Retail Management: Master-class: “B and Q in focus, UK”

In October 2008, “Jos de Vries The Retail Company” had participated in a business trip to Great Britain. The trip was intended to search for and to learn any new solutions for “DIY” (“Do It Yourself”) stores. English shops have traditionally been ahead of European retailers, so indeed we’ve seen many interesting trends and solutions here. We want to share our experience with you, Retail.ru visitors! This is our first article on overall evaluation of the British retail chain “B&Q”.

Niko de Young, Irina Bolotova, “Jos de Vries The Retail Company”
Photo: Nico de Jong

B&Q in brief: Today, it is the third world’s largest DIY retailer (right after “The Home Depot” and “Lowe’s”). The retail chain has been developing since 1969. It was founded in 1969 in Southampton by Richard Block and David Quayle. Their names together formed the name of the whole shop (later shortened to plain “B&Q”). The retail chain developed swiftly, frequently engaging into M&A activity – and 10 years later, there were already 26 shops in total. In 1982 the retail chain was purchased by the “Paternoster” company (currently known as “Kingfisher”). In 90-es, the company became international, opening its stores in Thailand and – thanks to the merger – in Poland. In 1999 “B&Q” merged with French “Castorama”. Today, there are 332 “B&Q” stores in Great Britain alone. By the end of 2007, its turnover amounted to 3.9 billion pounds, with a net profit equal to ?162 million.

We’ll analyze the B&Q store in London’s suburb. It is one of the newest sights occupying 12 thousand sq. meters. For many retailers, such huge areas are very hard to deal with: it is hard to do zoning and to accommodate good correctly. This shop’s advantage rests upon good planning and visualization. The whole shop is an extended rectangle. Conceptually, it is divided into two parts: the decorative one and the gardening-and-construction one (about 2/3 of the total available space). This division reflects the general tendency: the decorative part yields more income and is more attractive in general (it “generates” flow of customers).

Okay, right at the entrance we see the “Lighting” section. A bit unusual, you think? Yes, but on the other hand, each customer instantly starts to “participate” in the purchasing process, remembering that he or she had plans to buy some light bulbs for his or her house. Strict vertical presentation and clear annotations to all sorts of light bulbs really help customers to make their choices. In the “Lightning” section, you are being “inspired” to make a purchase: for that, lamps are kept at upper shelves. Visual merchandising is employed, and no free space is being wasted for nothing.

In the main corridor and other decorative sections, you may see some corner installations. Well, they are used for demonstration of goods, so to speak, but we sincerely think that’s not a good idea because they look a bit alien for such a huge store which demands more serious attitude towards marketing.

The gardening section is located in the upper-right corner of the shop. Goods in the “gardening” category make this most complicated section of the store most attractive. B&Q found a very effective and easy solution of covering excess reserves of goods. Bright banners and curtains hide the upper part of shelves here – the shop looks tidier, there isn’t any stockpiling, but at the same time, goods are still right here, within reach. Banners and curtains may be lifted and lowered easily, allowing even pallets to be loaded with goods. They also inform customers where they are and “broadcast” other advertising messages.

The retail chain has implemented many interesting solutions in its “Decoration” section: many visuals and other ways to help customers here. The section with paintings (traditionally being most profitable in DIY stores) was made by B&Q to look most illustrative. Examples of colors are used to make your choice of the desired painting between hundreds on shelves as easy as it can be. The presentation of different brand names is easy to understand – of course, private labels have higher priority in spacing. The idea with “colorful schematics” is great and indeed may help customers, but we think that it is placed too high and is not as effective as it could be.

The section with wallpapers is divided into two – cheap wallpapers and designer (thus, more expensive) wallpapers. They are also designed and presented differently. Non-expensive wallpapers make a massive presentation with bright visualization and orientation towards warm “orange” color tones. There are storage doors knocking loudly when closed. “Design wallpapers” is another thing. It is a more “exclusive” presentation with samples of brands in possession. Here, you can make your orders or you may check for any certain brands with the “Order Point” (the personnel is ready to assist, if needed). If there isn’t any assistant in place, you may press the button – and your questions will be answered.

In the textile section there is a (in our humble opinion) most ingenious solution to sell decorative pillows right out of the producer’s large boxes: it saves free space, at the same time it looks tidy enough. However, the section with curtains looked a bit ineffective. There is a good cross-merchandising here (curtain track rest together with curtains), but the whole exhibition yields nothing: the row of brands looks endless and dull.

The section with kitchens is decorated brightly and attracts interest. There is black demonstration equipment surrounded by various types of stoves, panels and cooking surfaces: they look bright and effective, at the same time - not at the expense of each other. Not only B&Q demonstrates its equipment – it also helps to choose. For that, various photos of interior and cross-merchandising (like, for instance, panels and tables fitting kitchen sinks just perfectly) – might be of great use.

The “Construction” section was planned as most organized and informative. It is never easy for an average commoner to understand all nuances of construction tools and accessories, which is why the network really helps. It is their motto: “We make it easier”. Strict and clear presentation plus advice on how to choose the right screw-bolt or the right wooden floor covering make any customer’s task look easier.

In our next articles, we’ll continue our review of British DIY networks

Articles and additional information may be acquired here: http://www.jdvtrc-retail.com/russian/

Retail experience Jos de Vries The Retail Company

Christiaan Rikkers, Director of Jos de Vries The Retail Company, urges German retail to communicate more with its own customers. Christiaan Rikkers has been interviewed by German retail specialist magazine Lebensmittelzeitung and gives his opinion on the German retail world.

Mr. Rikkers, what does intelligent store design mean to you?
Let set the record straight first: we are not store designers, we are strategy and communications advisors on retail concept development.

That sounds expensive. Particularly in a time when retailers have high cost pressures to deal with.
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.

Which German retail company is currently making the most beautiful outlets?
In store development, it’s not just about the prettiest, but about developing a successful retail concept.

Let me rephrase the question: who in the German retail food market has a strongly communicative 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.

Explain.
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.

Please contact m.vanderkooij@josdevries.eu or take a look at www.josdevries.eu for further information.

Jos de Vries The Retail Company: Smart Retailing, now!

Seduce the customer. It’s a fine art in the retail sector. The P for Presentation is key. But that doesn’t mean the other marketing P’s should be left by the wayside. Retailers that score above average on all Ps are the winners of the future.

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.

Smart Retailing
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.

Innovation is: having nothing to choose from

By Jan Kroon, art director with Jos de Vries The Retail Company

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…

Jos de Vries The Retail Company: Retailing needs change

How to transfer to the fifth retail generation

Without doubt, the current financial crisis will change consumer behaviour and shopping patterns at unprecedented rates. Retailers, who want to survive, will have to radically rethink their position and strategy over the coming period. Inevitably, the key-phrase in this process of change will be ‘how to stay connected with my customer’.

How, as a retailer, is it possible in these difficult times to identify with customers and serve their changing requirements effectively? Retailers who wait for customers to come to them to share their new ideas, will probably have missed the boat. Retailers therefore, should be proactively seeking out customers and trying to understand their changing needs.

So get out there and find out what they want, take it back to your store tomorrow and … explain how much you care and demonstrate your willingness to help.

That economic and social trends impact on retailing is, of course, nothing new. The retail industry is influenced by social change like no other. Developments taking place today define the behaviour of the shopper tomorrow, the reason why the retail sector is often run on a day-to-day basis. Successful retailers however, know that day-to-day operations have to take place within the framework of a long-term strategy.

With the consumer being bombarded with a constant flow of bad news, formulating a long-term strategy is no easy task. To do this effectively, it is necessary to understand the development of the retail business and to look at it retrospectively. Current developments in retailing can be defined as the transformation from the third to fourth generation concepts. This change is already underway, but the process is being stepped up by current economic developments.

Retail generations
The traditional small-sized corner shop was the first generation in retailing. These ‘Pappa and Mamma stores’ had a strong social relationship with the customer.
This first retail generation was the first stage in the disassociation of producer and consumer. Before that, producer and retailer were one and the same: the baker sold his own bread and the farmer sold his own vegetables at market.

Later, in the second retail generation, the first supermarkets evolved. The direct social relationship between retailer and consumer disappeared. Now price, product range and location became the determining factors connecting customers with the store.

In the eighties and nineties, third generation retail concepts began to develop. Retail marketing was introduced; from store concept to store brand. The store focused on its own customer-base and, with the right communication and concept, a strong store identity was created to differentiate itself from the competition. Many retailers are still engaged in the process of store-brand creation and market differentiation.

A few retailers are now entering the fourth retail generation: multi-format concepts. This means that they are targeting individual consumers using different formats, at different locations and a different times of the week. Segmentation is the keyword in this process of change. It goes without saying that retailers entering the fifth retail generation - multi-format and multi-channel - are few and far between.

In this fifth generation, the retailer has almost total control, optimising management of the complete flow of goods from producer to customer … and in doing so, they are closing the circle: industry and retailer are almost synonymous once again.

Having to change to stay the same

Retailing is about running the day-to-day operations, especially in such turbulent times as today … but always based on a long-term strategy. This long-term strategy is not as difficult as it may seem. Just determine the stage of development your company is at, compare this to overall developments in the retail industry and connect up to these developments.
Join the fourth retail generation now and, when you’re ready to take the leap, go for the fifth generation - multichannel and multiformat - and take total control!

Literature retail marketing: Let me tell you a store

Let me tell you a store (2008)The world is moving at a breakneck speed. Everyone seems to be looking for new opportunities. Is choice an imposing possibility? Is innovation the magical word?

In “Let me tell you a store” European retailers, designers, strategists and trend watchers tell their personal and inspiring stories. No fairy tales but retail in every little detail.

Who are you? Where do you stand for? Let the store be the place to tell your story to the customer. The theory of our successful Store Manual, now described in practice.

You can order this manual for € 35,00 (excl. Postage and Package)

http://www.josdevries.eu/