3rd Quarter 2002 Analyst Presentation

Store Layout, Design and Visual Merchandising - Principles & Optimization

3rd Quarter 2002 Analyst Presentation
10/13/ :42:41 AM Learning Objectives List the elements of a store’s environment and define. Discuss the steps involved in planning the store. Describe how various types of fixtures, merchandise presentation methods and techniques, and the psychology of merchandise presentation are used to increase the productivity of the sales floor. Describe why store design is so important to a store’s success. Explain the role of visual communications in a retail store.

Introduction to Store Layout Management
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Introduction to Store Layout Management Store Image is the overall perception the customer has of the store’s environment. L.L. Bean offers relaxed, classic apparel styles to its customers. To help convey this image L.L. Bean’s catalogue and Advertising reinforces their image. For cataloge customers, the catalog is the store environment.

10/13/ :42:41 AM Store Image By incorporating a café as an integral part of Barnes & Noble bookstores, a very relaxing and casual ambiance is created.

Introduction to Store Layout Management
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Introduction to Store Layout Management Space Productivity represents how effectively the retailer utilizes its space and is usually measured by sales per square foot of selling space or gross margin Rs per square foot of selling space. Elements of the Store Environment Objectives of the Store Environment

Elements That Compose the Store Environment
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Elements That Compose the Store Environment Visual Communications Retail Identity Graphics POS Signage Store Planning Space Allocation Layout Circulation Store Image And Productivity Store Design Exterior Design Ambiance Lighting Merchandising Fixture Selection Merchandise Presentation Visual Merchandising

10/13/ :42:41 AM Retailing Truism The more merchandise customers are exposed to, the more they tend to buy.

Objectives of the Store Environment
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Objectives of the Store Environment Tasks to create desired store image and increase space productivity: Get customers into the store (market image). Convert them into customers buying merchandise once inside the store (space productivity). Do this in the most efficient manner possible. Reduce Shrinkage Represents merchandise that cannot be accounted for due to theft, loss, or damage.

10/13/ :42:41 AM Allocating Space Types of space needed: Back room Office and other functional spaces Aisles, services areas, and other nonselling areas of the main sales floor Wall merchandise space Floor merchandise space

10/13/ :42:41 AM Allocating Space Warehouse clubs are able to take advantage not only of the width and depth of the store, but also the height, by using large “warehouse racks” Space Productivity Index is a ratio that compares the percentage of the store’s total gross margin that a particular merchandise category generates to its percentage of total store selling space used.

Merchandise Productivity Analysis
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Merchandise Productivity Analysis

Positively influencing purchase behavior
Allow a transition zone Place high-margin merchandise to the right of the entrance Make merchandise accessible Use signs, fixtures, displays to draw customers Avoid the “butt-brush” effect Vary the tempo of music to achieve goals Arrange shelved merchandise strategically Ref: Paco Underhill, Why We Buy: The Science of Shopping

Tradeoffs in Store Design
Ease of locating merchandise for planned purchases Aesthetics, space to shop comfortably Relaxed environment Exploration of store, impulse purchases Productivity of space Energy, excitement

Circulation: Grid Layout
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Circulation: Grid Layout

10/13/ :42:41 AM Circulation Grid Layout is a type of store layout in which counters and fixtures are placed in long rows or “runs,” usually at right angles, throughout the store. Advantages Low cost Customer familiarity Merchandise exposure Ease of cleaning Simplified security Possibility of self-service Disadvantages Plain and uninteresting Limited browsing Stimulation of rushed shopping behavior Limited creativity in decor

Grid Layout

Racetrack Layout Major and minor loops with multiple entrances & multiple sight lines, draws shopper around the store, encourages exploration, impulse buying Location of departments) men’s vs. women’s impulse goods – near entrances, to the right, escalators, point-of-sale demand/destination – upper floors, back corners; complementary – adjacent Display areas) – bulk-of-stock + feature areas (walls, promotional areas, point- of-sale areas, feature fixtures, windows) Fixtures– feature fixtures – four-way, free-standing/mannequins, glass cases + gondolas, rounders & straight racks for bulk-of-stock & sale merchandise

10/13/ :42:41 AM Circulation Free-Flow Layout is a type of store layout in which fixtures and merchandise are grouped into free-flowing patterns on the sales floor. Advantages Allowance for browsing and wandering freely Increased impulse purchases Visual appeal Flexibility Disadvantages Loitering encouraged Possible confusion Waste of floor space Cost Difficulty of cleaning

Free-Form (Boutique) Layout
+ Aesthetically pleasing, relaxing, asymmetrical, invites browsing - Less efficient, more costly, more sales assistance needed, more theft Storage, Receiving, Marking Storage, Receiving, Marking Tops Checkout Accessories Fixtures Bulk-of-stock - straight racks, gondolas, rounders (very flexible) Feature – glass cases, 4-way, free-standing, custom-built fixtures Feature areas Windows, walls, feature fixtures, point-of-sale Jeans Casual Wear Stockings Skirts and Dresses Hats and Handbags Tops Pants Clearance Items Feature

Circulation: Loop Layout
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Circulation: Loop Layout

10/13/ :42:41 AM Circulation LO 2 Loop Layout is a type of store layout in which a major customer aisle begins at the entrance, loops through the store, usually in the shape of a circle, square, ar rectangle, and then returns the customer the front of the store. Advantages Exposes customers to the greatest amount of merchandise

Location of Merchandise - Planograms (map – photos, drawings, computer generated)
vertical merchandising - eye movement - left to right & down high margin merchandise - 15% below horizontal (51” - 53” & 56” - 58”) not alphabetical, “flank” new & private label with popular national brands

Atmospherics Signs Lighting Color Store Atmosphere Music Scent
Inform; draw attention, highlight merchandise, dramatize, decorate Signs Lighting Color Warm versus cool colors – attract/ hurry vs. relax; value vs. prestige Pop merchandise, set a mood, downplay unsightly areas, show accurate color Store Atmosphere Music Scent Easily changed - match demographics, influence shopping mood & crowd control Most direct effect on emotions and memory

10/13/ :42:41 AM Visual Merchandising Visual Merchandising Is the artistic display of merchandise and theatrical props used as scene-setting decoration in the store.

Visual Merchandising is:
Showing merchandise with the end purpose of making a sale. Presenting an image of who/what the shopper can be when using the merchandise displayed. Making the shopper a “stopper” and a walk-in rather than a walk -by. Keeping the interior presentation the same as what is promised on the outside/in the window. A combination of skills including creativity, order, artistic knowledge and understanding of store design.

Planning Fixtures and Merchandise Presentation
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Planning Fixtures and Merchandise Presentation On-Shelf Merchandising Is the display of merchandise on counters, racks, shelves, and fixtures throughout the store.

10/13/ :42:41 AM Visual Merchandising Here’s sampling of the techniques stores use to generate those sales: Get’m coming and going. Escalators are a focal point of many stores. That makes them ideal locations for promotional signs and for impulse items like perfume.

10/13/ :42:41 AM Visual Merchandising Lead them to temptation. Department-store design incorporates a gauntlet of goodies to stimulate impulse buys. Cosmetics, a store’s most profitable department, should always be at the main entrance to the store.

Design Elements Color Texture Line

Color The big attraction point Color psychology implications
Color Schemes Analogous Complementary Split-Complementary Contrasting Monochromatic Neutral

Color Examples

Texture Definition: surface treatment or “feel” of merchandise
Important for backgrounds too Masculine/feminine Rough/smooth Neutral Weight, Balance

Texture Examples

Line Vertical Horizontal Curved Diagonal
Can be used to bring initial attention to a display by catching the eye or to sustain attention within a display by moving the eye around.

Line Examples

Design Principles Balance Proportion Rhythm/Repetition
Dominance/Emphasis Contrast Harmony

Balance Symmetric Asymmetric Relates to weight, texture, color
Formal balance Asymmetric Informal balance Relates to weight, texture, color

Proportion Relationship of size, scale or “weight” of elements and between elements. Often used to create emphasis and capture attention. Don’t take size for granted.

Rhythm/Repetition Self-contained movement within a display.
Creates path for the eye. Dominant --> subordinate Line Repeating motif establishes dominance and movement.

Dominance/Emphasis Object which draws the eye first.
Focal point Directs viewers eye (rhythm). Can be dominant due to size, weight, color, contrast, line or repetition.

Contrast Showing a sharp difference between objects.
Effective use = eye “feels” object. Achieved through texture, color, size, directional placement.

Harmony The careful combination of principles or elements to create a unified whole. Consider storewide presentation or image too.

Planning Fixtures and Merchandise Presentation
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Planning Fixtures and Merchandise Presentation Fixture Types Merchandise Presentation Planning Selecting Fixtures and Merchandise Presentation Methods Visual Merchandising

Merchandise Presentation Planning
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Merchandise Presentation Planning Methods of Merchandise Presentation: Shelving Hanging Pegging Folding Stacking Dumping

Merchandise Presentation Planning
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Merchandise Presentation Planning Psychological Factors to Consider When Merchandising Stores: Value/fashion image Angles and sightlines Vertical color blocking

45-Degree Customer Sightline
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM 45-Degree Customer Sightline

Vertical Color Blocking
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Vertical Color Blocking

Accept, hold, stock and show merchandise.
Fixtures Accept, hold, stock and show merchandise. Used in window displays, on top of counters, within floor arrangements. Contribute to store brand image and ambiance. Expected to last a long time.

Capacity Fixtures Hold large quantities Shows a single style in depth of selection. Usually the largest fixtures in the store. Usually placed in back of store.

Straight Rack

Four-Way Feature Rack and Round Rack
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Four-Way Feature Rack and Round Rack

Rounder

Four-Way

Gondola

Feature Fixtures Used to highlight categories. Hold fewer items. Best used as lead-in fixtures. Also interspersed throughout store to add variety.

Positioned at store or department entrance. Reflects brand image
Signature Fixtures One-of-a-Kind units. Positioned at store or department entrance. Reflects brand image Designed specifically for the store to catch shoppers’ interest.

Ways to Display Window Displays Interior Displays
Wall Assortment Displays Focal Point/Aisle End Displays

Window Displays Closed Back Window Open Back Window
Straight Front Window Angled Front Window Arcade Front Window Corner Window

Window Examples

Other Display Methods Interior Windows--create a scene inside the store by grouping mannequins, props etc. Wall Cabinets--create “windows” by showing merchandise on top. End of Aisle--displays assortment of merchandise together for sale.

Display Examples

Display Types One Item Display Line of Goods Display
Related Merchandise Display Variety or Assortment Display

Display Types Examples

Vignette/Semirealistic Fantasy Abstract
Display Settings Realistic Environmental Vignette/Semirealistic Fantasy Abstract

Display Settings

Thank You !

HBA Space Allocation by Mass Merchandisers
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM HBA Space Allocation by Mass Merchandisers LO 2 Total U.S. and by geographic region Selected HBA categories Average linear feet per store handling... Total U.S Eastern Central Southern Pacific Headache/pain remedies Vitamins Contact lens solution Diet aids Pregnancy test kits Laxatives Contraceptives-male Sanitary napkins Tampons Source: Neilsen Marketing Research

10/13/ :42:41 AM Shrinkage Prevention LO 2 One of the most important considerations when planning the layout is visibility of the merchandise.

10/13/ :42:41 AM Visual Merchandising LO 3 Its all in the display. When an item, such as a watch or a scarf, is displayed in a glass case, it implies luxury. An item in a glass case with a lot of space around it implies real luxury.

10/13/ :42:41 AM Question to Ponder How do fixtures and merchandise presentation interact to influence consumers in different types of retailers?

10/13/ :42:41 AM Store Design LO 4 Ambience Is the overall feeling or mood projected by a store through its aesthetic appeal to human senses.

10/13/ :42:41 AM Store Design LO 4 Storefront Design Interior Design Lighting Design Sounds and Smells: Total Sensory Marketing

10/13/ :42:41 AM Lighting Design LO 4 Crate & Barrel makes effective use of lighting to highlight and feature merchandise on display.

Total Sensory Marketing
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Total Sensory Marketing LO 4 Crabtree & Evelyn makes effective use of fragrances and odors to generate smells that reinforce its store ambiance.

Visual Communications
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Visual Communications LO 5 Name, Logo, and Retail Identity Institutional Signage Directional, Departmental, and Category Signage Point-of-Sale (POS) Signage Lifestyle Graphics

Directional, Departmental, and Category Signage
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Directional, Departmental, and Category Signage LO 5 Directional and Departmental Signage are large signs that are usually placed fairly high, so they can be seen throughout the store. Category Signage are smaller than directional and departmental signage and are intended to be seen from a shorter distance; they are located on or close to the fixture itself where the merchandise is displayed.

10/13/ :42:41 AM Departmental Signage LO 5 Departmental signage serve as the highest level of organization in an overall signage program. These signs are usually large and placed fairly high to they can be seen throughout the store.

10/13/ :42:41 AM Category Signage LO 5 Category signage helps consumers negotiate throughout the store to find the product categories they are looking for. The size of category signage varies widely from a lettering that is a few feet in height to merely inches.

Point-of-Sale (POS) Signage
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Point-of-Sale (POS) Signage LO 5 Point-of-Sale Signage Is relatively small signage that is placed very close to the merchandise and is intended to give details about specific items.

Point-of-Sale (POS) Signage
3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM Point-of-Sale (POS) Signage LO 5 POS signage for clearance and sale items tend to be in red to draw a consumer’s attention.

10/13/ :42:41 AM Lifestyle Graphics LO 5 The Limited uses lifestyle graphics to convey the image of the product to the consumer. Here the Limited conveys the casual nature of one apparel line.

10/13/ :42:41 AM Visual Merchandising LO 3 Suggestion positioning. Once the customer has already purchased one item, it’s easier to sell an additional item. Thus apparel retailers strategically place impulse buys like hair bows and costume jewelry by the cashier the same way supermarket checkouts display candy and magazines.

3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM HBA Space Allocation by Mass Merchandisers LO 2 Total U.S. and by geographic region Selected HBA categories Average linear feet per store handling... Total U.S Eastern Central Southern Pacific Creme rinse/conditioner Deodorant Face cream/lotion Hand/body lotion Hair colorings Hair spray-women’s Men’s toiletries Oral antiseptics/rinses Shampoo Source: Neilsen Marketing Research

3rd Quarter 2002 Analyst Presentation 10/13/ :42:41 AM HBA Space Allocation by Mass Merchandisers LO 2 Total U.S. and by geographic region Selected HBA categories Average linear feet per store handling... Total U.S Eastern Central Southern Pacific Shaving creams Suntan Lotion Toothpaste Acne remedies Antacids Cold remedies-adult Cough syrup/tablets Nasal spray/drops Source: Neilsen Marketing Research

10/13/ :42:41 AM Visual Merchandising LO 3 Color is king. Retailers believe consumers are more apt to buy clothes that appear in full size and color assortments.

Space Planning Considerations
High traffic & highly visible areas Entrances, escalators, check-out area, end aisles, feature areas Profitability of merchandise Private brand, higher margin categories Customer buying considerations Impulse products near front Demand/destination areas in back, off the beaten path Physical characteristics of product Bulky vs. small/easily stolen Complementary products should be adjacent Sales rate Display more units of fast-selling merchandise (tonnage merchandising

3rd Quarter 2002 Analyst Presentation

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