Chapter 13 – Store Layout and Design

I. Introduction to Store Layout Management. Retailers can use the retail store itself to initiate and
continue their relationship with customers.

A. The store itself (e.g., its layout) has the potential to overcome many of the negative
attitudes/emotions customers may carry as they enter a retailer’s store.

1. In fact, no other variable in the retailing mix influences the consumer's initial
perception as much as the retailer's store itself.

2. The two primary objectives around which all activities, functions, and goals in the
store revolve are store image and sales productivity.

a. Store image is the overall perception the consumer has of the store’s
environment.
b. Space productivity represents how effectively the retailer utilizes its space
and is usually measured by sales per square foot of selling space or gross
margin dollars per square foot of selling space.
3. In cyberspace, retailers must be concerned with the format of the entire website. In
order to drive repeat visits and encourage consumer purchasing on one’s web site,
the e-tailer should:

a. Keep content current.

b. Make the site easy and enjoyable to use.

c. Structure an online community where consumers can interact with

one another or contribute to the site’s content.

B. Elements of the Store Environment – The successful retailer will place a heavy emphasis on
designing their physical facilities so as to enhance the retailer’s overall image and increase
its productivity. The elements that should be considered are:

a. Visual Communications – Retail identity, graphics, and

POS signage.

b. Store Planning – Space allocation, layout, and circulation.

c. Store Design – Exterior design, ambiance, and lighting.

d. Merchandising – Fixture selection, merchandise

presentation, and visual merchandising.

C. The two primary objectives of creating the desired store image and increasing space
productivity correspond to the general mission of all retailers, which is to get consumers into
the store (traffic) and influence them to buy merchandise once inside (conversion rate) while
operating in the most efficient manner possible (operating efficiency). The store planner
must constantly balance these objectives, as they are sometimes at odds.

1. Developing a Store Image - the ability to create and change image through the store
environment becomes more important every day as consumers’ time poverty
increases.
 2. Increasing Space Productivity - a goal summarized in a simple but powerful truism
of retailing: “The more merchandise customers are exposed to, the more they tend
to buy.” To enhance space productivity, retailers must incorporate planning,
merchandising, and design strategies that minimize shrinkage (the loss of
merchandise through theft, loss, and damage).

II. Store Planning. Store planning is the development of floor plans, which indicate where merchandise
and customer service departments are located, how customers circulate through the store, and how
much space is dedicated to each department.

A. Allocating Space - the starting point of store planning is determining how the available store
space will be allocated to various departments, based on mathematical calculations of the
returns generated by different types of merchandise.

1. Types of Space Needed - there are five basic types of space in a store:

a. The back room includes the receiving area to process arriving inventories
and the stockroom to store surplus merchandise.

b. Offices and other functional spaces include a break room for associates, a
training room, offices for the store manager and assistant managers, a cash
office, bathroom facilities for both customers and employees, and perhaps
other areas.

c. The amount of space dedicated to aisles, service areas, and other

nonselling areas can be significant, perhaps 15 percent or more of the
entire space. While the store planner always attempts to minimize the
amount of nonselling space, customer service is an equally important part
of a store and should not be short-changed.

d. The floor merchandise space holds many types of fixtures used to display
merchandise.

e. The walls are one of the most important elements of a retail store. They
serve as fixtures holding tremendous amounts of merchandise, as well as
serving as a visual backdrop for the merchandise on the floor.

2. Space Allocation Planning - to determine the most productive allocation of space,

the store planner must analyze the productivity and profitability of various
categories of merchandise. There are two situations where this is evident: planning a
new store and revising the space allocation of an existing store.

a. Improving Space Productivity in Existing Stores - When a retailer has been

in business for some time, it can develop a sales history on which to
evaluate merchandise performance, refine space allocations, and enhance
space productivity. Various quantitative measures, such as the space
productivity index, can be used to develop a more productive space
allocation.

b. Space Allocation for a New Store - When a retailer is creating a new store
format, it bases space allocation on industry standards, previous experience
 with similar formats, or more frequently, the space required to carry the
number of items specified by the buyers.

B. Circulation - there are four basic types of circulation patterns in use today. Shoppers have
been trained to associate certain circulation patterns with different types of stores.

1. Free Flow, the simplest type of store layout, is a type of store layout in which
fixtures and merchandise are grouped into free-flowing patterns on the sales floor.

2. Grid Layout is another type of store layout in which counters and fixtures are
placed in long rows or “runs,” usually at right angles, throughout the store.

3. Loop Layout is a type of store layout in which a major customer aisle begins at the
entrance, loops through the store – usually in the shape of a circle, square, or
rectangle – and then returns the customer to the front of the store.

4. Spine Layout is a type of store layout in which a single main aisle runs from the
front to the back of the store, transporting customers in both directions, and where
on either side of this spine, merchandise departments using either a free-flow or grid
pattern branch off toward the back and side walls.

C. Shrinkage Prevention. When planning stores, the prevention of shrinkage due to theft,
damage, and loss must be considered. Some layouts will minimize vulnerability to
shoplifters by increasing the visibility of the merchandise.

III. Planning Fixtures and Merchandise Presentation. In the "theater" of retailing, there are two basic
types of merchandise presentation: visual merchandising displays which are analogous to the props
which set scenes and serve as backdrops; and on-shelf merchandising which represents “the stars of
the performance”.

A. Fixture Types fall into three basic categories:

1. Hardline Fixtures. The workhorse fixture in most hardline departments is the

gondola. The gondola can hold a wide variety of merchandise -- in fact, virtually all
hardlines -- by means of hardware hung from the vertical spine. Tables, large bins,
and flat-base decks are used to display bulk quantities of merchandise when the
retailer wants to make a high-value statement.

2. Softline Fixtures. A large array of fixtures have been developed to accommodate the
special needs of softlines, which often are hung on hangers. The four-way feature
rack and the round rack are two of the fixtures most heavily used today. The round
rack is known as a bulk or capacity fixture, and the four-way rack is considered a
feature fixture, because it presents merchandise in a manner, which features certain
characteristics of the merchandise (such as color, shape, or style).

3. Wall Fixtures. The last type of fixture are those designed to be hung on the wall. To
make a plain wall merchandisable, it is usually covered with a vertical skin that is
fitted with vertical columns of notches similar to that on the gondola, into which a
variety of hardware can be inserted. Shelves, peghooks, bins, baskets, and even
hanger bars can be fitted into wall systems.
B. Merchandise Presentation Planning - With all the various types of fixtures available, there is
an endless variety of ways to merchandise product.

1. The methods of merchandise presentation include the following:

a. Shelving - The majority of merchandise is placed on shelves that are

inserted into gondolas or wall systems. Shelving is a flexible,
easy-to-maintain merchandising method.

b. Hanging - Apparel on hangers can be hung from softlines fixtures such as

round racks and four-way racks, or from bars installed on gondolas or wall
systems.

c. Pegging - Small merchandise can be hung from peghooks, which are small
rods inserted into gondolas or wall systems. Used in both softlines and
hardlines, pegging gives a neat, orderly appearance, but can be labor
intensive to display and maintain.

d. Folding - Higher-margin or large, unwieldy softlines merchandise can be

folded and then stacked onto shelves or placed on tables. This can create a
high-fashion image, such as when bath towels are taken off peghooks and
neatly folded and stacked high up the wall.

e. Stacking - Large hardline merchandise can be stacked on shelves, the base

decks of gondolas, or "flats," which are platforms placed directly on the
floor. Stacking is easily maintained and gives an image of high volume and
low price.

f. Dumping - Large quantities of small merchandise can be dumped in bins or

baskets inserted into gondolas or wall systems. This method can be used in
softlines (socks, wash cloths) or hardlines (batteries, candy), and creates a
high-volume, low-cost image.

2. Different merchandising methods can strongly influence our buying habits and
cause us to purchase more. There is a certain psychology of merchandise
presentation.

a. Value/Fashion Image - One of merchandising's most important

psychological effects is its ability to foster an image in the customer's mind
of how trendy, exclusive, pricey, or value oriented the merchandise is.

b. Angles and Sightlines - Research has shown that as customers move

through a retail store, they view the store at approximately 45 degree angles
from the path of travel, so merchandise placed at 45 degree angles to the
aisle has better visibility.

c. Vertical Color Blocking - To be most effective, merchandise should be

displayed in vertical bands of color wherever possible, so that customers are
exposed to a greater number of SKUs.

C. Selecting the Proper Fixture and Merchandise Presentation Methods - In selecting which
fixtures and merchandising methods to use, a good guideline is to match the fixture to the
merchandise, not the merchandise to the fixture. This means you should only use fixtures
 that are sensitive to the nature of the merchandise, but all too often, retailers are forced to put
merchandise on the wrong fixture.

D. Visual Merchandising is the artistic display of merchandise and theatrical props used as
scene-setting decoration in the store. Visuals don't always include merchandise - they may
just be interesting displays of items somehow related to the merchandise offering or to a
mood the retailer wishes to create.

IV. Store Design - encompasses both the exterior and the interior of the store. There are literally
hundreds of details in a store's design, and all must work together to create the desired store
ambiance, which is the overall feeling or mood projected by a store through its aesthetic appeal to the
human senses.

A. Storefront Design. If the retail store can be compared to a book, then the storefront or store
exterior is like the book cover. It must be noticeable, easily identified by passing motorists or
mall shoppers, memorable, clearly identify the name and general market positioning of the
store, and give some hint as to the merchandise inside.

B. Interior Design can be broken into architectural elements and design finishes, and
encompasses floorcoverings, walls, and ceilings.

C. Lighting is one of the most important, though often overlooked, elements in a successful
store design. Retailers learned that different types and levels of lighting can have a
significant impact on sales.

D. Sounds and Smells: Total Sensory Marketing. Research has shown that senses other than
sight can be very important. Many retailers are beginning to engineer the sounds and smells
in their stores.

V. Visual Communications. Visual communications includes in-store signage and graphics. When
carefully balanced with personal service, visual communications, with its reliability and low cost, can
create an effective selling environment and is therefore an important tool in the store designer's
toolbox.

A. Name, Logo, and Retail Identity. The first and most visible element in a comprehensive
visual communications program is the retailer's identity, composed of the store name, logo
mark, and supporting visual elements. The name and logo must be catchy, memorable, and
most of all, reflective of the retailer's merchandising mission.

B. Institutional Signage. Once inside the store, the first level of visual communications is
known as institutional signage, or signage that describes the merchandising mission,
customer service policies, and other messages on behalf of the retail institution.

C. Directional, Departmental, and Category Signage serve as the next level of

organizational signage. These signs help guide the shopper through the shopping trip and
assist in locating specific departments of interest.
D. Point-of-Sale (POS) Signage. The next level of signage is even smaller, placed closer to the
merchandise, and known as point-of-sale signage, or POS signage. POS signage is intended
to give details about specific merchandise items and is usually affixed directly to fixtures.

E. Lifestyle Graphics. Many stores incorporate large graphic panels showing so-called lifestyle
images in important departments. These photo images portray either the merchandise, often as it is
being used, or images of related items or models that convey an image conducive to buying the
product.