Friday, April 6, 2012

The new rules of Retail Design

It's no secret that internet retailers have been taking market share from brick and mortar stores over the last few years.  Recent numbers suggest that half of all merchandise is purchased online now as compared to about 10% a few years ago.  With that being said, large and small stores seem to be at a crossroads:  either they rebrand themselves every few years to stay relevant or they close up.  You may be familiar with JC Penney's recent re-launch including a new logo, new store design, and a new marketing campaign flaunting incredible customer consideration.  The commercials seem well timed around the election year antics where normal people go into 'angry mob' mode and start rebelling against the establishment.  All things considered, I applaud what JC Penney is trying to do.  Unfortunately, I feel they are ignoring some very basic principles of retail design.  If you plan on opening your own shop or mega store anytime soon I suggest you review the following guidelines for retail design:

1- Set the mood - There's a reason that stores like Anthropologie and Ralph Lauren spend alot of money on window dressing.  It creates an impression before you even walk in the door. If you don't have alot of window space you need to create a dramatic entry.  Most department stores ignore this completely.  You come in the store and you're knee deep in some department.  This is one of those bad habits that companies keep repeating.  User experience is everything in retail.  There's a reason that Abercrombie pumps that obnoxious cologne into the air right by the door.  You've got to grab people right at the gate or they're gone.

2- Big stores are out - Sorry department stores, but your days are numbered.  You can't stock 150,000 products and expect to make money on each one.  It's not because it can't be done, it's because web sites can do it better for less money.  The most profitable brick and mortar stores are the ones that drive the most revenue in the least footprint.  You could fit 50 Apple stores in the average Macy's.  Which one do you think makes more money?  I was surprised to see that the new JC Penney store was the same size as the old one. I would have thought they would have focused on highlighting their best selling products in a fresh new (and more efficient) environment.  Instead they've just jumbled up their departments and created a bunch of new fixtures and displays.  The problem is that it's hard to make 200,000 SF look good in a store trying to compete in the budget friendly arena. 

3- It's better to have good product than discounts - I have never gotten a coupon for 50% any drink at Starbucks.  So why are they so crowded when nothing is ever on sale?  The answer is because they spend their money on creating a good product and not giving it back in the form of a sale.  Even Wal-mart can't give you an Ipod any cheaper than the Apple store.  People will line up for something that makes them feel special but it has to be something special.  If you read the labels of the clothes at most stores, it's amazing how few of them have natural materials.  I think the Wal-mart effect has run its course and people are tired of having to replace everything they own every 6 months.  There is a movement towards quality and it's hard to do that unless you focus on a core group of products. 

4- Invest in Design - Great retail brands have iconic images. I know it sounds like common sense but companies that invest in creating more interesting environments reap the benefits of more loyal customers who spend more per purchase.  It's no coincidence that when McDonald's created a new store design prototype featuring classic mid century inspired interiors that they launched a line of new burgers and salads that are comparably priced to a real restaurant.  Better user experience equals more money.  Time and time again, Good Design is Good Business. 

These four guidelines are just the beginning of what it takes to build a retail empire.  Whether your business is a day spa or a cupcake bakery, keep in mind that creating a great user experience has to be in the DNA of the design from the early stages.  Without it, you will find yourself struggling to maintain a competitive edge against your competition.

6 comments:

  1. I both agree and disagree. For all of its aesthetic qualities, you can't make me shop in an Apple store simply because I can not get pass the pretentiousness of it sales team. Nor will I cross the threshold of an Abercrombie & Fitch because its photographs of skinny, nearly-naked teenagers intimidate the heck of of me. I will happily shop in a large Super Target all-day, every-day. (but NEVER Walmart... ever) What can I say, I am Middle-America (although, I think I am a hipper version).

    Actually, I prefer shopping the independents and the quirky little boutiques; that's the only places around here you can find the really interesting stuff. I guess it all boils down to where you live in the country. (I'm in the south) Our big department stores always have crowed parking lots, but when you walk by those trendy stores in the malls they are so empty to the point that it makes you wonder how they stay in business.

    As for JCP... well, I got their March flyer last month and found that it reminded me mostly of a Target flyer: happy, perky people in bright colors.

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    1. You bring up a great point in your thoughts on the quirky little stores..I think Main Street is making a comeback. Maybe it's cyclical but I think alot of people in America like the neighborhood butcher or the little boutiques. Yes, we will likely always have Targets and Wal-marts but I think they can co-exist with well planned small businesses as well. Thanks for the comments!

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  2. I certainly agree with the points mentioned.

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    1. Thanks Tim - It will be interesting to see how long these big stores go before they have to re-boot. Target and Wal-Mart have added supermarkets into their stores to try and use their footprint better. Will it be enough?

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