37 Consumers and Retailers, Store Layout and Presentation

K. Sangamithirai

epgp books

 

 

 

 

OBJECTIVES:

  • To understand and identify the issues related to consumers and retailers
  • Enable you to understand the functions of retailers
  • To understand the role of store layout in retail business
  • To evaluate various techniques of store presentation
  1. INTRODUCTION

In this era of consumerism, the market is expanding as with the population. The numbers of retail outlets are increasing and so are the consumers’ needs and demands. Changing consumer attitudes can be as important as changing economic conditions. The current consumer’s mood can be described as an age of creativity, self-expression and individualism. The behaviors of human beings as consumer are complex. Retailers understanding of consumer behavior will help them serve their customers efficiently and effectively and serve attract new ones. Retailers are careful on selecting their markets in which the compete as well the competitive strategies they use.

  1. CONSUMER

Consumer is one that consumes, especially one that acquires goods or services for direct use or ownership rather than for resale or use in production and manufacturing. In other words consumer is a person who acquires goods or services for his or her own personal needs.

 

2.1.MAJOR CONSUMER SEGMENTS

 

The things people value and their behavior patterns lead to diverse groups of consumers with different needs. The resulting consumer segments can be defined as

  • The buy – for-one consumer
  • The stability seeking consumer
  • The get my money’s worth consumer
  • The time buying consumer

2.2.CONSUMER BEHAVIOUR

 

Consumer behavior is all about understanding how people choose to spend their money and time in buying and consuming various goods and services that they desire.

 

In the retail context , retailers would be specifically more interested to gain an insight into the consumers shopping behavior, which involves an understanding to gain an insight into the consumers shopping behavior which involves an understanding of decision variables regarding when , where and what to buy. Such decision variables are the factors which should be considered by retailers while framing their business strategies.

 

2.3.FACTORS AFFECTING CONSUMER DECISION – MAKING

 

A consumers purchase decision tends to affected by the affected d by the following four factors.

  • Demographic
  • Psychological
  • Environmental
  • Lifestyle

Demographic factors

 

They are unique to a particular person. They are objective and quantifiable and easily identifiable population data such as sex, income, age, marital status etc.

 

They also involve identification of who is responsible for the decision making or buying and who is the ultimate consumer. Example saravanna store and shoppers stop.

 

Psychological factors

 

This refers to the intrinsic or inner aspects of an individual. An understanding of consumer psychology guides the retailers’ segmentation strategy. Example consumers respond differently towards the same retail marketing mix due to their respective motives, personality, perception, and learning. Level of involvement and attitude.

 

Environmental factors

 

They cover all the physical and social characteristics of a consumer’s external world including physical objects ( goods and outlets) , spatial relationships (location of the shopping centres and merchandise in stores), and the social factors ( opinion leaders , the persons family, co-customers, reference groups, social class and culture).

 

Lifestyle factors

 

Lifestyle refers to an individual’s mode of living as identified by his activities, interest and opinions. Lifestyle variables have been measured by identifying a consumer’s day-to-day activities and interests. Life style is considered to be highly correlated with consumer values and personality.

 

An individuals’ lifestyle is influenced, among other things, by the social group he or she belongs to and his occupation. Example, double- income-no –kids(DINKS) families in metros shop very regularly at the super malls because of the limited time at their disposal, and also look for entertainment while shopping on weekends. At the same time they are higher spenders than single income families. Khaddar a popular store in Bangalore specializes in dresses for women owned by a Kolkata-based company, it is a fine example of trying to incorporate the cultural values of Indian women in their garments. They notice a very unique characteristic of Indian women in extra-large (XL), garment size- group. Women in this size-category do not want the contours of their body to get highlighted and are consciously looking for dresses that would conceal them.

 

Indian working women have to balance their wardrobe collection based on the requirements of different occasions related to profession work place or family gathering. Based on the study regarding dress preferences of working Indian women by images fashion.com, different brands have emerged.

 

In ethnic wear there are just a handful of quality brands like Nalli, Kumarans and Bombay selection. They have positioned themselves to meet the demand for ethnic wear at family and festival occasions. On the other hand W a women’s store and khader are trying to infuse global styling and design functionality with salwar kameez.

  1. RETAILER

The distribution of finished product begins with the producer and ends at the ultimate consumer. Between the two of them there is a middle person – the retailer. Retailing is defined as a set of activities or steps used to sell a product or a service to consumers for their personal or family use. A retailer is a person , agent, agency, company or organization which is instrumental in reaching the goods, merchandise or service to the ultimate consumer. Retailers perform specific activities such as anticipating customer’s wants, developing assortments of products, acquiring market information and financing.

 

In this era of globalization, liberalization and highly aware customers, a retailer is required to make a conscious effort to position himself distinctively to face the competition. Retail business is the largest private industry in the world ahead even of finance and engineering.

 

In India retail is the second largest employer after agriculture. It is highly fragmented and consists predominantly of small independent and owner –managed shops. There has been a boon in the retail trade in India owing to a gradual increase in the increase in the disposable income of the middleclass households.

 

A strong trend in favour of organized retail format has been witnessed as people are increasingly showing their preference for one-stop-shops. Customers are also looking for ambience and convenience in shopping. This is likely to continue more strongly in the coming years. In future with more dual income families the consumer’s ability to spend will increase, but at the same time it is predicted that the time available for shopping will go down. In such a scenario retailers will have to take steps to develop shopping as an experience though the more successful retailer will be those who would provide quicker service.

 

Retailer cannot always anticipate the rapid changes that can occur in the environment that can so virtually affect their future. Weather problems, such as floods, unforeseen rapid increase in interest rates, totally new form of product or services, rising costs of liability , change in consumers interest such as health and fitness, insurance are some of the reasons.

 

In the chain of distribution of goods from the product/manufacturer to the consumer the retailer plays an extremely crucial role. It is at the retail store that the consumer gets actually the opportunity to choose the products and brand that he wishes to buy. Hence it is the retailer who best knows the specific needs of the customer and who can accurately and successfully monitor the changes in consumer demands from time to time.

 

3.1. THE ORGANISATIONAL STRUCTUIRE

 

 

3.1.1. Organization of an Independent Store Retailer

 

Owner – managers of small store may themselves constitute the entire organization and may hire employees as sale increase. However coordinating and managing employee activities are easier in a small store than in a large chain store retail outlet. The owner –manager simply assigns tasks to each employee on a day-to-day basis and ensures that these tasks are performed properly. Since the numbers of employees are limited small retailers have little specialization and each employee must perform a wide range of activities while the owner –manager is responsible for all the management tasks.

 

As and when the sales of the store increase substancially, specilisation in management may occur when the owner-manager hires management employees though he may continue to perform strategic management tasks. Besides the management of the store, the owner-manager may also be responsible for administrative tasks irrespective of the size of a retail operation, all tasks of a retail company may be divided into four major divisions: strategic management, merchandise management, store management and administrative management.

 

3.1.2. Organization of A large Chain Store Retailer

 

In contrast to the management of small retailers, retail chain management is a fairly complex structure. Most retail chains have an elaborate senior management that includes a CEO, directors, presidents, vice presidents, etc. All of them work closely together in taking strategic decisions and in managing the entire organization. The tasks of all the four divisions of a retail operation as mentioned above are divide among this senior management who are responsible for their respective  divisions. Large retail chains lay great emphasis on their company’s human resource philosophy and try to function strictly in accordance with the latter. However large or small an operation may be, all it tasks are broadly divided into four broad divisions.

 

Strategic management

 

The crucial decisions of the company are taken by the highest management of a chain store retailer. All members of the senior management of a chain store retailer function in a very close contact and coordination with each other, and constantly consult each other on important issues. The main tasks of these retailers are as follows.

  • Developing a retail strategy
  • Identifying the target market
  • Determining the retail format
  • Designing the organizational structure and selecting locations

Merchandise management

 

The merchandise division of a chain store retailer is responsible for selecting and buying the merchandise sold in the stores and ensuring that the quality fashion, assortment and pricing of the merchandise is consistent with the firms strategy. The buyer is the key operating manager in the merchandise division and is usually responsible for a specific category of merchandise. Most retailers usually follow the principles of category management so as to ensure a high degree of specialization among their managers. Depending on the magnitude of the operations, each of the buyers may have one or two assistants reporting to them. The buyers actually select the merchandise and even decide its pricing policy. They determine what merchandise of their ‘category’ is stocked and sold in each store and manage their ’category’ with profit and loss responsibility. The major tasks performed by the merchandising team are:

  1. Buying Merchandise
  • Identifying vendors;
  • Evaluating the best of them;
  • Negotiating with vendors ; and
  • Placing orders
  1. Controlling merchandise inventory
  • Developing merchandise budget plans;
  • Ensuring timely delivery to store; and
  • Reviewing open-to-buy / stock positions.
  1. Pricing merchandise
  • Setting initial prices an
  • Adjusting prices.

Store Management

 

The store division is responsible for all the activities undertaken in the company’s facilities where the merchandise is actually sold and services provided to the customer. Depending on the size of the store, a store manager, a general manager or even a store director is appointed to head the operations at the store level. The operations at the store level are usually divided into three main functions-personnel, administration and selling, which would include the following sug functions.

  • Recruiting and training store personnel
  • Planning work schedule
  • Evaluating the performance of store personnel
  • Maintaining store facilities
  • Locating and displaying merchandise
  • Assisting customers in selection
  • Repairing and altering merchandise
  • Providing services such as gift wrapping and home delivery
  • Handling customer complaints efficiently
  • Ensuring accurate inventory
  • Taking physical inventory and
  • Preventing inventory shrinkage.

Administrative Management

 

The responsibilities of the administrative division include marketing, human resources, logistics and finance. The administrative division of a retail chain is the support division of the company which provides all the requisite support for the mainline managers to perform their duties and to implement the company’s strategic plans. Their functions may be summarized as follows:

 

Promoting the company, its merchandise and the services offered

  • Planning communication programmes;
  • Developing an advertising budget;
  • Planning special promotions;
  • Designing special displays;
  • Overseeing public relations.

Managing human resources

  • Developing an HRD policy;
  • Recruiting, hiring, and training managers;
  • Planning career paths; and
  • Maintaining merchandise to vendors

Distributing merchandise

  • Selecting warehouse locations;
  • Receiving merchandise;
  • Marking and labelling merchandise;
  • Storing merchandise;
  • Distributing merchandise to the stores ; and
  • Returning merchandise to vendors.

Establishing financial control

  • Providing timely information on financial performance;
  • Forecasting sales cash flow, profits;
  • Raising capital from investors;
  • Billing customers; and
  • Providing credit.

   It has been the general practice of dividing the overall organizational structure into retail chains for a long time, irrespective of their size and format. However with the passage of time and change in the retail environment, many companies have evolved newer and more innovative methods of designing their organisations. Regardless of the extent of change, the overall functions and job allocations remain on similar lines.

  1. STORE LAYOUT

Customers in India are usually offered nothing to visit neighbourhood stores, which are characterized by the absence of any new products or exciting promotions and schemes, impolite staff, a dirty environment and huge crowds.

 

The situation is however changing. Many retail organisations have upgraded their stores substantially, others have created stores with altogether a new look. The customers are quick to recognize when they are offered better value for money in a dignified environment. It is now being felt more than ever before in our country that retailers must create exciting store designs and neat and innovative merchandising techniques so as to be able to draw the people for shopping. In this era of virtual shopping on internet , the need to attract the customers has become more important than ever.

 

The following points must be kept in mind while designing a retail store.

  • The atmosphere being created in the store must be consistent with the store’s image and overall strategy.
  • Since the purpose of a good store design is to help influence the customer’s purchase decision, all efforts should be aimed in this direction only; and
  • The designers of the store must keep in mind both the initial cost as well as the subsequent recurring maintenance costs. It is also imperative to ensure easy and regular maintenance of the store from time and time.

As is often said in retailing “Even good merchandise does not sell on its own.” In an age where retailers all over the world have virtually reached a stage of saturation of ideas with regard to merchandising techniques, or even locations, price and promotion, it has become more important than ever before to create a differential advantage in terms of store layout itself.

 

A store must be exciting in all respects to be able to motivate the customer to visit it again. Many retailers as around the world prefer to implement the strategy of a ‘store as theatre’ concept and conceive their store as a theatre itself where the items of merchandise can be equated to the characters of a play and the lights and visual communication treated as the sets. While designing a store retailers must consider the seven fundamental objectives.

 

4.1. FUNDAMENTALS OF STORE DESIGN

 

Consistency with store image

 

Both the internal and external design and decoration of the store must be in consonance with the image of the store and what it wishes to communicate to the general public.

 

Selection of family fixtures

 

The type of fixtures, furniture, shelving racks and flooring must not clash and should harmonise with each other.

 

Need to influence customer shopping

 

Retailer should constantly evaluate his store layout and visual merchandising techniques in terms of the impact that it might have in influencing the customer’s decision. So that the retailer would tend to make less mistakes and would always be able to keep customer interest foremost in his mind.

Returns on investment

 

A retailer must be certain that all his decisions ensure proportionate returns and that the recurring costs and hassles of maintenance are also affordable.

 

Must be modular

 

The entire store must be designed in a more or less modular arrangement to ensure that any subsequent changes in the layout or design of the store do not lead to wastage and can be conducted smoothly. The design of the store must be adaptable to many types of merchandise as well as be economically useful for several years.

 

Cost effectiveness

 

All electrical equipment used in the store must be energy –efficient as energy costs are a major component of recurring expenditure in retail operation.

 

Optimization of floor space

 

The store plan must strike an ideal balance between optimizing floor space and encourage customer traffic. The store layout must not create an impediment in the smooth flow of customer traffic as this could frustrate customers an may hurt them physically.

 

4.2. TYPES OF STORE LAYOUT

 

Many elements need to be considered in the design of a store layout to help achieve the ultimate the objectives of the store. Broadly ther e are only three general store layout designs commonly used in retailing throughout the world.

 

4.2.1.   GRID STORE LAYOUT

 

A grid layout may be described as a series of long aisles of merchandise displayed in a respective manner. Grocery stores/supermarkets are usually organized in a grid design which permits them to stock and display as much merchandise as possible in an orderly and logical sequence. Although the grid layout is not the most aesthetically pleasing arrangement, it is undoubtedly the most convenient,  both for the store management as well as for customers. Since supermarkets are usually frequented by a regular clientele and are also considered venues for regular shopping, customers find it very convenient to go straight to the aisles of their choice without meandering in an otherwise complicated layout thus saving time.

 

Apart from this the grid layout is also cost-effective in both in terms of coat of the shelving racks used as well as the extent of wastage of prime space. This also enables the layout to be fairly flexible and the multiple and adjustable shelves in the racks the help to optimize the store space. A grid layout is also considered to be much safer than the other designs in terms of the security aspect, which is especially important aspect in the case of supermarkets which deal in a large number of small and pilfer-prone packs of merchandise.

 

4.2.2.RACETRACK STORE LAYOUT

 

This type of store layout ensures the fulfillment of the retailer’s main objective of getting customers to visit the store’s multiple department’s thereby enhancing the sales of the store. This is also known as loop.

 

A racetrack layout used in department stores is usually a category/ department-wise layout in which every manufacturer is allotted a separate space, which is why a store with such a layout is often called a shop-in-shop store. This is evident from the fact that each of these so-called boutiques/ shops are usually not separated by brick walls but by the colour combinations of the carpeted flooring and décor that they use to symbolize their strong individual brand presence. In a racetrack layout there is usually a major aisle from where the customer is able to access many of such open shops which in turn also encourage impulse purchases. The store is designed in a manner which compels the customer to view many of the attractive shops from a single location unlike the grid layout where one is able to view a single aisle only.

 

It is a common selling strategy with most manufacturers to display their latest arrivals at the entrance of their boutiques and close to the aisles so that passer-by are enticed to come and have a closer look at their collections. Department stores also adopt a deliberate policy of locating some of the most attractive departments like the children’s department at the rear of the store so as to induce the  customer to cross the entire store for visiting that department. By doing this, the retailer hopes that the customer would make a few more impulse purchases along the way, thus enhancing his store’s overall sales. Such layout provides a very exciting experience for the customer who is suitably impressed by the store’s ambience.

 

4.2.3.   FREE FORM STORE LAYOUT

 

A free form store layout is more popular with speciality stores and the design of such a layout is synonymous with its name. Such stores are organized in a rather asymmetrical manner with the objective of making up-market customers feel at home. There is abundant open space with very little and selective furniture and fixtures, but of very expensive tastes. Such an environment not only helps the retailer in providing a very personalized touch to the customers but also encourage the later to carry on browsing in a very relaxed browsing, which hopefully for the retailer, would culminate in added sales for the store.

 

5.  STORE PRESENTATION

 

It is often said that retailing is a highly organized business and the merchandise must be very logically organized to foster a sense of convenience as well as excitement among customers for the retailer to succeed in his operations. Innumerable display and presentation techniques are used in retail stores all over the world, some of which have proved to be highly profitable. While planning a retail store, the retailer must always at the store from the eyes of the customers to come as close as possible to fulfill the customers’ requirement. Some of the more popular presentation techniques which have been highly successful in retail operations all over the world are as follows.

 

5.1.VISUAL MERCHANDISING

 

Enhancement of the value of the product through innovative shelving techniques has now become more crucial for triggering brand recall and only the use of innovative methods can stand out in a competitive crowd.

 

The competition for shelve space and display space has intensified like never before. Retail space is limited and every marketer has to constantly find new ways of getting his products noticed. The store/  retail outlet is the final meeting ground between the product and the customer where the sale is finally closed. From the manufacturer’s point of view managing the retailer, in turn, enhances the customer’s buying experience for their merchandise. Ensuring that your merchandise stands out over that of your competitors and adds more value to the product have become core elements for effective visual merchandising.

 

It has been observed that human beings are prone to exploring usually from left to right and from top to bottom. Be it a newspaper or a book or even a shelf at a supermarket, one would inevitably explore in this pattern. Vertical merchandising takes advantage of this aspect of human nature by displaying merchandise vertically through the use of walls or even high gondolas and by strategically shelving products with high profit margins either towards the right side of the shelf or towards the bottom. Hence while the customer is viewing the shelf, his eyes would inevitably follow a pattern of left to right and top to bottom and the item viewed towards the end would remain fresh in the mind and have a greater possibility of being sold. For example many grocery stores prefer to display their private label products either in the lower shelves or even towards the right of the branded merchandise primarily for achieving this advantage.

 

5.1.1. CATEGORY WISE PRESENTATION

 

Retailers usually have organized stores that usually display merchandise very logically so as to afford maximum convenience to the customer. Most stores arrange all the merchandise on the shelves on a category as well as department-wise- basis so that their customers may be able to view the entire variety available in the respective category/ department, at a glance. This would obviously be of great help to the customer in taking a decision and would in turn benefit the retailer as well. A true test of the most logical layout would be if an absolutely new and first –time customer is able to locate merchandise throughout the store with absolute ease. All categories and departments also have placards that are hung at a height from the ceiling so to inform the customers even from a distance where they can find each department.

5.1.2. TONAGE MERCHANDISING

 

‘Stock it high and let it fly’ is a common saying in retailing. Tonnage merchandising is an extremely effective display technique in which large quantities of the same product are displayed together to create the impression of a bargain, this technique is popular among the masses. A garment retailer or a discount store would usually have a large number of clothes for the same customer segment bundled into a large bin or even spread across a table as at a sale, at substantially reduced prices. Surprisingly such display techniques sometimes produce miraculous results.

 

5.1.3.EXCLUSIVE DISPLAYS

 

All items connot necessarily enjoy the same level of display in a retail store. For example casual clothes for women cannot be displayed with as much emphasis as an exclusive designer dresses. This is because the low margin/ high turnover nature of casual clothes does not necessarily warrant a highly exclusive display, while designer dresses does.

 

5.1.4.    SPECIALLY FABRICATED GONDOLAS

 

A specially designed gondola may be described as a self-service island with multiple tiers of shelves, bins or pegs usually very strongly representing a particular brand. However manufacturer has to pay the store quite substantially or prove that they also of benefit to the retailer for creating such displays even for a limited period.

 

5.1.5.    IMPULSE PURCHASE

 

Another common marketing trick is that some merchandise is also displayed at the check-out area. Items that are usually displayed at such locations are known as impulse merchandise. Many retailers also adopt a deliberate strategy to force customers to pass through aisles that stock such inexpensive impulse items only to be ultimately met by a rather expensive category of products which the customer requires a tremendous amount of will power to avoid.

It is often believed that the success of a retail store is judged by the extent to which it is able to induce its customers to make impulse purchases. Such displays are usually created to help the retailer achieve the following benefits.

  • These products help in creating impulse purchases, which are made by the customer at the last minute despite no prior planning for such purchases.
  • Since most of these items are low value, high profit margin items, their sales enhance the profitability of the store substantially.
  • The area of the check-out counters is more profitably utilized by displaying such items.
  • Many essential and high demand items which would otherwise be classified as pilferage prone

products can also be sold in this manner as they are displayed under the constant watchful gaze of the cashiers.

 

5.1.6. LIVE SETTING PRESENTATIONS

 

Very often one has noticed that retailers display merchandise in a live setting in an effort to effectively demonstrate to the customers how a particular combination would look like. For example, a ladies department in a department store would probably have certain statue model actually wearing a particular combination of clothes so that the customer buy not only one item but is encouraged to buy the complete set as well to achieve a similar effect as that of the model.

 

SHOP-IN-SHOP DISPLAYS

 

Many strong and powerful brands prefer to display most of their related merchandise at one place under their own brand banner so that customer may be encouraged to buy multiple items of the brand. Such a concept within a large department store is often termed as a shop-in-shop concept of display. All such brand shops are effectively designed and prominently display the brand colour and logos so that customers can identify them easily.

 

PROMOTION AREAS

 

Customers all over the world love promotions as they share a general feeling that they get more value for money during such promotions. Customers thus make it a point to specially visit affixed  promotion area or an aisle while visiting a store. Enhancing on this excitement among its customers, retailer strategically prefer to locate their promotion areas towards the end of the store so as to compel customers to explore literally the entire store in the hope that they might pick up some more items on their way to the promotion area.

 

FRESH PRODUCE AT THE ENTRANCE

 

Fresh produce has an excellent refreshing effect and the location of this department towards the entrance of a supermarket instills a positive feeling in the customer. This have a tremendously positive impact for the retailer, which is reflected not only in the sales achieved by the fresh produce department but in the sales of the entire store.

  1. CONCLUSION

Consumers are becoming more critical and independent, but also place higher demand on convenience. A strong trend in favour of organized retail format has been witnessed as people are increasingly showing their preference for one-stop shops. Customers are also looking for ambience and convenience in shopping. Hence retailers has to know and take necessary steps in store presentation and consider customers preferences.

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References

 

  • Chetan Bajaj, RajnishTuli, Nidhi Varma Srivastava, Retail Management, Oxford University Press, New Delhi, 2010,Second Edition.
  • Ed peelen, Customer Relationship Management, Pearson Education Ltd.,New Delhi, 2009
  • Lamba A J., The Art of Retailing, Tata Mc graw-Hill Publishing Company Limited, New Delhi,2003.
  • Ramkishen Y., International Retail Marketing Strategies, Jaico Publishing House, Mumbai, 2010.
  • http://retailertrainingservices.com/glossary-of-key-retail-and-retail-marketing-terms/
  • http://www.boostmyproduct.com/retail-glossary.html