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Impact Of Retail Store Design and Layout on Consumer

(1)
1. [Type text] Page 1 Impact of Retail Store Design and Layout
on Consumer’s Mind By Mr. Ashish B. Chate (AIMS Institute of
Management studies, Pune) In partial fulfillment for the POST
GRADUATE P ROGRAMME (Marketing) APPROVED FOR FINAL
SUBMISSION July 2012
2. [Type text] Page 2 ACKNOWLEDGEMENTS “I would like to thank
the Almighty GOD for the Graces He continues to pour unto meand
in answering of my prayers “ We happilyrecord here our abiding
gratitude to Mr.ManishSinha our Respected Director, AIMS
institute of management studies, Pune. Special Thanks to Mr.
Murugesh Kumar Krishna, Store Manager of Spencer’s Retail Ltd.,
Malad (Mumbai). For their valuable guidance and providing us
necessary information during the course of project. We would like
to express our sincere thanks to Mr. PravinParmar, the Marketing
Manager of Spencer’s Retail Ltd, MUMBAI, for the guidance and
valuable suggestions to completethis project work. Special
thanks to the entire staff of the department of Marketing,
Spencer’s and Publicrelations for your continuedsupport and
guidance throughout the whole project.
3. [Type text] Page 3 Executive Summery Store Design & layout
is an important factor affecting consumer behavior and a critical
determinant towards the creation of store image. Well designed
layoutsare extremely important because they strongly
influencein- store traffic patterns, shopping atmosphere,
shopping behavior, and operational efficiency. When an
inconsistency occurs, some consumers will abandon that
establishment in search of anotheronewhich offers fast,
convenient and betterservices. Taking a more strategic approach
to store layout can reap big rewards by boosting sales,
increasing customer loyalty and ultimately increasing turnover.
4. [Type text] Page 4 Contents 1.Introduction i. Introduction ii.
Research Objective iii. Research Methodology iv. Limitation v.
Conclusion 2.Brief Details of Design& Layout i. Introduction ii.
Defining core concepts iii. Store appearance & Images iv. Store
floor space v. Merchandise Display vi. Product assortment vii.
Store ventilation viii. Entrance & Exit ix. Music system &
arrangement of Light x. Conclusion 3.ResearchMethodology i.
Type of study ii. Sampling Method iii. Questionnaire Design iv.
Questionnaire Content
5. [Type text] Page 5 v. Type of Question vi. Data Collection vii.
Data Analysis viii. Conclusion 4.Data Analysis i. Introduction ii.
Frequencies a) Age of respondents b) Gender of respondents c)
Education level of respondents d) Frequency of shopping e)
Adequacy in product assortment f ) Level of satisfaction about
store ventilation g) Perception about store lighting h) Response
about space management of store i) Response regarding to store
accessibility j) Shelf planning of product 5.Summery, Conclusion, &
Recommendation i. INTRODUCTION ii. SUMMARY OF THEORETICAL
STUDY iii. EMPIRICAL STUDY iv. ACHIEVEMENTS OF RESEARCH
OBJECTIVES v. RESTRICTIONS OF THE STUDY vi.
RECOMMENDATIONS Recommendations based on research design
Recommendations based on findings
6. [Type text] Page 6 vii. RECOMMENDATIONS FOR RETAILERS IN
GENERAL viii. CONCLUDING REMARKS
7. [Type text] Page 7 1.Introduction i. Introduction Store Design
& Layout is a critical factor driving consumer elaboration and
response in retailing.While considerable attention has focused on
store layout in relation to brick and mortar retailing, store layout
has been virtually ignored in the study of retailing. The layout of a
retail store has been found to significantly impact a retailer's
overall performance through its influence on information
processing, purchase intentions and attitude towards the retail
establishment. Retailers store layout results in greater consumer
elaboration and more positive consumer outcomes. The retail
environment is changing more than ever before. It is
characterized by intensifying competition and more sophisticated
and demanding customers who have greater expectations
related to their consumption experiences. A retail store
experience involves more than a non-retail services experience in
terms of customers negotiating their way through a store, finding
the merchandise they want, interacting with several store
personnel along the way, and returning merchandise, all of which
influence customers“ evaluations of service quality“.
8. [Type text] Page 8 ii. Research Objective The overall aim of
the study is to investigate the impact of store design & layout on
consumer purchasing behavior in Spencer’s. Objectives: The
following objectives are drawn from the overall aim of the study:
 To determine the essential characteristics of layout of Hyper
stores;  To establish if problems are encountered by consumers
with regard to different store settings while shopping around
Hyper stores;  To investigate whether consumers are satisfied
with the level of service they get from Spencer’s in terms of
accessibility, quality of merchandise and general appearance. 
To make recommendations to improve store design &layout in
Spencer’s. iii. ResearchMethodology This session discusses the
research methodology employed to collect the primary data.
Research design is covered in the first part of this chapter
followed by the sampling method, data collection, data analysis,
validity and reliability testing. Exploratory research was used to
conduct the study and quantitative data were collected in order
to gain an insight into the elements of store layout and consumer
purchasing behavior.
9. [Type text] Page 9 i. Type of Study Primary data were
collected through the survey method. A questionnaire was
designed and pre-tested in order to obtain the necessary
information. The data were collected through self- administered
questionnaires. A closed-ended questionnaire, in which a number
of alternative choices are provided for respondents, was used to
collect primary data. ii. Sampling Method Non-probability samples
include elements from the population selected in a non-statistical
manner. Therefore, convenience sampling was used whereby a
non-statistical approach was used primarily because it is easy to
collect data. This approach is practiced because almost
everybody is a grocery customer, and samples are easier to
setup, cheaper in financial terms, and are adequate in their
representativeness within the scope of the defined research. iii.
Questionnaire Design The questionnaire was in the form of
closed-ended questions in which respondents were asked to
make one or more choices from a list of possible responses. The
questions were designed in a manner that provided answers to
the objectives of the study.
10. [Type text] Page 10 Clear and simple words were used to
construct the questions, in an effort to make them easier to
understand and answer. The questionnaire consisted of
questions developed from reviewing the relevant literature on
this research area. The questionnaire was pre-tested before it
was used to gather information in order to determine if the
content and sequencing of questions were correct. Any
alterations that needed to be made were then done before the
research was conducted. Secondary information was gathered
from books, journals, and the internet before the questionnaire
was designed, and also to determine what questions needed to
be asked. iv. Questionnaire Content The questionnaire (Annexure
C) consisted of two pages. The questions followed an
introduction section on the first page, explaining the purpose and
the importance of the study. v. Types Of Question A
questionnaire was constructed and kept deliberately short to suit
the face-to-face method and to improve the response rate. The
questionnaire was edited to ensure that it was grammatically
correct.
11. [Type text] Page 11 Limitation The study was limited to a
review of literature pertaining to store appearance, merchandise
display and other attributes of a good store layout. Due to time
and cost constraints, the study was confined to only Hyper store
in Mumbai. The research was done in Spencer’s Retail Ltd.,
Mumbai and therefore, the results of the study cannot be
generalized to all Hyper stores in Mumbai or in the whole of State.
2.Brief Details of Design& Layout i. Introduction The outside store
appearance affects consumer’s choice of a store. Therefore,
stores should pay attention to external appearance; if the
external appearance is not attractive, customers will not enter.
Both service and merchandise quality exert asignificant influence
on store performance, measured by sales growth and customer
growth, and their impact is mediated by customer satisfaction.
The aims of the literature review are much more than a mere
survey of the information that results in a list of items
representing some literature on the area of study. It is
Understand that the literature review is more of a “research
facilitator”, because it influences the research at many stages of
its development, from its inception to the conclusions. The
literature review provides a conceptual framework to be built in
which facts, relationships and findings of this research study can
12. [Type text] Page 12 be placed and it helps torefine and
introduces ideas that are relevant to the scope of the study. ii.
Define core concepts It is necessary to define the core concepts
and terminology of this research in order to facilitate as wide an
understanding of the issues as possible. The explanation of core
concepts and terms in the present context is systematically
presented and aligned to the logical progression of the thesis.
Store layout, consumer purchasing behavior and convenience
stores are defined within the context of marketing and retailing.
Store layout is ease of user movement through the store to
provide maximum exposure of goods and attractive display .This
includes doors, merchandise placement, shelf orientation, music,
check-out counters, interior decorating, staff attitude, lighting and
location of the loading facilities. Consumer purchasing behavior is
the process by which individuals search for, select, purchase,
use, and dispose of goods and services to satisfy their needs
and wants. This process is influenced by the social and cultural
environment. Hyper is relatively large, low cost, low margin, high
volume, self service retail outlet having warehouse appearance.
iii. Store appearance& Images Developing a strong positive
appearance has become essential to the maintenance of
sustained competitive advantage. Research into store
appearance has allowed retailers to create positioning
13. [Type text] Page 13 strategies and enabled them to
differentiate their stores in terms of the products and prices or
services on offer. The significant role played by store appearance
within food retailing is unquestionable and many authors have
long advocated that a desirable store appearance, facilitated by
an effective positioning strategy, can be considered a core
element of the retail mix and can be integral in influencing store
choice. Consumer loyalty will be more likely when the consumer
perceives the appearance of a store to be desirable. According
Hawkins (Consumer Behavior: Building Marketing Strategy (10th
Ed). New York: McGraw-Hill.) The stimuli that pertain to store
attributes include merchandising, store atmosphere, in-store
service, accessibility, reputation, promotion, facilities and post-
transaction service. Consumers ‟ preference is based on their
post-visit ranking of the stores. To a certain extent, consumer”
visits to retail stores often take the form of a recreational activity
whose worthiness is reinforced by the level of service provision
within the store. Hence, the quality of in-store services is likely to
have a strong impact on consumers ‟ purchasing behavior and, if
not liked or incompatible with the values or the beliefs sought by
the target consumers, might inhibit attraction. And hence they
describe the S-O-R model as below
14. [Type text] Page 14 Stimulus Organism Response Fig: S-O-R
Model of consumer purchase behavior Most important for
customer satisfaction is the store as a brand. Retailers must be
good at retailing. Customers are satisfied when the store is neat
and pleasant and when they feel that the store understands their
needs. Only certain customer segments are interested in store
brands. Satisfied customers are loyal. Several studies
demonstrate that store appearance affects consumer product
judgments and responses. Strong store appearance offers
recognition, familiarity, confidence, and other associations that
make it easier for consumers to make shopping decisions. iv.
Store Floorspace Floor space shows how store design and in-
store communications can make shopping trips easier and more
fun for consumer. The core requirements are enough space to
move around the store, ease of access from outside the store
and clear navigation and displays. Stores can also improve the
communication of their values by memorable window displays,
Store images 1. Merchandising 2. Store atmosphere 3. In store
service 4. Accessibility 5. Reputation 6. Promotion 7. Facility 8.
Post-transaction ConsumerPerception Preference for store
15. [Type text] Page 15 strong departments using better point
of sale (POS), personal touches to encourage customer loyalty,
graphics, highlighting prices and ranges in busy areas. v. Store
traffic & crowd density The store layout is the foundation for
operations. Therefore, conducting a traffic flow analysis is a good
step to take when the goal is to improve store performance.
Shopping is one of the most exciting activities in life. As the taste
and the preference of shoppers change constantly, retail
facilities have evolved in response. It is universally accepted that
in-store traffic flow plays an important role in the success of a
retail facility. The overall objective of conducting a traffic flow
analysis is to determine ways to make shopping and running the
store easier, Using layout and merchandising techniques to
improve sales, enhance the store's appearance and make
shopping more fun. Generally store atmosphere is defined as
designing the retail space to affectconsumer emotions and,
accordingly, to appeal to consumer purchasing behavior.This
definition includes physical products on display, sales
procedures, after salesservices, and most importantly the
aggregate atmosphere of this space. Elementscontributing to the
atmosphere could be either tangible or intangible. Tangible
elements may include coloring, lighting, background music, goods
display, point-of-sale posters, employees and visitors. Exterior
cues include location, exterior lighting, and exterior coloring.
Intangibles may include scent, odors, and temperature, and other
socialfactors such as gestures, attitudes, and behavior of service
employees and the visitorsas well as personal buying readiness
and past experience.
16. [Type text] Page 16 Retailers have to slow customers down
to get them to see more merchandise, yet not create traffic jams
in the store and lose them altogether. The best strategy is to
establish aisles that are narrow enough to force customers to
slow down, which gives them enough time to notice the products
displayed, but not so narrow that they create a traffic jam.
Therefore, the best place for customers to linger is at the rear of
the store. To achieve this, lower density fixtures should be
positioned at the front of the store, and higher density fixtures in
the back - the higher the density, the longer a customer is likely to
stay to look at merchandise. Increasing merchandise density to
the rear of the store encourages customers to stay and browse
(Traffic Flow: Make it Work to Maximize Sales, 2008). vi.
MerchandiseDisplay According to Zentes(Magazine- Store Image
2009) “is a term frequently used inthe context of in-store
marketing. It refers to the way products are presented in a
retailoutlet.” While this expression has been used with a focus on
merchandise display (e.g.the choice of fixtures to be used and the
method of product presentation), it relates tooverall store
design, store layout and other facets of the store environment.
Therefore,it is often used synonymously with the design
component of in-store marketing.
17. [Type text] Page 17 Two basic objectives of in-store
marketing are: To facilitate the search process for customers,
i.e. to design the store for easyinternal orientation; and To
create a positive store atmosphere, i.e. to evoke a positive
emotional state ofmind in consumers while visiting the store. Both
aspects are important to different degrees in different stores and
for different consumer segments. The retailer‘s focus is mainly on
easy orientation and supporting the consumer search process.
When approaching shoppers, the efforts are shifted towards
merchandise display as it facilitates shopping and easy
orientation, because consumers should not be confused but feel
secure and self-confident in the shopping situation. (Zentes,
Magazine- Store Image 2009) According McIntosh, (M. 2007. The
importance of retail merchandising [online]) merchandising is
more than simply the arrangement of products on the shelf. It is
an integral component of the business image. It should be
considered when designing the retail mix. Opinions suggest that
merchandising and display are frivolous extra expenses for the
small business owner who is just starting up. The implication is
that expenses such as marketing, rent, inventory, utilities and
staffing are serious expenses, while merchandising and display
are frills. Merchandising and display are an important part of the
retail environment, and should have a reasonable budget
allocated even for a retailer operating on a shoestring. In today's
competitive retail environment, a retailer cannot afford to
consider merchandising as a frill. Everyone is competing for the
customers' rand. There are more choices out there for
consumers than ever before. By rotating merchandise and
changing displays, the customers feel that there is always
something new for them to see or experience. Including
18. [Type text] Page 18 merchandising in the retailing plan and
budget makes sense. It can make the difference between selling
a product and having it sit on the shelf. Appealing displays by
retailers can lead shoppers to sacrifice the time and effort
required to go further to more distant stores. This technique
suggests that consumers shop at the stores where they can
maximize their satisfaction (i.e. efficiency), considering both retail
attributes and shopping costs. According to the research
performed by the Food Marketing Institute (FMI),
productplacement at eye-level or slightly below seems to have
the most selling success. Eyelevelis described to be at around 13
centimeters from the floor. Therefore, companiesopt to place
their product at eye-level or in children’s reach. Many leading
brands orhigh draw items are placed on the eye-level shelves.
Also, new products are oftendisplayed on the best shelves to
promote their new product and generate enough interest so that
customers will want to try them. Otherwise, items, depending on
theirsize and weight, are put above or below. According Sinha,
P.K.andBanerjee, (Store choice behavior in an evolving
market.InternationalJournal of Retail & Distribution
Management2004. ) A good display of products, so that the
shoppers can lookaround and touch and feel the products,
becomes an important consideration toconsumers. According to
Merchandising (2008), the way that products are displayed
merchandised can have a significant effect on retail sales. In self-
service stores, stapleproducts tend to be merchandised
strategically so that customers, looking for these items, are
required to walk past higher profit items such as luxury goods.
This displaycan often result in higher sales and higher profits.
19. [Type text] Page 19 Merchandising consists of the following
elements: Correct strategic placement in the store; Eye-
catching and appealing display; Appropriate point of sale
support media (e.g. labels, signs); and Legal requirements
satisfied. vii. Product Assortment The determination of the
optimal product display assortment requires information
aboutfactors such as:  How much value the market places on
each available product, including which products are viewed as
completely unacceptable; and How the market assesses the
sustainability across products based on price. Effective category
management is essential for retailing. It is critical that stores
improvetheir service by providing customers with the products
they want, in a position that is sensible and simple to find. As per
the opinion of Clerk (.Going forgrowth. 2003) taking a more
strategic approach to merchandising canreap big rewards by
boosting sales, increasing footfall and ultimately increasing
turnover. Halepete, J., Hathcote, J. and Peters, C. (Journal of
Fashion Marketing and Management.) says, in the past, when
competition was less intense, astore could target a wide range of
customers. However, retailing trends indicate that it isbecoming
more important to satisfy customers' needs. Moreover,
20. [Type text] Page 20 assortment planningis one of the most
important factors in merchandising. In general, the assortment
ofproducts depends on store location, store size, and the
lifestyle of the local consumers. For achieving customers loyalty
the organization need following steps as mention in following
figure: viii. Store Ventilation Ventilation of buildings depends
significantly on the used criteria for the indoor environment,
which also affects health, productivity and comfort of the retail
consumers. First of all, store ventilation measures should not
sacrifice peoples' comfort and health while shopping. Therefore,
a need for ventilation for the indoor environment for retail design,
and to improve shopping conditions. According Kotzab, H. and
Teller, C. (Development and empirical test of grocery retail in
store logistics model.) today's retailers have to perform on an
extra-ordinary level by combining different decisions regarding
location, assortment, selection of target markets, negotiations
with suppliers, motivation of staff and other typical retail
decisions, such as Productpricing Markdown Retail sales
Assortment Planning Marketing Merchandising CustomerLoyalty
21. [Type text] Page 21 store ventilation and merchandising are
all done in a very competitive and global environment. Since the
1990s, there has been an increasing importance of store
ventilation, which was recognized to generate competitive
advantages by increasing in- store traffic and enjoyment of
shopping. The ultimate goal of store ventilation is efficiency,
which means offering the best shopping atmosphere. ix. Music
system & Arrangement of Light Retailers use background music in
order to enhance the atmosphere of their stores. The effects of
music on attitudes toward the store, the salesperson, and the
visit to the store are moderated by cognitive processes.
However, retailers are warned that enhancing cognitive activity is
no panacea since it is found here that higher cognitive activity is
associated with lower attitudes. It is proposed that music fit with
the store may explain such results. Music fit and cognitive
processes triggered by store music are strongly suggested as
avenues of store atmospherics As mentioned by Mr. Hoyale (Chain
Store Age : 2003)substantiates that lighting for any retail
environment has the potential to dramatically affect sales.
Lighting can increase floor traffic, create visual interest and direct
people through the store-either deeper, where there are fewer
distractions from other mall competitors, or to areas of product
that the store manager is trying to promote. Store lighting
generally requires high ambient-light levels to help create a
comfortable
22. [Type text] Page 22 environment that allows customers to
evaluate merchandise, further compounding the problem of
display lighting. One of the most popular methods of display
lighting is to add track lights to a store layout, allowing extra light
to be focused on mannequins and feature items. Retail shoppers
themselves have also acknowledged the importance of music as
an atmospheric variable. Atmospherics, including music and
lighting, have received considerable attention in the
retail/services literature since used in the designing of space in
store environments to create certain effects on buyers. Positively
valence (happy) music should lead to positive moods which
should encourage positive evaluations and behaviours. The music
element does influence consumers ‟ retail patronage intentions.
Retail managers need to make informed music and lighting
choices involving their store types and target markets. It is
important that retail managers know the music that their target
market likes and play happy selections in that genre or by those
liked artists x. Conclusion In summary, retailers should seek to sell
products that satisfy the buyer’s needs and provide store layouts
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