MODERN DAY RETAIL

MARKETING MANAGEMENT Store layout

9 STORE LAYOUT
Learning objectives:

• To study the different types of store layout

• To understand the importance of store layout in increasing sales
• To learn the main objectives of a store layout
• To learn about MR model and the ELM model

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MARKETING MANAGEMENT Store layout

In the previous chapter, we saw the importance of selecting the right location for a retail
store. Cost and availability of land, capital available, basic infrastructure facilities available
near the store, safety and security and availability of parking space are important criteria for
selecting the location for a retail store. Traffic flow near the store determines its accessibility.
Presence of competition in and around the store is another major factor that drives sales in
retail. Again, the type of retailing also plays a role in arriving at a decision – for example – is
it going to be a generic store, specialized store, department store or supermarket? A retailer
also looks for the potential for future expansion while selecting a location. Demand density
too plays an important role. Demand density is the extent to which potential demand for
retailer’s goods and services is concentrated in a particular area. In this chapter, we shall
learn more about a store layout.

What is a store layout?

The design and lay-out of floor space and the placement of fixtures within a department
or retail store is important. A store layout is the design in which a store’s interior is set
up. A well-planned retail store layout allows a retailer to maximize the sales for each foot
of the allocated selling space within the store. A store layout is the design in which a store’s
interior is set up. Store layouts are well thought out to provide the best experience possible.

Store Layout: Need for one

1. Today competition among retailers is all about unique shopping experience.
2. Store planning = Store location + Store Design + Store Layout
3. Store atmosphere refers to interiors as well as exteriors
4. Exteriors refers to storefront, signages, marquee, entrances, parking, display windows
5. Store interiors refers to colors, lighting, temperature, fixtures, flooring, merchandise,
locations of cash counters, fragrances, aisles, display of merchandise.
6. Atmosphere = Store’s physical characteristics + ambience.
7. Atmospherics is the psychological feeling a customer gets when he enters the store.
This influences customer’s shopping experience. Customers may spend more due
to store atmospherics that includes interiors and exteriors.

Every store has a layout that decides the arrangement of the merchandise offered by the
store and floor space allocated. Store layout creates a unique image of the store so that
customers can be attracted. Store layout depends on total space available, types of goods,
volume, variety, movement required in the store, storage space needed, average number of
customers visiting the store.

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Objectives of store layout

1. Optimum utilization of space
2. Minimum movement and product handling
3. Maximum visibility of products to customers
4. Entice customers to visit as many departments/product areas as possible
5. Ease in maintenance of the store – cleaning the floor
6. Maximum safety for the employees working in store and the customers visiting
the store

Different types of store layout

1. Free flow layout (Boutique Layout)
2. Grid Layout
3. Loop Layout
4. Spine Layout

Free flow layout is when customers can move freely throughout the outlet. Fixtures, racks,
counters arranged asymmetrically. Customers may buy impulsively. This layout is good with
general merchandise of limited variety but it is not suitable when the store offers larger
variety in the specialized products.

Grid Layout – Traffic flow is in a straight line. This pattern suitable when rectangular space
is available. Counters, shelves and fixtures are arranged in the long rows. This layout is used
by supermarkets and food retailers. This layout makes effective use of vertical space. Self
service possible, hence less sales staff is required. Shelf management is crucial. This layout
encourages the customer to visit the entire shop.

Loop Layout – This is called as racetrack layout and is suitable when rectangular space
is available. It enhances store productivity. This loop begins at the entrance and returns
the customer to the front of the store. This layout encourages customers to visit multiple
departments. Customers can view the merchandises kept at both sides. This layout encourages
impulse purchasing.

Spine Layout – Traffic flow is in a straight line running from the front to the back of the
store. Merchandises can be displayed on the both the side of the spine. Departments can
be formed on both the sides with a common back or side walls. Within the departments,
free flow or grid layout can be used. This is the arrangement that is used when there is lot
of space.

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Free-Flow Layout
• Fixtures and merchandise
grouped into free-flowing
Storage, Receiving, Marketing patterns on the sales floor-no
defined traffic pattern

Underwear Dressing Rooms

Hats and Handbags

Stockings

• Works best in small stores

Accessories

(under 5,000 square feet) in

Tops
Checkout which customer wish to
counter browse
Casual Wear

Clearance • Works best when

Pants

Tops
Items merchandise is of the same

Skirts and Dresses

type, such as fashion apparel
Jeans

Feature Feature
• If there is a great variety of
merchandise, fails to provide
cues as to where one
Open Display Window Open Display Window department stops and
another starts

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Grid layout

Bakery

Electrical &
Fruits Electronics

Vegetables

Clothing

Carts
Checkouts

Office Exit Entrance

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The Racetrack Layout

B G H I
E J

K
A C D M

L
TILLS

Entrance A to M = Category Display Areas Exit

Spine Layout
• Variation of grid, loop and free-form
Back Room layouts

• Based on single main aisle running from

the front to the back of the store
(transporting customers in both
directions)

• On either side of spine, merchandise

departments branch off toward the back
or side walls

• Heavily used by medium-sized specialty

stores ranging from 2,000-10,000 square
feet

• In fashion stores the spine is often

subtly offset by a change in floor coloring
or surface and is not perceived as an aisle

Importance of Store Layout

Surveys have shown that one of the most important criteria for customer satisfaction is
the ease with which the customer finds his way in the store. Besides, the customer expects
to be led along the main departments of the store. Therefore a good layout is a matter of
customer satisfaction.

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A good layout provides you with the opportunity of influencing store turnover. The
appropriate shelf layout, the arrangement of the product range or a well-thought out spot
for special offers all have a direct effect on turnover.

Each store has its own best solution for logistics problems. This applies especially to stores
with a fast turnover of goods, stores that sell products that are difficult to market or products
that take up a large amount of space etc. Defining specific conditions is an absolute necessity
for the sale of goods that require a certain (sales) ambiance. And, finally, it is important to
keep both customers and sales employees satisfied.

A good store layout serves many purposes, such as for instance customer flow and the
prevention of shoplifting. One of the main purposes of store layout is to create smooth
customer flow through the store. It is vital to create the right balance between fast and
smooth (customer) flow on the one hand and provision of space on the other. Creating
smooth (customer) flow is necessary in stores that have a high frequency of customer visits.

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The danger of too smooth a customer flow is the speed. If the customer is accustomed to
walking through a store at a certain pace, it is important to slow down this speed deliberately,
effectively and gradually. This can be achieved by means of certain ‘tools’. It does not need
to involve a different layout of the available space. It can also be accomplished by a special
product range or eye catchers in the store.

A customer needs some time to decide to buy a product. The purchase of goods from
particular product ranges is determined by ambiance. For instance, a customer does not want
to be disturbed by other customers when a choice has to be made between two types of
lingerie. When a store is poorly organized, the opportunities for shoplifters increase. While
developing the layout, precautions must be taken to ensure that this aspect is taken care of.

A good layout can attract customers or put them off. A logical product layout will help
customers make a decision to purchase – otherwise this can create chaos and additional
work load for store staff. As product ranges change more frequently, a retailer has to respond
to seasonal changes with alacrity and agility. A good layout will allow for this flexibility.

Store design
It lays an important role in the perception of the customer’s shopping experience. If retailer
can develop the right controlled environment, shopper moods may be influenced. If moods
can be influenced, so can behavior.

Store Design: Ambient dimension – background effects in an environment (atmospherics).

Social dimension – All the people in the environment and their interactions

Design dimension – physical appearance, nature of the environment

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The Mehrabian- Russell Model

The Mehrabian – Russell Model

Pleasure

Environmental Approach behaviour

stimuli Avoidance behaviour

Arousal

1. The MR model was developed in 1974.

2. Shopper behavior is a result of emotional states created by the store environment.
3. The model has 3 elements:
• Environmental stimuli
• Emotional states
• Behavior
4. Stimuli from the store (images, sounds, smells) are processed by the shopper in a
unique manner.
5. Emotional state of a shopper is described by two variables – pleasure and arousal.
6. Pleasure – extent to which a shopper feels good in the store.
7. Arousal – extent to which a shopper feels excited or stimulated.
8. The shopper’s behavior can be approach or avoidance oriented.
9. Approach behavior – willingness to move towards the environment, increased
propensity to buy.
10. Avoidance behavior – intent of the customer to move away from the environment;
reduce participation and a decreased propensity to buy.
11. The main use of MR model is in the design of the store environments. If the
retailer understands the way shoppers react to store design elements (layout, display,
atmospherics) the correct environmental stimuli can be created to build the correct
emotional state that will trigger the most appropriate behavior.

The MR model is a useful tool in predicting and influencing shopper’s in-store emotional states
and behavior. Mood effects of a customer are more pronounced for high involvement purchases.

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The ELM model

The Elaboration Likelihood Model
It considers the concept of persuasion. Persuasion is the process by which shoppers move
towards a final purchase decision and can take two routes under the ELM treatment. There
are two types – Central Route persuasion &Peripheral Route persuasion. Shopper has the
ability and motivation to digest the arguments offered in a careful and critical manner.This
occurs without any systematic consideration of the facts, ability to persuade subconsciously.

The ELM model adds an extra dimension to the Mehrabian-Russell model by considering
the mechanism by which an environmental stimulus may invoke a certain response. Design
fit of store is the balance between retailer and shopper considerations. A product’s packaging
is the silent salesman. A retail store’s exterior can help shoppers to evaluate the nature of
the store in terms of the assortment on offer, the price levels concerned and the likely
shopping experience.

Atmospherics can be defined as the effort to design buying environments to produce specific
emotional effects in the buyer that enhance purchase probability. Atmospherics influence
the shopper on a more subconscious level hence can be seen to affect the shopper’s mood
rather than the purchase decision directly.

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The Retail Assortment

1. The full product range on sale within a store is called as assortment.
2. Retailers have to decide on a limited assortment that will most effectively meet
target shopper’s needs.
3. For retailers, the scare resource is the selling space. For a manufacturer, the scare
resource is the production capacity.
4. Retailer must maximize sales by selecting the most appropriate range of products
(assortment) to offer in the store.
5. Assortment width is the number of different product types offered by the retailer.
6. Assortment depth is the number of product varieties offered.
7. Assortment consistency is the degree of similarity between the products offered.

Assortment Planning Process

The goal of assortment planning is to produce the most appropriate range of products to
offer to target shoppers. How can you satisfy the customers more than the competition?
How can you make maximum profit in the process? Retailers must achieve this objective
with limited selling space. There are 2 stages: Analysis & Decision.

Analysis Decision

Target shopper Total range of products to be offered

Competition Category numbers, type and composition

Categories of purchase Demand forecast

products and store capacity

Target shopper analysis

1. Who are the customers?
2. What are their needs?
3. Why do they want it?
4. What do they want?

Retailer has to try to answer these questions

1. Product composition
2. Branding
3. Pack sizes

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Categories of shoppers
Planned purchasers and Impulsive purchasers

In store judgement of the shopper are influenced by degree of choice and quality perceptions.
Shoppers look at the additional choices too.

Addition of extra product to assortment runs the risk of cannibalization.

Cannibalization happens when a new product is added that fails to generate any new business
and draws sales away from a retailer’s existing products.

E.g. A retailer offers products A, B, C and D in a given category and achieves combined
sales of Rs 10000 per week. Product E is now added to increase choice and sales increases
marginally to Rs 10050. Offering product E has caused cannibalization, as it has drawn
sales away from other products rather than causing new purchases to be made. Unless
the addition of product E satisfied the shopper’s present and future needs much better or
responded to competitive pressures successfully, it was an inappropriate tactic.

A retailer must balance customer choice with financial performance. A limited number of
purchase options leads to operational efficiencies for the retailer owing to buying power and
space utilization, but may result in lower sales owing to a lack of choice for the shopper.
A larger number of purchase options may increase sales by giving the shopper the right
amount of choice for current and future needs, but may trigger operational inefficiencies
at the point where cannibalization occurs.

Perceived assortment quality, indicates how fit a range of products is for the purpose of
satisfying the shopper’s needs. The perception about quality depends on shoppers’ past
experience with the retailer, objective judgement and subjective judgement about brand image
and retailer image. Competitor benchmarking also affects a shopper’s judgement of quality.

Shopper profiles vary from region to region. The assortment must fit to the local shopper’s
taste. Shoppers are becoming more homogeneous, so regional adaptation is becoming less
of an issue. Degree of assortment overlaps between competing stores in the same trade
area. Shoppers who saw two assortments as similar would be more likely to spread their
purchases over both stores.

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Product and capacity analysis is aimed at ensuring that the available selling area is used
as efficiently and effectively as possible. Issues covered are store area requirements and
management and logistical issues for each product or category that may lie within the scope
of the desired store image. Store area requirements relate to the amount of selling space (in
sqft/metres) required to effectively display a given product category.

Physical handling of product is concerned with logistics. Some products (like glass) need
more complex handling procedures.

THE DECISION PROCESS

• Range of products to be offered
• Relevant order quantities of each
• Type of brand to store

Consider pack size for frequently purchased relatively low-price items.

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MARKETING MANAGEMENT Store layout

Concern about running out – large pack sizes will encourage greater usage volume as customers
are less concerned about finishing the pack. Replacement cost idea is that smaller packages
are used more sparingly to save the inconvenience of buying another pack so usage volume
is reduced as pack size decreases. Over pouring is the simple concept that larger packs are
harder to handle and so more difficult to control. As pack size increases, control decreases
and usage volume increases owing to larger servings being poured.

Financial considerations – product profitability.

Store and physical distribution – considerations allow the profit per unit of selling space to
be calculated and the handling requirements to be analyzed.

Profit/Selling space – Profit per sq ft.

Handling requirements relate to the ability to handle the product within both storage areas
and the store itself.

Buying terms – contractual conditions that governs the supplier – retailer transaction.

Accurate demand estimation is needed to determine order quantity.

Decide on the brands – should we buy supplier brands or retailer brands. Customer choice,
need satisfaction, financial performance, shopper satisfaction, quality issues are these affect
the retailer’s decisions to opt for a particular brand.

Store image, competition are other factors. Retailers must match the balance of brands with
their overall retail concept. The increasing sophistication and diversity of retailer brands has
increased their appeal and narrowed the perceived quality gap with supplier brands. Retailer’s
image or corporate brand depends on the assortment. The perfect assortment probably does
not exist and if it did, it would change on a regular basis in line with changes in the market.
Optimizing the assortment is the key and requires detailed data collection and analysis.

References:
http://www.slideshare.net/gadekar1986/store-design-12816038

http://www.slideshare.net/medhaviv/rm-lecture-6

http://www.slideshare.net/prithvighag/retail-store-layoutdesign-and-display

https://www.linkedin.com/pulse/importance-store-layout-hernani-ribeiro

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MARKETING MANAGEMENT Store manager – CEO of the store

10 STORE MANAGER – CEO OF

THE STORE
Learning objectives:
• Review the store manager’s job responsibilities and duties
• Identify critical parameters for performance of store manager
• Evaluate the strategic benefits of becoming a store manager
• Understand the challenges involved in a store manager’s job

The demands and challenges of a store manager’s job

Though the modern day store manager’s role is dynamic and exciting, it is also extremely
demanding and stressful. Store managers need to possess a range of abilities – they need to
have excellent communication skills and administrative capabilities. They must understand
supply chain management, accounts, HR, marketing and sales. The store manager has to
drive the stores operations so that they are profitable. But he must also elevate the store
image and ensure that store personnel are delivering exemplary service to customers.

In UK more people are looking at a career in retail. The influx of new staff makes the role
of a store manager more important to ensure the smooth and successful running of the store.

The typical duties of a store manager are:

1. Recruit and train new employees

2. Ensure productivity of store employees
3. Meet company targets and maximize profitability
4. Manage budgets
5. Oversee pricing
6. Support the retail firm in loss prevention
7. Ensure compliance with local legislation
8. Manage the assets of the store
9. Ensure that safety and security measures are in place
10. Take stock of inventory
11. Maintain regular coordination with head office, godowns/warehouses and merchandiser
12. Prepare promotional materials and displays
13. The store manager must be available to the customers when they need him

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Other duties of a store manager may be

• analyzing sales figures and forecasting future sales;
• analyzing and interpreting trends to facilitate planning;
• using information technology to record sales figures, for data analysis and forward
planning;
• updating colleagues on business performance, new initiatives and other pertinent issues;
• touring the sales floor regularly, talking to colleagues and customers and identifying
or resolving urgent issues;
• maintaining awareness of market trends in the retail industry, understanding
forthcoming customer initiatives and monitoring what local competitors are doing;
• initiating changes to improve the business, e.g. revising opening hours to ensure
the store can compete effectively in the local market;

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Role of a store manager – strategically rewarding

The experience that a store manager’s role offers can be enriching for the individual in the
long term and this can be a stepping stone for moving into wider industry roles. Most
retailers believe in promoting people from within the ranks. While an academic qualification
helps, it is the on-the-job experience of a store manager that is valued more.

Store managers must demonstrate a higher level of emotional intelligence to ensure a better
work life balance. They must be mentally strong to deal with the pressures as a store manager.
To move into a better role in the future, store managers must be willing to travel.

After years of grounding in a retail store, store managers can move to a national or a global
role and can expect roles in senior management. They can bring considerable practical
experience in areas like buying, merchandising, customer service, training, PR, operations
and performance management.

Retail store managers need to be adept in soft skills. They must have IT skills and also
demonstrate aptitude in analytical abilities. They must be good planners and demonstrate
organizational skills. They must be resourceful and energetic. They must also keep a tight
handle on costs. Store managers must ensure that promotions are run appropriately as per
company standards. Customer care standards must be continuously improved.

The retail store manager oversees the daily operations of a retail establishment. He has to
ensure that customers have a pleasant shopping experience. The store manager is responsible
for ensuring that store operations are successful. He has to do all that is needed to achieve
this goal.

The store manager has to deal with cash management too. He has to maintain records
meticulously so that the money is accounted properly. He has to be on his toes to ensure
proper management of inventory. He has to analyse fast moving stock and slow moving
stock and plan sales strategies to increase the sales of non moving stock.

Retail store manager acts as an effective conduit between the retail store and the top
management team at the corporate level. They need to keep tabs on store’s performance
on an on-going basis and keep the top management updated about the same. He is also
responsible for employee relations.

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The store manager must be an easy going person who can lend a patient ear to his employees
and customers. He must be someone who is easy to converse with. The store employees
play an important role in converting prospects into a sale. So, the store manager needs to
motivate and empower them so that they can do their best in terms of customer service.
Store manager must be professional in his approach.

The main challenge for a store manager is not just people management but also dealing with
innumerable performance metrics. Retailers are often less knowledgeable about narrowing
down to a few crucial metrics. So the poor store manager has to spend lot of time deciphering
the numerous metrics most of which may not have immediate relevance. Above all these
aspects, demand forecasting is also challenging for a store manager though technology is
now being used to forecast demand in a better manner.

But technology is not a panacea for everything. Human involvement is essential when it
comes to sudden customer fluctuations driven by promotions, weather and social media.
Technology can at best be an enabler. Trucks may arrive too early or too late. A high value
customer may turn up unexpectedly. Stock out situations can be a nightmare. Last minute
employee no shows and sick callouts can be stressful for a store manager. He has to adjust
the labour throughout the day to match actual customer traffic.

The ability to consistently identify and rapidly respond to all of these last minute/second
demands is the “Holy Grail” of retail. Combining real-time data and alerts with best-practice
guidance for actions is essential part of a store manager’s job. This can maximize sales, lower
expenses, improve customer service and compete better.

Restricted store budgets, lean staffing and a long-working hours culture has resulted in
increasing work place demands and time pressures leading adverse effects on health of
store employees. Store managers have to accommodate work-life balance for their staff and
themselves personally.

Owners and managers of grocery stores are keen to build sales and profits. They constantly
strive to offer quality products that customers demand at reasonable prices. Additionally,
retailers must constantly be improving customer service satisfaction in their units. While
specific sales and customer service goals are common with all retailers, certain retail
management challenges can hinder a grocery store’s chance of achieving these objectives.

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Whether in charge of a small, individually-owned grocery store or one that is part of a larger
chain, managing a grocery store successfully involves considerable responsibility. Grocery store
managers must ensure that the store runs smoothly, that items are priced competitively and
that customers are satisfied. Having a thorough understanding of key concepts involved in
effective grocery store management is imperative for any manager dedicated to the success
of his store.

Nearly every survey consistently indicates what customers are looking for in their shopping
experience:

• Sell what they need and have it in stock when they want it.
• Make it easy for them to shop and find what they are looking for.
• Provide all the information they need in order to quickly decide what to buy.
• Have friendly helpful people available to make the shopping experience a pleasant one.

Controlling operational costs is certainly one of the biggest challenges that any retailer faces.
Since grocery stores typically run on extremely low profit margins, the need for a lean and
efficient operation is critical. Labor costs are the single greatest controllable expense.

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Some grocery store managers have a tendency to cut labor during tough times. If labor
cost reduction is not managed properly, customer service and store conditions may suffer.
This, of course, results in lost customers and sales. Retailers that do not properly budget for
necessary training programs will most likely see both increased employee turnover, which
becomes very costly over time, as well as reduced customer service, due to a lack of training.

Inefficient processes cause a lot of time wastages, equipment wear, and strain on the people
who do the work. Inefficiencies are everywhere and are most often found when products are
touched multiple times or delivery routes are undefined. The grocery store manager must
understand the inventory inside and out. In addition to knowing what the product is, the
manager also has to know how often it ships from the producer, how big the packages are,
the most cost-effective quantity to order, etc. Above all, the manager must know at all times
exactly what is on hand, where it is located, and when it will be replenished.

Most grocery store managers prefer to manage products for customers according to their
needs and expectations. It is the responsibility of the grocery store manager to understand
what the customer expects and to deliver the results they require. Otherwise, the manager
can expect to lose business quickly as customers are quick to switch to other grocery stores.

With emergence of the grocery store chains or supermarkets in developed countries, it is

becoming more difficult for new grocery store owners to establish and survive in competitive
environment. With low labor costs, material costs, and low currency values, these emerging
grocery stores can easily undercut established supermarkets. With the availability of fast
international shipping, established grocery stores are constantly challenged to compete.

Technologies designed to improve the customer’s experience in the grocery store, such as
faster checkout, or ways to provide additional information to the customer are sometimes
difficult to justify when chains are focused on their bottom line. The impact of new system
deployment, training, maintenance, and support can add to a retailer’s reluctance to simply
accept the next new technology. As technology has evolved over the years, most retailers
have switched their operations to the latest tools and techniques except using older systems.

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