Merchandising 101: Anecdotes & Methodology Presented by: Bob Radcliffe, Jr. display dynamics, inc. Overview (Un) Conventional Wisdom The Big Three Think Like Your Customer The Front End Shopping Baskets Signs – Retail Road Maps Shelf Stalkers Men are from Lowes…Women are from Nordstrom Retail Judo Sensual Shopping What Have We Learned? What is POP? Point – Of – Purchase is the most critical component of any successful marketing campaign because it exist at the point of ‘convergence’. At no other instance are people, products and $$ in the same place…. Merchandising 101 In 2005, marketing trends in retail environments will continue to focus on point-of-purchase displays for attracting new and expanding existing markets. – 2005 POP Trends Report; In-Store Marketer (Un) Conventional Wisdom The obvious is not always apparent Observe the flow of traffic before making merchandising decisions Conversion rates…not sales tapes! Marketing, advertising and promotion brings them…what happens once they are there? Talking with customers draws them closer Interception rates reduce the amount of perceived waiting time – we would rather look at people than objects! Shoppers only have 2 hands! The Big Three! Retail stores have 3 distinct aspects: Design (meaning the premises) Merchandising (whatever you put in them) Operations (whatever employees do) -Paco Underhill; Envirosell They are all connected… Making a decision or change to one of these aspects; you’ve automatically made a change to the other two as well. Example: Gap Stores trademark is intimate contact between shopper and goods. That merchandising policy dictates that the displays are wide, flat tabletops; not racks and shelves. The display policy dictates that significant staff (operations) is needed on the floor to fold and keep clothing areas neat. Think Like Your Customer Spend half an hour standing in one place…observe! How do people move? How are people reacting to your displays? Is it how you thought they would? Shopping has become the museum of the 21st century…it is a social, not business phenomenon. Start with the Front Stand half a block away. You can see the building but can you identify what’s inside? Does your signage reach people at that distance? Is the lighting for window displays effective at various times during the day? It takes time for people to acclimate to a retail environment, so don’t try to achieve something critical in the immediate area by the door. They will blow right by, hence the term “decompression zone”. More On The Front End Greet customers, don’t steer them! This will start the seduction… A simple hello will also reduce theft. Create a “Power” display that will act as a speed bump and also a billboard. It doesn’t have to say “shop me”, but rather “take a look at what your walking in on”. Don’t forget the sidewalk…clearance items create excitement. Front End Power Aisle – Target Stores Anatomy of the Power Aisle: “1 Spot” Dollar Store – Located at the front of the store, this was a successful traffic-driving initiative. Customers begin shopping the minute they arrive. Drives customers straight to shopping carts with thoughts of other deals to come. Sales were 4 times expectations in first week. Shopping Baskets & Human Anatomy Shoppers only have 2 hands – those who use baskets buy more – period! Shoppers don’t necessarily need a basket at the front of the store. They should be spread around, available without stooping. Consumers don’t seriously consider purchasing until they have browsed a bit. Make sure your baskets are appropriate for the merchandise going in them. Signs – Retail Road Maps A great sign in the wrong place is worse than a so-so sign in the right place. Your store is a 3-D TV commercial. Get their attention. Then deliver clear, logical information. Pictures tell a thousand words. Checkout areas are perfect for longer messages. Signs can multiply the power of a price reduction by a factor of six. Don’t forget to leave them with a message on the way out…you look fabulous! Some Examples… Signs Work! Shelf Stalkers Typically, shoppers position themselves in the center of one aisle or location and begin reviewing a 4’x6’ section at slightly below eye-level, close to the product that has the greatest visual contrast - Tactical Insight Group Shelf Stalkers Research has shown that allocating more shelf space to memorable brands is not as effective as better visual presence – even for less noticeable brands. Product placement on a shelf has shown to be more effective sales tool than the actual numbers of product packages showing – Measuring the Value of Point-of-Purchase Marketing with Commercial Eye-Tracking Data.. Merchandising by Category Commodity products with similar package sizes are best displayed in one, easy shop category. Merchandising by Brand; Custom P.O.P. Industry leading brands spend considerable dollars promoting their products. Good store merchandising takes advantage by reinforcing this message in store. Merchandising by Theme Modular display components allow retailers the flexibility to merchandise many different products in one, easy-to-shop area. This leads to complimentary (and profitable) sales. Men Are From Lowes… Woman Are From Nordstrom For men – have seating and food. Women aren’t just shopping, they are searching for authentic, emotional expression. Women need to feel comfortable before they buy, so be sure to give them enough room. Women need to test, ponder, try, then buy. Keep as much information available as possible. Retail Judo People buy what they want, so use their momentum to maximize sales. Here’s what they want: Touch – it’s material world. Mirrors – retail brake pads. Discovery – hints of what’s to come. Recognition – everybody knows your name. Bargains – obvious but don’t compromise quality. No Lines – a positive experience can be killed at the end Available Information – no dumb questions. In Stock – Duh! Informative, Friendly Service – it’s all about people. Retail Judo In recent study, fully 30% of respondents picked Costco and Target as a “fun” shopping experience because of Costco’s in-store food sampling and Target’s organization and sense of fashion. Remember that entertaining and maintaining your store’s displays and products will go along way to encourage buying and repeat shopping. Retail Judo Think again about the supermarket… When you go to staple items, there’s usually something new to use with that staple item. If it’s merchandised correctly – with signage and ideas how to use it – shoppers will probably buy it. Keep this in mind when you organize (reorganize) your store…drive customers to their staples, but increase sales by making sure complimentary and newer products are at their fingertips. Sensual Shoppers The “open sell” display strategy allows consumers to touch, smell and try everything. We are post-Nader shoppers; we will believe it when we see, touch, taste, hear or try it. A sale happens once a shopper takes “possession”, not at the checkout counter. If a product does something, it should do it in the store. Think about Sephora, Brookstone or The Sharper Image… So Now What? Understand your POP needs, including look and feel. Take a fresh look at your store layout and how it can change. Decide on a level of functionality and flexibility for your displays. Reinvest in signage and shelf talkers – that can update a section in minutes. What Type of Displays Should I Invest In? Review many merchandising systems in the market. Initially, don’t let cost discourage you. Find a look that compliments your store (and products). Feel comfortable communicating a preferred look to prospective vendors. Be clear about your store’s physical attributes (limitations). Use digital photography – picture tells a thousand words. Point-of-Purchase Options… Create “focal points” with moveable, modular island displays. Use rotating displays to maximize product offerings in tight spaces – against walls, corners. Implement waterfall displays for SKU intensive product categories. Feature popular and new products with signage at the front of the store. Reproduce similar signage within specific departments to reinforce signage at the front. What Have We Learned…. Customers want a relaxing and fun shopping experience – Good POP design and layout allow them to enjoy the process. Be thoughtful about your space and don’t be afraid to try something new. Variety may not be the spice of life. Think modular, moveable, multiple SKU’s. Sign language; create visual attention with signs and shelf talkers. If at first you don’t succeed try, try again – Modular displays will allow you the flexibility to move displays (product) is customers don’t seem interested.