Strategies Used by Retailer to Increase Sales - Coursework Example

Report about Retail Abstract This report explores how various strategies can be used by retailer to increase sales per square foot. Retail design, store layout, and merchandising are different strategies that have been covered in this report. Interior design of the store, lighting, and storefront design have been explored under retail design. The report assesses these strategies on how they increase sales per square foot in a store. Various stores have been used as examples in this assessment. Contents 2.0 Retail Design 4 4.0 Visual Merchandising 7 5.0 Conclusion 9 Works Cited 10 Bill, Showroom Interior Design Can Boost Your Sales 2010. 19 Nov. 2010. 11 . 11 Elizabeth, Consavage, “Merchandising Mix Gets a Makeover Home.” Channel New 26. 22 11 (11 Dec. 2000): 41-45. 11 Jim, Dion. Visual Merchandising - Make It A Feast For The Senses (2000): 65-115. 12 1.0 Introduction Retailers can improve profits by either increasing sales or decreasing costs. The cost reduction opportunities are of operation in nature since they rely on effective personal management, stock management, and exploiting technology. The increase of sales opportunities are market driven, and they are divided in 2 groups: in-store tactics and out-of-store tactics (Stephen J. Hoch, Mary E. Purk and Xavier Dreze 3). In in-store tactics, the retailer tries to obtain maximum surplus from customers once they are inside the shop. With tactics of out-of-store, the retailer endeavors to attract more customers in the store, either by attracting new customers or by inducing current patrons to buy at their store versus the competition more often. One of the various difficulties that face retailers is how to allocate space of shelf effectively to the large number of products they sell in order to increase sales per square foot. Retail shelf space is most valuable real estate. Therefore, retailers work harder to maximize sales on their investment while considering that allocating too few products will cause loss of sales due to going out of stock and allocating too many facings is a waste. According to Freeman, Store layout can be utilized by retailer where store itself is used to start and continue the relationship with consumers (167). Layout of a store has the ability to overcome various negative emotions or attitudes customers may hold as they enter a retailer store. Retail design includes the interior and exterior of the store. There exist many details in design of a store, and all should combine to develop the needed store ambiance, which is the overall mood or feeling revealed by a store via its aesthetic appeal to human senses. Hartwell Design suggests that visual merchandising is the artistic display of goods and theatrical props utilized as setter of scene decoration in the store. Visuals do not always involve goods but they may just be interesting displays of goods somehow related to the product being offered or to a mood the store want to create. 2.0 Retail Design Interior design of a retailer store can be categorized into design finishes and architectural elements that encompass ceilings, walls, and floor coverings (Freeman 167). Designing of interior is one of highly specialized matching skill of science and art. It has involved various areas of skills such as architecture, interior design, ergonometric, and advertising. This aspect has been found to make it easy for employees to stock and restock the products when sold out and it allows goods to be displayed in order of how they are beneficial to consumer. Effectively designed retail location gives the process of products browsing and purchasing a relaxing and easy experience to customers. It makes the whole process of finding, selecting, and paying for the goods as an activity that is full of fun and stress free (Bill). The aim of interior design in a retailer store is meant to convert every potential buyer into a purchaser and hence increasing sales per square foot. Lighting has also been found to be the potential element in designing an effective store. Retailers have learnt that different levels and types of lighting can have huge influence on sale per unit square. In Massachusetts, Merchant Mechanics conducted the Hera lighting study in 2003. With the data that was acquired, it was possible to improve the instinct and creativity of the planner of the store or retailer with the confirmed results. The research proved that lighting used in display it actually increased sales per unit area and should not be viewed as an extra cost factor in stores of retailers (Melissa). Storefront design allows retail to be compared to a book where the exterior of store or the storefront is like the cover of a book. It helps the store to be easily identified or noticed by mall shopper or passing motorists. It also provides memory, easy identification of name, effective market positioning of the store, and provide some hint on what goods are in the store. Total sensory marketing has allowed the retailers to realize that smells and sounds are important in retail design. Research has revealed that senses apart from sight can be vital factor in sales. Majority of retailers have began to engineer the smells and sounds in their stores with an aim of increasing sales per unit square. Display Boys, a California based firm in retail consultant vice president, Michael Mikyska, indicated that smells are actually a part of the experience (Freeman 161). The company designed marketing displays for Nike and Pepperidge Farm as well as displays on Starbucks coffee. They applied technique of changing lighting over the aisle of coffee in the retail store in order to make customers feel as if they are in a coffee shop of Starbucks. 3.0 Store Layout A layout of a store is one of the main strategies that bring accomplishment and hence huge effort, a lot of time and manpower are directed in to its design. Retailers have been utilizing layout to influence behavior of a customer by designing flow in store, ambiance, and merchandise placement (Stephen, Mary, and Xavier 5). Layout of store is utilized by retailers to have knowledge of the amount of sales made per square foot. Utilizing this information, retailers can effectively assess the weakness and strengths in their merchandizing mix. A space of store generates more revenue when it increases sales per square foot and this can be forecasted with the utilization of store layout. Therefore, if a particular section is below sales expectations, the retailer can reorganize products to achieve goals of sales. The aim is to place as much products on the floor with a mix of slow to fast selling goods and low to high priced goods. For instance, high priced goods might be given more space of retail and items that are low priced might be placed on a fixture to accommodate more merchandise in the floor. Additionally, merchandise that are highly priced such as plasma screen TV are placed together with goods that are low priced. The store layout flow influences how consumers shop. The more time the customer spends in the store, the higher the possibility she/he is going to purchase (Ashbourn, 64). Placement of escalators in up and down arrangements, the placement of departments, and fixtures arrangements influence the traffic of a store. For instance, majority of foodstuff stores are arranged in manner that necessities like milk and eggs are placed at rear end of the shop in order to give the customer a chance to navigate through other products. Departments in retails have also employed this strategy where they place sections of kids on the upper floor so that their parents have to pass through various areas of products with an aim of increasing the possibility that they will buy more. This strategy aims to assist the retailer in increase sales per square foot in their store. Majority of storeowners wants consumers to have comfortable and ease feelings when buying in the store in order to convey the same feelings to the merchandise they are buying. The layout of store can influence what emotions are induced in the experience of shopping (Ashbourn 67). Factors like aisle space, fixture colors, and arrangement of merchandise determines whether they are appealing to the customer, and hence influence whether he/she will be returning to the store. Fixtures that are too long do reduce visibility and hence induce anxiety to buyers since they are forced to move from one aisle to the other. Layouts that are more open and items are visible can help to remove tension, making shoppers want to shop for a long period and in turn increasing sales per square foot. As reported in The Independent newspaper, the recovery strategy that was employed by Thornton stores showed improvement in sales per square foot (Anonymous 42). The company employed effective store layout in it strategy and it reported a 14% increase in profit during the half year in 2008. The revenues increased by 13.9% to 126.7 million in period of 28 weeks during the same year. Another example; Lowe’s have relied on its store layout and marketing strategies to influence shoppers who opt for brighter, cleaner, and more open layout (Elizabeth 41). 4.0 Visual Merchandising Dion report that visual merchandising is the science and art of presenting and displaying product in the windows and on the sale floor with the aim of elevating sales per square foot and store traffic (68). It is a new profession that utilizes spaces, environments, and products into stimulating and engaging display to promote the sale of services or items in stores. It has gained importance in retailing such that a team contribution involving architects, senior managers, buyers, merchandising managers, staff, and designers is required (Hartwell Design). Retailers have utilized various elements in visual merchandising in order to develop display. Some of elements used are product information, space, lighting, color, sensory inputs such as sounds, touch, and smell as well as technologies like interactive installations and digital displays. The visual presentation employed by retailers has some kind of hierarchy and it starts with the image that the retailers want to relay to the customer. The image is then supported by the layout of store. This is followed by presenting the products in the most appealing way possible on different fixtures, and with varying lights. There are other aspects referred to as peripherals and they include cleanliness, smell, video, music, and color (Barry and Philippa 506). This is used to ensure that these elements promote the desired image and provide the right experience to the shopper. Through this technique, retailers are able to communicate to their targeted shoppers the brand identity, what is special and unique about the offering, and what makes one store better compared others. An effective merchandise presentation has been found to increase sales in stores (Daniel 26). The first reason for this is that the shoppers are more likely to find what they want if products are presented in an attractive manner. Shoppers aim to spend shorter time in doing their shopping and the retailer uses the technique of visual merchandising in order to increase sales per square foot. Visual merchandising helps in attracting the attention of the shoppers to enable them to make decision of buying in a shorter time resulting to increased sales. Example of stores that have used visual merchandising is Cole Haan where the store is designed to offer a highly upscale experience of shopping for shoppers. The updated environment was received well by customers. The average sales of store were reported to have increased by over 15% and the average per shopper transaction was in increase by over 30%. It utilized elevated tables and shelves of display where the visual merchandising and organization were optimized (Marianne 76) 5.0 Conclusion Appropriate retail design allows the process of buying and browsing of product a relaxing and easy activity for the shoppers. In turn, the entire activity of finding, selecting and paying for product is made stress free and full of fun. The main object of this strategy is to turn each potential shopper into a buyer that results to increased sales per square foot. Store layout is a strategy that is employed by retailers to influence customer behavior by designing store flow, ambiance, and merchandise placement. Retailers are able to evaluate strengths and weaknesses of merchandising mix using store layout. This will allow the retailer to come up with an effective strategy to improve sales per square foot. Layouts that are highly open and visibility of items is good, helps to increase chances of buyer wanting to buy more. Retailers have used visual merchandising technique by presenting and displaying products in the window and on the floor with an objective of increasing sales per square foot and traffic of store. Buyers can easily find what they want easily if products are arranged in an appealing manner. Works Cited Anonymous. “Recovery strategy pays off for Thorntons.” The Independent. [London] 21 Feb. 2008: 40. Ashbourn, Justin. “Shop layout: The Key to increased sales.” Retail & Distribution Management 10. 6 (1998): 63-67. Barry, Davies and Philippa Ward. “Exploring the connections between visual merchandising and retail branding: An application of facet theory.” International Journal of Retail & Distribution Management. 33. 7 (2005): 505-514. Bill, Showroom Interior Design Can Boost Your Sales 2010. 19 Nov. 2010. . Daniel, Truesdale. “Making Visual Merchandising Pop.” Today's Garden Center 7. 2 (Feb. 2010): 26. Elizabeth, Consavage, “Merchandising Mix Gets a Makeover Home.” Channel New 26. 22 (11 Dec. 2000): 41-45. Freeman, Laurie, “Store Layout and Design.” Journal of Chain Store Management 5. 1 (2005): 161-187. Hartwell Design, Visual Merchandising. 2010. 19 Nov. 2010. . Jim, Dion. Visual Merchandising - Make It A Feast For The Senses (2000): 65-115. Marianne, Wilson. “Chain Store Age.” New York 84.10 (Oct. 2008):76-782. Melissa, Lardiere. Lighting up Retail Sales 2003. 19 Nov. 2010. . Stephen, Hoch, Mary Purk and Xavier Dreze. Shelf Management and Space Elasticity. (1994): 3-41. Read More