The ROI of retail environments
By Jennifer Robison, National Retail Specialist - Tucker Rocky Distributing
November 1, 2013
Filed under Guest Blog
I am often asked how retail-scaping (the act of visual merchandising techniques in store) can be measured; how we can determine if the return on investment in visual merchandising is a worthy effort and expense. I face that question often from dealer principals, parts directors all the way to the senior management of my own team.
The question always is “Is all this expense on fixtures, graphics and branding efforts, not to mention having the labor of someone to execute the physical store reset ,pay off?” I would say YES! How do I possibly measure this and prove this to be accurate?
Here is one way:
Take two spaces in a store with two brands of similar products, treat one of the brand’s space with branding and POP of similar product, then take the other brand of similar product and leave it untreated. Measure the sales in the same period of time (like two or three months) and compare results.
I have done this in more than one brick and mortar retailer. I can say that in one case, the sales were significantly improved and outperformed our goals. I created a branded space for select brands of goods and setup a space near my branded displays of similar products from competitive brands. The competitive brands are traditionally top-selling brands nationally; they were set in a space with clean professional and generic displays and had no branding support of any kind. In fact I set up the competitive brand displays in a better location than my products, so customers had to walk through competitive brands to access my branded displays in many cases.
The results in a year of sales for my brands were very pleasing. We not only out performed our goals for sales; we also had less obsolescence. We were naturally left with your typical broken size run of garments, some XS or 3XXL sizes destined for the clearance sale rack, especially set in the back of my brand displays.
Not all attempts to measure the effects of design of fixtures, spaces and branding campaigns are this simple. It’s always a challenge to speak to your brand managers and CFOs about spending money on displays, they want to know how much sales they will get for it.
Here is what we in visual merchandising are working to create sales:
- Longer dwell time. Similar to online retailers, we want our visitors to stop, look and engage with products. The way a product and brand is presented visually online and in store is No. 1. If they don’t see it or sense it ,you’re losing sales! Better displays with stronger, easy-to-understand messages are more likely to produce more sales turnover.
- Improve shoppers’ engagement. We need customers to pick a product up, try it on and examine closer with handling the product(s). Will your shoppers be intrigued to ask staff questions about the product? How a product is discovered in store is very important to inventory turns. If milk is in the back to make you walk through, then you need great displays of goods on the way to the milk to create add-on sales.
- Brand identity. Get shoppers to identify with the brand’s message and lifestyle. We have seen the effect with powersports brands like FOX apparel, for example. Dealers have for many seasons built powerful and effective branding settings in store for the FOX brand; it has clearly been instrumental in creating sales. If this same effort was applied with other brands, I believe they would get stronger sales results. The brand is good, the product is good, but the setting is usually more engaging then other similar products in powersports retailers, and I feel it’s the edge that makes it sell.
- Directing shoppers to what they want or need. When we apply visual merchandising strategy to a store, we make it easier to shop and apply proper logic to product category placement. Make it easy to shop, and they will buy more. If you reset your store, measure sales of same brands or categories with a report. (Make sure your POS system has products not only categorized by vendor but by brand and category). By running reports of categories, you will likely see better-presented brands sell better. I can see the sales difference between two brands and stores in the same region. It’s the store’s efforts to show and sell a brand that makes the difference. In other words, the same brand in similar stores in the same town will have different results, and usually one store has better visual displays showing the brand than the other store.
- Keep customers up to date. Customers want to experience what is new, what is the. Online or in store, if you never change your merchandising, you are likely missing and losing sales! Fresh new products and brands in key spaces are a big part of retail-scaping that will create sales and growth. Brands need new displays and fixtures, so they look like they are moving forward with the pace of style. Apple is updating its stores, and so is the Pep Boys auto parts chain. They both know they are top brands and that shoppers look to them as leaders in their categories, so the stores can’t get dated and stale, or they will be perceived as not a top brand, regardless of the products sold.
- Grow sales. To grow sales you need to work your visual merchandising strategy, boosts brand visibility and encourage shoppers to return to your store for more! Remember, 70 percent of buying decisions are made in store.
Avoid the mindset to undervalue the need for visual merchandising and displays for your stores or brands. The cost of the time (labor), fixtures, lights, props, graphics and other ways we create a retail environment designed to sell, is a bigger player than perhaps you can easily measure. Let your store or brand stay the same, and you can see a ship sinking.