- The Discovery Phase: Discovery: Evolution or revolution? That is the question
We have now completed two of the three phases of the Jos de Vries The Retail Company Concept
Development Model. In the discovery phase, we defined your customers and their wishes, and determined your store's identity. Subsequently you translated this into a successful strategy for the new store formula in the Master Vision phase. Then, using the toolbox, you summarised it in a document, which serves as a briefing for the final phase. So now you are ready for phase three: the concept itself.
The toolbox has already been introduced in the Master Vision phase. Now you will read what knowledge and expertise you need in order to derive the greatest benefit from it.
In the rest of the chapter we further explain the purposes and the importance of a good store lay-out.
This chapter is part of the book "the store manual" of Jos de Vries The Retail CompanyThe Store Manual (2005) Jos de Vries The Retail Company has been working his way through the marvels of the Retail world since twenty years. Since the Retail branch on its way to professionalism is developing and also scholarly interest was growing, there still wasn’t a manual.Jos de Vries The Retail Company has made a definite change in bringing out “The Store Manual” a must for every store.You can order this manual for € 35,00 (excl. Postage and Package)
- Developing the store formula: The right combination of creativity and process based development
During the Master Vision phase, you will determine how you can translate these developments into a successful strategy for the new store formula. It is extremely important in the interests of a successful Master Vision phase to establish which niche in the market you will be able to fill with the store formula. After all, the retail trade is almost always a market in which one business crowds another one out. When you market a new formula, therefore, you will almost always have to try to prise away your future customers from other providers.
Another important consideration is what new added value you eventually see as granting to the new formula the basic right to existence. Essentially this applies to both existing and new formulas. Newcomers in the market will also need to continuously prove their right of existence, and therefore their added value. However, where existing formulas are concerned, new developments should be such that existing customers will not feel alienated from the formula because the innovations are too drastic and unexpected. An evolutionary process of gradual change is often to be preferred to a too strong revolutionary process.
If you want to read the rest of this chapter for free, please send an e-mail to Maurice van der Kooij and mention which chapter you want to read.
Venca wants to come closer to their customers with the implemantation of the new multi-channel strategy, this means opening stores in Spain. The first store is located in Calle Balmes, in the city center of Barcelona, close to the famous, central square Plaza Cataluña. This new store is show room as well as pilot-store for the Venca brand, and tries to increase the service to the clients, present the products from the catalogue and stimulate the sales.
For the positioning and implementation of the new concept Venca elected Estrella Fernández (strategic) and Jos de Vries The Retail Company (development and realization of the new concept). The retailspecialist Jos de Vries The Retail Company (with headquarters in The Netherlands and further offices in Germany, Russia and Spain) is one of the leading design agencies in the Spanish and European retail market. In Spain Jos de Vries The Retail Company is well-known for the development of new concepts for Grupo Cuevas and Caprabo (big regional supermarket chains), Coca Cola and Procter & Gamble (POS display solutions) and Forum Sport.
The Venca store faced some drastic changes: the lay-out and the interior design were the focus points at the development of the concept with the products as central point. The entrances were made bigger, making access more easy, a central zone was developed with the theme “fashion you like and which makes you beautiful” and the communication and the brand of Venca was strengthened by the logo communication and the “brand wall” at the entrance. The check-out is placed next to the entrance and the fitting rooms are located at the end of the store, creating strategically routing for the “obligated” points in the store.
Inside the store and in the display window the fashion is presented by extraordinary mannequins, directly at the entrance some mannequins are placed seducing clients to enter the store. This all is well-balanced with the rest of the store. Once inside the store the clients are seduced and guided into new zones and product groups. The lightning presents every group in an attractive way. The warmth and the mediterranean character is represented by the light-brown and yellow colour of the walls, creating an open and pleasant environment.
The end result can be seen as very innovative and a big step forward in the world of retailing, a whole new experience for Venca, a new player in this competitive market.
Before you start developing a new store formula you need to ask one essential question: do you really need a completely new concept or can the existing formula be updated through a process of evolution? To answer this question, it is advisable to go through the discovery phase step by step. When the phase has been completed you can determine in a considered manner how you wish to proceed. Is a completely new store concept a responsible choice or will an improvement of the existing formula suffice? In other words: the discovery phase will assist you in making your decision: is it going to be a ‘revolution’ or an ‘evolution’? The discovery phase consists of several components. Your objective during the first step is to arrive at a precise definition of your customers and their wishes. In the second step, you will need to establish your store’s identity. In addition, you can study all the market trends and developments during this phase.
The discovery phase
Important questions to ask in this phase
Evolution or revolution: the desired change process
Best in class: What are the market developments?
Consumer: Study trends and developments
Who and what do I want to be for my customers?
What is my identity, what do I offer and… what is my added value?
Step 1 of the discovery phase
What solutions should I offer my customers?
Modern retailers need to see their businesses from a broader perspective than merely that of selling products. If a retailer intends to survive in the competitive world, he will need to view his store as a service solution centre. The question he should ask himself is not: ‘what products shall I offer my customers?’, but rather: ‘what solution can I offer my customers?’. Because the following has to be considered: when a customers walks into your store, buying certain products is not his only purpose. It is much more than that. Customers visit your store to find a ‘solution’ for their ‘problem’.
We can illustrate this with an example. Let us have a look at successful clothes stores such as Zara and H&M. What has made them so successful? Is it really their lowprice policy? No, if we take a closer look, we see that they offer their customers not only inexpensive clothes, but also – or perhaps we should say especially – solutions. First of all, they guarantee that their customers will never be lagging one fashion trend behind, because chain stores are the industry’s trendsetters. Moreover, they guarantee their customers exclusivity. What does this mean? That customers never need to worry that the clothes they have bought at Zara's or at
H&M's will also be worn by the masses!
These two clothes stores offer a new collection every four weeks, their way of preventing their customers from taking home clothes that are either out of fashion or worn by everyone! In other words, Zara and H&M offer their customers the solution of being dressed in exclusive clothes according to the latest fashion at a highly affordable price. And, of course, in this industry, this is
the best way to gain competitive edge!
A good way to find out what problems customers face, and therefore, what solutions they are looking for when they come to you, is to determine the ‘shopping risks’. It may seem strange to you, but many people consider shopping as a risky operation. Why? Because they experience shopping as a process full of uncertainties. Customers do not know what to expect. To them, shopping is like making a risky bet or buying a ticket in the lottery! The customer does not know whether to regard the choices he will make as a gain or as a loss. And, therefore, whether it will be a pleasant or an unpleasant shopping experience.
Based on the ‘shopping risks’ we can divide customers into four groups.
1. Buyers who want to avoid taking financial risks
This group of customers is highly ´value conscious’, which makes them see shopping as a financial risk. Their problem is that they are always looking for bargains. If your customers belong to this segment, you should look for a formula that offers a solution for ´cost versus gain´.
2. Buyers who want to avoid the physical effort
These customers consider shopping as a threat to their energy level and as a physical effort. Their problem is: ‘I'm so tired that I can't be bothered with shopping.’ Do you recognise your customers in this phrase? Then your solution should be a store formula that gives these customers a pleasant and relaxed shopping experience. Make sure they really enjoy themselves when they are shopping!
3. Buyers who want to avoid the risk of losing time
These customers consider shopping as a time-consuming exercise. Their problem is: ‘I may have enough money, but I'm always short on time’. If these are your customers, you could develop a timesaving formula, because that will provide the solution to their problem. The difference between these customers and those under points 1 and 2 is that they are not looking for ‘material solutions’, but rather for a ‘psychological solution.’
4. Buyers who want to avoid psychological risks
These customers are afraid that shopping may endanger their status in society. They are struggling with the problem that their social environment Discovery phase frame continued (family, friends, etc.) will judge them on the basis of the stores where they shop. ’Tell me where you shop and I'll tell you who you are!’ You can solve the problem of these customers by means of a formula that makes them experience shopping as a unique experience that further enhances their self-image. Therefore, the solution is: give them the proud feeling of pleasant shopping! As you have seen above, by simply asking questions such as ‘what solutions can I offer?’ and ‘to whom can I offer them?’ you will discover step by step whether your store formula satisfies the needs of your customers.
But we are not there yet. Because what matters is not just what you offer and to whom, but also how you offer it.
Step 1 Brand value and identity
As we have said before, the discovery phase consists of several investigative steps. After the first step, in which your customers and their wishes have been defined, we will now move on to the second step, where you can define your store’s identity. The key question in this respect is: how does you customer currently define you? In other words: what brand value or brand identity fits the store formula in the customer's opinion?
Besides finding the answer to this question, it is also important to uncover how the organisation itself defines its identity. Of course, the two definitions should not differ too widely. The study of the brand value of the present formula can be carried out in several ways. It can be carried out using questionnaires or by means of a customer panel or a customer discussion group.
Specific workshops are a good means of finding out how the store’s identity is defined within one's own organisation.
Think beyond your own business
Besides studying the market position of your own organisation, it is also important to consider the market as a whole. Where are you in the market? How does your formula compare to that of the competition? Who is really ‘best in class’ in your field? What consumer trends and developments are taking place? Having a look across the national borders is also important: what is happening in Europe? In America? Study trips, store visits and having a look at how others work are the best ways to find out.
10 important retail and consumer trends
When developing a new store formula or redeveloping an existing formula, it is of the utmost importance to anticipate the latest trends and developments. Trends and developments both in customer behaviour and in retail formulas.
At present, the following megatrends can be observed:
1. The world is turning into one big (fast food) shopping centre
Today you can shop anywhere. At the airport, train station, petrol station, hospital or museum. Today's consumer does not need to look for a shop because the shops will come to him. You can shop and eat wherever you are.
2. Hypes and incidents increasingly determine consumer behaviour
Since 11 September 2001 and the financial crisis we know that international events can change consumer behaviour overnight. Consumer trust changes with world politics. Spend money today and save tomorrow? Or the very opposite. Just try and base your policy on that.
3. Anyone can sell anything
Computers in the supermarket. CDs at the petrol station. Travel agency at the chemist’s and toys in the home improvement centre. Individual industries are disappearing; everyone is selling everything.
4. The consumer is a professional buyer. Prices are once again essential
After the abundance of the 1990s, the consumer has rediscovered price-conscious buying. If I am price-conscious, I can spend the same budget twice. The faithful customer is being replaced by the bargain hunter and the smart shopper. They are here to stay for a long time. They want to go on holiday AND have a new wide-screen TV. It is all possible within the same budget.
5. Stores become brands
There is no room for ‘mousy’ shops anymore. You need to be distinctive and recognisable. We are all selling the same things. Not only does it matter what you sell, but also how you sell it. 'How’ you sell it determines your identity and added value.
6. Monobrand stores beat multibrand stores
The store is the brand. The brand is the store. Without a familiar face, a store cannot distinguish itself from the rest. Several brands in one store make this difficult. Only a few department stores will survive. The department store as a ‘house of brands’. The sum of the brands creates the experience.
7. Combination marketing enhances the brands
Synergy through power. Lagerfeld at H&M. Philips and Douwe Egberts in Senseo. A Ferrari laptop.
8. We look for authenticity and experience
The future is uncertain. We look for our sense of security in old values, but with a contemporary, recognisable added value. ‘The modern spin-off of traditional value’. What is from the past is good, but with today's creature comforts. In addition, we look for the experience, not rushing about, but consciously enjoying good quality. We only live once. Go on a distant journey, see a particular artist perform… Price is not an issue. A priceless experience.
9. Food does not escape consumers' capriciousness either:
Food retailing used to be secure in comparison with the non-food industry, especially in terms of statistics. Today, retail food is just as dynamic as fashion. The modern-day consumer eats the way he dresses. And the supermarket has no other option but to join in the trend, because failure will mean the consumer going elsewhere.
Plenty to choose from…
Price first, then time
Time remains an important factor. Much to choose from, little time. The consumer needs help as regards both product range and choice in what to buy. However…. No longer at any price.
Traditional meals are disappearing
We eat throughout the day. On the road, during working hours and at school. No time for breakfast… This needs to be anticipated by new formulas as well as product ranges.
Fast-freshness is the trend.
We are fed up with the hamburger. Fast food is OK, but it has to be healthy. Prepared in the store so that we can see that it's fresh.
I am what I eat
Obesity as the biggest threat to public health. The government will take action. Same as with smoking. A health warning on the packaging of almond paste cakes. Retailers will have to anticipate this.
Snacks: from snacks (indulgence) to food
Having a snack in between, this indulgent moment will have to be a healthy moment too. New products, new formulas. Nutritious instead of sweet.
A brands focus on fresh
Groceries in the supermarket, price as their only distinctive feature. Margins have melted away. Added value in fresh products; focus on fresh products replaces the focus on price. There is still money to be made here. Potatoes in brand packaging – a matter of time.
Bread is the theme of the future
We like a healthy snack. Freshly baked in the store. We like Mediterranean. Bread is part of these cultures. Warm, sunny and southern and healthy. Bread is becoming
Retail beats the catering industry
The Dutch catering industry will be unable to fight retail's growth in the out-of-home channel with real formulas of its own.
10. Innovate or die
Consumers change. They continuously formulate new requirements. Customer retention until the end of the week. Then there will probably be something new again. New, newer, newest. Failure to join this trend means you disappear.
This chapter is part of the book "the store manual" of Jos de Vries The Retail Company
The Store Manual (2005) Jos de Vries The Retail Company has been working his way through the marvels of the Retail world since twenty years. Since the Retail branch on its way to professionalism is developing and also scholarly interest was growing, there still wasn’t a manual.Jos de Vries The Retail Company has made a definite change in bringing out “The Store Manual” a must for every store.You can order this manual for € 35,00 (excl. Postage and Package)
Jos de Vries The Retail Company BV
3605 MA Maarssen
P.O. Box 1194
NL-3600 BD Maarssen
Tel. : +31(0)346 - 563764
Fax : +31(0)346 - 572722
When you start to develop a new store concept or to restyle an existing formula, you start a complicated process. Success is by no means guaranteed even if your research has been thorough and you have a great deal of experience and the right feeling for it when you make decisions regarding product range, prices and the store's location …
What is it that makes the retail industry so complex? First and foremost the extreme competitiveness: recently a growing number of international players have been offering identical ranges at minimum prices in easily accessible locations. And, of course, the consumers. They often seem like exceptionally well-informed professional buyers! But, at the same time, they are capricious, impatient and insecure. Yet this insecurity also gives you opportunities. Because it makes consumers look constantly for 'anchors', stable values that offer them trustworthiness and security. And they hope to find that trustworthiness in brands with fixed, recognisable values. So it is not surprising that the 'old' brands are, indeed, getting stronger, as demonstrated by a recent survey. Consumers find this trustworthiness not only in product brands, but also in store brands. For they also associate emotional value perceptions with store formulas.
It is a characteristic of stores that have developed a unique and valuable store brand perception that they have succeeded in retaining it for a longer period of time. This requires a consistent policy regarding such factors as product range and prices. In this respect, a link to communications, especially through the store's image, is essential: in this way, fixed brand values are combined with current developments.
The (Dutch) market shows many chains – such as Ikea, H&M and Aldi – that have built up a strong brand position thanks to this consistent strategy. In addition, there are chains that inevitably run into trouble because they anticipate consumer developments too late, or because they abandon their fixed values, such as for instance McDonalds, which introduced fresh salads into its product range in the nick of time. Or the Dutch supermarket chain Laurus (now Casino) that wanted to introduce a national store brand, but forgot that many of the fixed values of the stores were part of their familiar regional image.
Never stop innovating
Retail organisations are forced to choose their own direction. This is absolutely necessary for survival. But they need to realise that the road is often very tortuous and unpredictable, full of unexpected twists and turns and unpredictable dangers. Besides, they should also realise that the final destination is unknown: in order to survive, the organisation needs to continually re-invent a clearly recognisable consumer-oriented strategy. And each time the organisation does so, the consumer's likely response to the new strategy remains an enigma.
What does this mean?
That those responsible need to make far-reaching decisions. Not only about formulas to be newly developed but also about the future of the existing store formula - which is the successful ‘steady anchor’ for customers, with its familiar brand values. And in order to retain those values, the ‘anchor’ needs to develop in step with the customer dynamics. The aim is to retain the regular customers – and to attract new ones.
The store designers' role is becoming more strategic
The increasing complexity of retailing also requires a different strategy on the part of store formula designers. Creativity and expertise are no longer sufficient. Instead, today's retail organisations need a process-based approach. An approach that, in order to form a clear and recognisable store design, combines aspects such as trends, consumer developments, market overviews and also (with regard to restyling) the existing brand values. The main aim is to achieve a process of dynamic innovation in which designers have an increasingly leading and strategic role. They support the client using their market insight and expertise. They ensure that all of the success factors are integrated into the process in the right way and at the right time.
From theory to practice:
Getting to work with the practical-experience based development model. The Jos de Vries The Retail Company Concept Development Model is a handy tool. This successful model is based on extensive international practical experience of dozens of European retailers. Furthermore, the advantage of the model is that it is not only suitable for use during the development of new formulas, but also when restyling existing formulas. The special quality of the Jos de Vries The Retail Company Concept Development Model is that it is based on three pillars. The first is the maximum integration of market developments, trends and consumer behaviour. These are linked to the store organisation’s commercial expertise – the second pillar. And the third, at the same time not only pillar but also the central hub, consists of the designer's creativity and inventiveness.
Thus the model creates balanced solutions, focusing on innovation and practical applicability.
The model consists of three phases, which should be completed in the order given.
1. The discovery phase
2. The development (or Master Vision) phase
3. The concept phase
You can order this manual for € 35,00 (excl. Postage and Package)
Narrow casting as a kind of ‘fabric softener’ is fine, but there are much more efficient options. Technolgy is developing at high speed, down to systems that can be interactive real time, e.g. via GSM. Still, all this wonderful technology deserves carefully developed ‘content’.
Because it is and will be the content that determines how effective communication will be.
Product innovation! This was the stock answer of manufacturers if you asked them about the real added value of a premium label compared with a private label. For manufacturers, considering all their R&D possibilities, market insight and development budgets,would actually need to stay one step ahead of the retailer when it comes to the introduction of new products.
Is this an outdated point of view? ‘No,’ says the premium label manufacturer, and he will come with a series of examples of new products, brand extensions and combinations of these, such as the Senseo coffee maker launched by Philips and Sara Lee/DE.‘Yes,’ the retailer will say. ‘We are launching fewer new products, however, by linking loyalty card data to our knowledge of the shop floor we introduce products that customers really want.
Plus,we allocate shelf space and this will largely influence the success of the product!’Much to their dismay, manufacturers see their position becoming weaker. Also, new means of communication such as mobile telephony make consumers more difficult to reach with traditional mass communication, used of old by the industry to build brands.
And in the meantime, the retailer continues to develop. From simple private label development at the start to complete ranges of basic price products, a mid segment and even premium ranges that are higher-end than the premium labels. Furthermore, specialty ranges are often developed for special seasons, or special target groups. Take organic food, for example. In combination with the new shelf plans, that leave only a minimum of space for the premium labels, the position of the premium labels seems almost hopeless.
And yet: there is hope. But it does require a shift of manufacturer focus. From an often unilateral marketing and communication policy aimed at building the brand to a multi focus approach where the shop floor (P.O.S.) is in included in the strategy as well. There are plenty of possibilities for this. P.O.S. systems, instore television and narrow casting, cross merchandising and permanent display. These are just a few examples of what manufacturers can do to raise the shop floor to an innovative communication platform, in collaboration with the retailer.
Within such a joint platform, to which all stakeholders contribute their own specific know-how, ever more possibilities will be created.
Since many years Jos de Vries The Retail Company is a well-known organisation in the retail business. We are specialised in analyzing, designing and realizing shop concepts all over Europe. We know for a fact that the successful presentation of shops and products can not only bring about a positive image but also achieve above-average successes. Check our website www.josdevries.eu or contact Maurice van der Kooij (email@example.com) for further information.
Mercator - is the leading chain in Slovenia with a 45,8% market share, and one of the most important players in the countries of former Yugoslavia. The company owns approximately 1.200 stores and works in multiple formats - hypermarket, supermarket, discount and «c-store». In addition to food products lines the chain operates in the direction of non-food, selling cosmetics, electronics, items for home decor, clothes. The chain has unique experience in the absorption of 25 retail companies and a good annual growth in sales (about 18%) and turnover of 2.06 billion euro a year.
Today the chain operates 17 hypermarkets with trade area from 5.000 to 12.000 m2. Thanks to the experience of working with food and non-food category the concept of a hypermarket is formed and is effective. Mercator has a clear strategy for business and brand development. The chain relies on the development of loyalty programs, develops new services - such as Healthy life club. For the format of hypermarket an experience in working with food as with non-food - textiles, a group of «home decoration» makes a special advantage. Today those hypermarket chains are leading, which effectively manage the non-food part of the assortment, organize effective seasonal purchases, promo.
The trade area from Mercator has increased from 6000 to 8000 m2, the shop demanded a new, modern concept and lay-out, but given the already existing infrastructure. The chain wanted to make the supermarket more up to date, comfortable, increase the proportion of own label products in the volume of sales. Additional 2000 m2 were added on the right side of the building and were scheduled for placement of non-food goods and home decoration. Area of fresh products - fruits and vegetables, breads and pastries, meat, cheese – became the center of the hypermarket. We believe such a lay out plan is effective, since these product categories are most profitable for the chain and the main focus to be made on them, giving most passable areas. High quality products - gastronomy, tasty bread, meat and fresh fish - this is what the customer looking for. For the grocery, or as they are known in Europe - must articles - water, beer, toilet paper, the customers will always reach, so they are appropriate in the back of the room.
The main idea of hypermarket design has been to create an emotional component. Usually a hypermarket - is a rational world, focused only on the lowest price. But in order to attract the customers today you need more than just a price. Quality products, their good presentation, tasty food, warm, emotional atmosphere - this is what helps to attract the customers from growing middle class - which is the most prospective target group. To provide a sufficiently large assortment of 60 000 titles, we have used in the design different colors and materials to make a clear zoning and allocate each group of goods. We proposed to use the entire height of the room, placing visual elements with bright focus, specially made for Mercator photos along the perimeter.
The zone of fresh food was underlined by special lay out and equipment, correct display of goods, we used a multi level presentations. This was particularly appropriate for the department «fruit & vegetables». It's no secret that the Slovenes prefer to go to the market on Saturdays for this category of goods, and to involve them in the supermarket the quality of products was not enough, a better atmosphere was needed- baskets, decorative presentation of the vegetables, the correct light. Marketing strategy of a hypermarket - shop for everybody, so you can find here all the most up to date. The most modern trend is the bio-and eco products. Not accidentally this hypermarket set aside nearly 200 m2 for this category of goods. It is important to be first, when there is a clear tendency to care about health and commitment to eco-products, such as in Europe and the U.S., where consumption of this group is growing at 10% per year.
We would like to give some tips for companies that design hypermarkets:
1. Create 3 - 4 «worlds» in hypermarket
a. Non-food (World of Fashion)
b. The world of fresh products
c. Dry grocery (discount world)
d. Seasonal and promotional products
2. Make a non-food products a store profile
3. Make sure your staff is present and seen in all departments. Employees are part of the sales process
4. Be a specialist and universal at the same time
5. Make a visit to the store an adventure, create an excellent navigation system
6. Create a dynamic atmosphere – organize every 2 weeks new discounts, promotions, and tasting and the client will return to you! Do you have questions? Want to know more? Write to us firstname.lastname@example.org or check our website: www.josdevries.eu
The authors of this article are Irina Bolotova and Bob Damen.. Irina Bolotova is retail strategy consultant and Bob Damen is creative director with Jos de Vries The Retail Company