themselves.
What do you base such a claim on?
How many people work in the marketing departments of Germany’s largest retailers? Three? And how many work on the shop floor? Two, three hundred? That’s a severely skewed ratio. British market leader Tesco employs just as many people in the marketing department as on the shop floor. That’s a huge difference.
If that’s true, what is the cause of this customer marketing blind spot?
Marketing is seen as an annoying expense. There’s still the widespread belief that marketing is little more than advertising weekly specials in the papers. That’s not brand strategy.
Will it still be possible for large-scale stores to reshape themselves in the future?
Globus, the Edeka ‘E centres’ and Hit are perfect examples. They embody what we refer to as ‘New Value Retailing’. We use the term to refer to concepts that deliver top performances in the areas of assortment and price while providing a true shopping experience.
What do you estimate are the survival odds for sales surfaces larger than 10,000 square metres?
If a retailer really listens to his customers, whether a store is 1,000 or 10,000 square metres large is irrelevant.
Based on this assumption, what makes a good sales experience?
Many factors influence the wide field of sales experience. The retailer must first and foremost provide the customer with a product experience with actual added value. My tip: set up every department as if it were a wine department.
Why is the reality so often different from this ideal?
Customers can rarely clearly recognise a strategy behind the assortment. The question the retail must ask himself is: “What do I want to let the customer experience?” At this point, he needs a communication concept.
And what is your definition of a convincing communication concept for retail?
If the customer takes two things home: the products bought and a positive overall impression of the retailer’s identity.
How does one create such an impression?
The retailer must tell a story the entire time the customer is in the store. Storytelling includes answers to the following questions: “Who is the retailer, what does he stand for, and what does he want to achieve together with the customer?” The retailer must constantly work from the customer’s viewpoint and consider what added value the customer is getting.
How do retailers communicate this added value in concrete terms?
A store has a variety of communications options for both in-store and without. Retailers can use the layout, design and signage as direct and indirect means of communicating.
What key consumer trends must retailers take into account in terms of overall communication?
Customers will always develop a value preference for values-oriented businesses.
Can you provide a concrete example of this customer values orientation?
One-third of all Dutch 15 year-old girls is vegetarian. The retailer must consider the impact this has on his business if this group will be his primary customer base in ten to fifteen years.
How can a retailer prove his values orientation through consumer communication?
Via the ‘right’ products, whether that means organic or vegetarian products, by bringing effective Visual Merchandising to the forefront. These products must become the key component of contact with the customer, as is the case with the Whole Foods Market or Trader Joe’s in the US.
We’re all getting older. Should we be paying more attention to the over-50 generation? Does the market need to reinvent itself? The problem with this customer group is that targeted communication is difficult. I don’t buy into the concept of either senior citizen or child supermarkets. The most one can do is provide a sub-selection of products interesting to specific customer groups.
How important is store layout in the grander scheme of communication?
Store layout is one of the most important parts of the market; after all, every metre counts. Without good layout, store capacity cannot be used optimally. Good store layout can lead to a 20 percent turnover increase.
What makes or breaks it?
When designing a retail concept, a lot depends on the retailer’s price positioning and the message he wants to communicate to the consumer. If the retailer is shooting for a high-value concept, he needs to adopt a more flexible layout.
In the industry, they say shelving design is an art in itself. What’s so artistic about it?
Shelving is where logistics and marketing meet. It’s pretty much the end of the line for both. Albert Heijn is an example of this.
Albert Heijn’s shelving systems allow 15 percent more products to be presented on the same sales surface. They can be adjusted to the millimetre, but the height of the bottom shelving floors is reduced from 15 to 1.5 cm, and the average height of shelves from 55 to 45 cm.
Visually attractive presentation systems, like Tchibo’s, are often used on the shop floor. Doesn’t this prevent the creation of a visually uniform Retail Brand?
Not if they’re deployed properly. Tchibo does have an incredibly strong marketing concept, though. For example, in Sainsbury’s in England, the surroundings of the Tchibo stalls is still clearly a Sainsbury’s environment.
What’s the take-home message?
Trade and industry are better off investing in joint visual marketing on the shop floor than skimping on advertising costs.
Global powers of retailing 2009: Discounters on the rise as downturn leads to consumer cutbacks, according to Deloitte study
This is demonstrated in the report, which ranks the 250 largest retailers in the world by fiscal 2007 sales figures, by the strong performance of discount retailers in the Top 10. The big movers were Schwarz Unternehmens Treuhand KG (Schwarz), owner of the Lidl supermarket chain, which climbed three places from 10th to 7th. Over the past five years, Schwarz has grown at a faster rate than any of the current Top 10 with a Compound Annual Growth Rate of 12.6 percent. Aldi GmbH (Aldi) also climbed this year and was the only new entry in the Top 10 taking the place of Sears Holdings Corporation (Sears).
Dr. Ira Kalish, Deloitte Research’s Director of Consumer Business added: “As we move through 2009, consumers will be intensely value-oriented, even more so than in the recent past. We are seeing this already with consumers shifting to more price focused retailers. For all retailers, this environment will require added attention to keeping costs under control.”
Forty four retailers experienced declining sales in 2007, compared with 36 the year before. Furthermore, the number of unprofitable retailers in the Top 250 doubled from seven in 2006, to 14 in fiscal 2007.
Top 10 retailers:
Furthermore, of the ten retailers with the highest Compound Annual Growth Rate over the past five years, two are Russian, two are Chinese and one is South Korean. Indeed, four of the six fastest growing are from emerging markets. Russian electronics retailer Euroset Group had a Compound Annual Growth Rate from 2002-2007 of 108.5 percent.
Kalish said: “China’s export growth has tapered off in real terms due to the slowing US economy and the rising value of the Chinese currency. However, inflation appears to be under control allowing the easing of monetary policy. The result is likely to be slower growth but not recession and as consumer spending should remain stable, retailers will be in a strong position. India also faces economic slowdown but not recession. While in the longer term, issues such as excessive regulation, poor infrastructure and limits on the supply of human capital could stifle growth, India should still grow more quickly than its historical pattern and retailers will continue to benefit.”
Many retailers which have gone global to try and take advantage of this growth have found the terrain challenging and not as lucrative as originally anticipated. However, the reasons for going global have not disappeared. Indeed, they have been reinforced by recent events. Retail spending is weak in developed countries and is likely to remain so in the near future.
Kalish said: “For the world’s leading retailers, strong growth will come either from gaining market share at home, or moving into new markets – especially emerging markets. In the coming years, we may see second-tier retailers as well as more non-food retailers take the plunge. In addition, we are also likely to see retailers based in emerging markets continue the path of investing in other emerging markets and even in some developed markets.”
Experience, atmosphere, entertainment…a retail formula is increasingly becoming an image builder. The store as brand, with all spotlights on the product, its presentation and enticing and binding the customer. The client remains critical, however, and wants value for money. Providing added value, particularly in the form of customer satisfaction and service for the lowest possible price, is essential for survival in an overflowing market. These developments and trends will only continue to grow in importance.
Creative and innovative
Looking at Dutch retail, particularly in the food sector, something else happened as well. Retailers have had to deal with enormous price pressures over the past years. Returns have dwindled, profits minimised. So is it all doom and gloom? No, because there’s a silver lining to be found as well: creativity and innovation have been stimulated and pushed into an even higher gear by continuing technological developments.
The organisation of labour begins with creating insight into labour processes and the costs involved. Where information about customers and product streams and the influence thereof on the organisation on annual, monthly, weekly, daily, even hourly levels is used at a store level, the potential for improvement is enormous. The processes lead modern retail, with the workforce organised around them. That is Smart Retailing, targeted and intelligent. Innovations like self scanning checkout and automated ordering systems also demand intelligent solutions. For self scanning checkouts, you need to answer questions like ‘when do employees need to be available, and how high are the savings at that point?’ An automated order system has a huge influence of logistical streams; ‘at what moment do I need to deploy how many people to make sure things run smoothly?’ is the question that needs answering.
Pamper your customers while remaining cost-effective?
In short, thinking in processes and deploying people around them is not a pipe dream, it’s an everyday reality. The broad retail process knowledge and innovations in IT technology enable us to provide retailers across the globe with advanced instruments to help them schedule employees in a cost-effective manner. This means the right employee will always be present at the right place, within the right number of hours, doing the right work, suited to his job. The result: savings on wage costs, greater profits and increased returns. And the customer in all of this? He gets what he wants, a well-stocked store that’s nice to shop at, where he’s welcomed like a king and employees can take the time to pamper him. Now that’s smart retailing!
Johannes de Vries is Director for Jurjen de Vries, management & efficiency agency. Retail specialist in the field of planning and organising labour.
Retailers are going all over the place in 2009; we want to be all things to all people, we provide good service, we are cheap, we have everything you need, and so on and so forth. Target groups are becoming larger and larger, or even being done away with completely…we’re a store for everybody! If you compare all retail concepts, a good 80% will be essentially identical.
Making clear choices and actual innovation are often seen as too risky. We don’t want to lose customers, or put up too high a threshold. It’s special offers that draw the customer into the store. It’s all about price.
But there are other ways to do things. I recently visited a Dutch sporting goods store specialised in running equipment. When you enter, you sign up for a personal talk with one of the running experts. You spend the brief time you’re waiting wandering around the store; sports shoes in all shapes and sizes. When your number comes up, your feet are measured using special equipment which clearly displays the type of foot you have. You are then given a pair of test shoes to try out in the store’s running track. Camera images subsequently examine how your foot settles. All of your personal details are collected and you receive a pair of shoes that feel like they were custom made for you: they fit perfectly. You ask for an alternative pair, but they’re not any better. You decide to purchase the shoes without asking how much they actually cost. When you reach the checkout counter, there’s a guy who just dropped by to say how much faster he ran the half marathon with his new shoes.
This store is known to be the best in its field. They invest time in a highly personalised service. They gain it back via the targeted choice they make. The store makes the choice for the customer…
You decide to purchase them without wondering how much they cost.
Another example is El Bulli in Roses (Spain), the most talked about restaurant in the world. A laboratory for experimental gastronomy, you will have to wait for years for a table (over 400,000 reservation requests per year). The location and décor are subordinate to the culinary surprises that grace the table. The staff is dressed in dark, sober Mao-like outfits, discretely but attentively present. They may not draw attention away from the food on the table, but are there to accompany you on your journey in experimental dining. The dishes (flavour bombs) provide a bit of spectacle every time. Consider spherical green olives and mozzarella balls, caipirinha sorbet served in a frozen lemon peel with a spoonful of tarragon extract, marshmallow made of parmesan cheese… an entire palette of experimental tapas, familiar flavours in unexpected shapes and colours, unique combinations - a re-education of the senses, as it were. You can’t choose what you get, and you always pay the same amount (excluding drinks). When you leave, you get a printout of the menu, describing the 25 to 30 courses.
What Ferran Adria does is radically different from anyone else, and that’s about more than his experimental daring. The atmosphere in his restaurant is relaxed, never stiff, never snob, a true breath of fresh air for gastronomy at that level. He brings guests back to the essence of eating. He wakes you up with playfulness and humour in colour, form and flavour, wiping away culinary clichés and old eating habits.
Forcing a choice can be done by offering something unobtainable. A hotel in Galle (Sri Lanka) charges over 10,000 euros for what the owner calls the most expensive desert in the world. The desert must provide the guests of the Fortress hotel with a unique experience. The Italian cassata ice cream, enveloped in gold leaf, is flavoured with Irish cream. It is served with mango, pomegranate mousse and champagne sabayone. The exclusive treat is decorated with a chocolate figurine of a fisherman hanging on a pole – a local custom – and an 80-carat aquamarine gemstone.
To date, nobody has ordered the desert…
The Russian retail market is catching up fast. It is being restructured in giant leaps, which manifests in new shopping malls opening on an almost weekly basis. Consumer disposable income is also growing steadily. Perhaps not adequately for everyone, but the middle class – until recently non-existent – is growing by the day. In turn, this stimulates the development of the retail sector.
Is it all a crescendo? No always, unfortunately; there are still inhibitory factors at work:
1. Many entrepreneurs in the retail market have a lot of money but little experience. They generally want to develop on their own, and believe they can do it without expert advice; hardly any funds or attention are directed towards market research or concept development.
2. There’s a structural lack of national retail chains. While initiatives in the field are growing, it’s still lagging far behind Western Europe. This also leads to problems finding so-called main tenants and crowd pleasers (anchor renters) for the development of new shopping malls.
3. The duration of contracts is far from inspiring trust. Contracts run for a maximum term of five years, less if possible. Try that in most Western European countries. Ten or more years is the standard these days.
4. Ownership rights are not yet regulated well in Russia. Obtaining the right locations requires a great deal care to make sure you actually get a site for the money you pay.
5. Pricing in, for example, rural regions is considerably higher than in comparable regions in Western Europe, which is also certainly true for clothing and furniture. A simple comparison of an Ikea catalogue in Amsterdam and in Moscow shows price differences of 20, even 60%. The Russian market is still developing, and lacks real competitive pressures.
6. The almost absolute lack of franchising is also a concern. It does exist, but on a very modest level. Some say that franchising does not suit the Russian personality. However, I think there’s an incredible growth potential here, and that franchising will become increasingly popular. Fortunately, banks are also looking at this development in a more positive way, and are willing to extend credit in a more pleasant manner than in the past.
Jan te Riele, General Director at LOGITECC, was director of several large super- and hypermarket chains in the Netherlands for over 30 years, including supermarket chain Laurus (Super de Boer).
LOGITECC Investment and Consulting Group is a Dutch-Russian company offering a wide range of business consulting services: investment consulting, strategic business planning, logistics, market research and a deep understanding of the Russian market.
The instruments in the toolbox are*
Today we continue with describing the sixth part of the toolbox.
In the last phase of the process of creating a store concept, Jos de Vries The Retail Company makes use of a toolbox. This practical toolbox includes instruments required to deliver a complete and discerning shop interior. The toolbox prevents decisions regarding the image of the store from being made at random. These must always be rooted in the framework of the concept.
The instruments in the toolbox are*
Today we continue with describing the fifth part of the toolbox.
Please contact Jos de Vries The Retail Company for further information. * For more information about using the toolbox, we refer to the book ‘The store manual’, which can be ordered from this website.: www.josdevries.eu or sending an e-mail to email@example.com
Jos de Vries The Retail Company Toolbox: Development of retail concepts (Part 4: Visual Merchandising)
The instruments in the toolbox are*
Today we continue with describing the fourth part of the toolbox.
Please contact Jos de Vries The Retail Company for further information. * For more information about using the toolbox, we refer to the book ‘The store manual’, which can be ordered from this website.: www.josdevries.eu