retail mgmt m5 - store layout and retail promotion

Retail Marketing Management

Module 5 – Store Layout and Retail Promotion

Prof. Ashish J Shah

[email protected]

97400 98952

Module 5 Agenda

• Store layout– Space planning

• Merchandising presentation techniques– Atmospherics

• Role of retail communication• Planning retail communication• Retail advertising programme• Frequent shopper loyalty programme

MPBIM - MBA, Managerial Communication, Ashish J Shah

Food For Thought

• Lagging indicators• Miller's Law• Nepotism• Brain drain• Cross-training

Store Layout, Design

• Store design objectives1. Implement the retailer’s strategy

• Stores may have designs and layouts to suit merchandise being sold e.g. Sports stores may have layouts that have mini golf areas, mountaineering walls

2. Influence customer buying behaviour

3. Provide flexibility

4. Control design and maintenance costs

5. Meet legal requirements – e.g. People with disabilities need to be provided access


– Store Design• Layouts

– Grid layout: parallel aisles, checkouts at exits– Racetrack layout e.g. IKEA– Free-form layout/boutique layout e.g. Weekender

• Signage and Graphics– Uses of visual communications:

» Location of merchandise in store» Category signage» Promotional signage» POS» Lifestyle images e.g. Metro has large size posters

on its bay ends


• Suggestions for effectively using signage:– Coordinate signs and graphics with the store’s

image– Inform customers– Use signs and graphics as props (supports)– Keep signs and graphics fresh– Limit the text on signs– Use appropriate typefaces (e.g. Font size,

style, colour) on signs


– Digital signage• Feature areas

– Freestanding displays – fixtures or mannequins– Cash wraps/point-of-purchase (POP) counters;

impulse purchases encouraged– End caps– Promotional aisle/area– Walls– Windows


• Space management– Space allocated to merchandise categories is based on:

• Space productivity• Inventory turnover• Impact on store sales• Display considerations

– Location of merchandise categories and design elements• Demand/destination merchandise – people have decided to

buy this prior to entering the store• Decompression zone – people acclimatised to store

atmosphere in this zone


• Impulse merchandise• Special merchandise• Adjacencies – complementary products e. g.

School shoes and shoe polish

– Location of merchandise within a category:• Plannograms

Merchandising presentation techniques

• Visual merchandising– Fixtures

• The straight rack• A rounder/bulk fixture/capacity fixture• Four-way fixture• Gondolas

– Presentation techniques• Idea-oriented presentation• Style/item presentation• Colour presentation• Price lining – used often where limited price points on offer

Merchandising presentation techniques

• Vertical merchandising – merchandise displayed based on how one would read a newspaper

• Tonnage merchandising – large quantities displayed• Frontal presentation – as much as possible of the merchandise is

exposed to customers

• Atmospherics – refers to the design of the store environment through visual communications, music, aromas– Lighting– Highlighting merchandise– Mood creation– Downplay features– Colour– Music– Scent

Role of retail communication

• Customer– Attract customer attention– Ascertain customer requirements through their

responses– Ensure customer loyalty through positive and

confidence-building messages• Within the retail organisation

– Keep your employees informed and updated (marketing – promotions), especially on the shop-floor

– Ensure there is seamless communication between top management and floor staff


• Using communication programmes to develop brand images and build customer loyalty– Value of brand image– Building brand equity – involves:

• Creating a high level of brand awareness– Aided recall – customer recognises brand when a hint

about the brand is presented to them– Top-of-mind awareness e.g. Starbucks


• Developing favourable associations with the brand name

– Common associations that retailers develop with their brand name are:

» Through the merchandise category» Through price/quality» Through specific attribute or benefit» Through lifestyle or activity

• Consistently reinforcing the image of the brand– Integrated marketing communications instead of unique

communication programmes could be useful e.g. Tesco, The Co-operative Group support the Fair Trade concept


– Extending the brand name• Retailers may use the same brand name e.g. IKEA

or may chose a different brand name for a new concept e.g. Food Bazaar, e-zone, Big Bazaar

– Methods of communicating with customers• Paid impersonal communications

– Advertising– Sales promotions

» Contests» Coupons» Store atmosphere» Web site


• Paid personal communications– Personal selling– Email

• Unpaid impersonal communications– Publicity

• Unpaid personal communications– Strengths and weaknesses of communication methods

• Control• Flexibility• Credibility• Cost

Planning retail communication

• Planning the retail communication programme– Setting communication objectives

• Communication objectives?• Communication objectives and approaches used by

vendors and retailers differs causing conflicts such as:– Long-term versus short-term goals– Product-versus location e.g. Wal-Mart– Geographic and demographic coverage– Breadth of merchandise

• Co-promotions – win-win situation for vendor and retailer


– Setting the communication budget• Marginal analysis method

– communication expenditure should be increased as long as each rupee spent generates more than a rupee of additional contribution (see exhibit 16 – 5)

• Objective-and-task method – determines budget required to undertake specific tasks to

accomplish communication objectives– Sum total of all costs required to complete tasks is the

communication budget (see exhibit 16 – 6 )

• Rule-of-thumb methods– Impact of communication activities expenditure on future of firm

estimated– Past sales and communication activities used to determine

communication budget

Planning retail communication– Affordable budgeting method:

» balance of money that remains after desired profits and all other expenses becomes the communication budget

– Percentage-of-sales method:» Sets the communication budget as a fixed percentage

of forecast sales– Competitive-parity method:

» Communication budget set so that retailer’s share of communication budget equals its market share

– Allocating the communication budget• Management say• High-assay principle: proportionate budgets to

products/brands depending on returns achieved


• Planning, implementing and evaluating communication programmes1. Advertising campaign (see tables)

2. Sales promotion opportunity – to evaluate a trade promotion, the retailer considers:

i. Realised promotion margin from the promotion

ii. Cost of additional inventory carried due to buying more than the normal amount

iii. Potential increase n sales from the promoted merchandise


i. Potential loss suffered when customer switch to promoted merchandise from more profitable private-label brands

ii. Additional sales made to customers attracted to the store by the promotion

3. Special promotion using a CRM/Campaign Management Tool

Retail advertising programme

– Developing the advertising message• Tips for developing local ads – Discussion

– Assistance in advertising• Cooperative advertising• Agencies• Media companies

– Choosing the most effective media• Newspapers – Free-standing insert (FSI)/preprint

Retail advertising programme• Magazines• Direct mail• Television• Radio• Internet• Outdoor billboards• Shopping guides• Yellow pages

– Considerations in selecting media• Coverage• Reach• Cost• Impact

– Determining advertising frequency and timing?

Frequent shopper loyalty programme

• Loyalty?• The CRM process (see exhibit 11-1)• Tesco – considered to be most successful

loyalty programme in the UK• Nectar – alliance amongst retailers• Loyalty is not just about points an coupons,

but also about offering ad-on services in the store e. g. assistance with locating products in a large store

Assignment 3

• Compare the customer loyalty programmes operated by Reliance Retail and Future Group (Big Bazaar) in India with respect to their value formats of Reliance Fresh and Big Bazaar/Food Bazaar.

• You may also choose to compare similar formats in other categories such as footwear, clothing (Westside and Reliance Trends) instead of FMCG, though this is optional. In any case, only two similar formats of different retailers are to be compared and assessed.

• Use factors such as loyalty cards, in-store services, ad-on services, etc. that you have studied on the Retail Management course to make assumptions and draw informed conclusions

Assignment 3

• Use your knowledge of CRM systems that you have studied in other management subjects as well to complete the assignment.

• Conclude with a comparative table using weighted average calculations indicating the points you award to each of the above. In your conclusion also mention what could the retailer with lower points (as per your table) do to improve its customer loyalty programme

• Recommended Retail textbook: Retailing Management by Levy, Pandit

Individual Presentation

• Analyse IKEA as a retailer presenting the following points on about 5 to 8 slides:– What is unique about IKEA as a retailer and at the

management level?– Comment on IKEA’s merchandising and visual display

practices?– What is unique about IKEA’s store layouts?– Comment on IKEA’s customer loyalty programme.– What is your observation on IKEA’s USA expansion

success?– Conclude by commenting on ‘should IKEA enter India

now’? If yes, then why? If not, then when and why?

retail mgmt m5 - store layout and retail promotion

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