Effectiveness of store layout strategy in maximizing the operational efficiency of a Retail Store
(A Study carried out in a renowned Shopping Mall in Kolkata)


By

Pramit Das
B.Com(H), MBA, PGDJMC, Fellow-HRD, CSMT, AIMA
Faculty Member-Marketing
Prakash Kumar Gupta
MBA pass out (2006-08)
INC Park Street
 


Introduction

Store layout and visual merchandising are two important factors that add to the distinctiveness of a store. The interior design of the store plays a more vital role. Marquees, walkways, entrances, doors, display windows, the height and size of the building, colors and materials used, and theft prevention are some of the pivotal factors to be kept in mind while developing a store's exterior.

Managing retail space is the first and foremost concern of almost every retailer, when it comes to designing the store's interior. Space is always an extremely expensive and scarce resource. Retailers try to maximize the return on sales per square foot. Planning a layout for the store's interior is the first step in designing the store's interior. There are various types of layouts from where a retailer will consider one or combine to maximize operational profit.

Adding More Flavor

Administering space to a wide variety of merchandise categories in a store is very difficult proposition. Such allocation of space can be on the basis of many factors, like historical sales, daily average sales, profit, margins, industry averages and strategic reasons. Apart from allocating space to various merchandise categories and brands, some space has to be set aside for some essential supplementary services. Such essential functions includes the back room for accepting and sorting the inventories, office and other functional spaces like customer service desks, floor space and change rooms.

The store interiors are designed in such a way as to influence customer behavior which is also referred to as visual merchandising. It takes care of the optimum and apposite use of equipment, displays, color, illuminations, music, ambience and floor management. Merchandise management is the most insignificant facet of store design, because it is a key attribute to draw customers' awareness. A retailer can adopt several strategies of merchandise presentation such as idea-oriented presentation, item-oriented presentation, price lining, color presentation, vertical merchandising and frontal presentation, which supplement a distinct image of the store.

Factors affecting operational efficiency

If we look around any retail store we can face the below mentioned following situations that will definitely cause customer attrition. These situations may exhibit poor customer relation and servicing offenses which creates discontentment. Here are ten situations which may turn off customers:

1. Dirty Bathrooms
2. Messy Dressing Rooms
3. Loud & unsetting Music
4. Handwritten Signs
5. Stained Floor & dirty ceiling Tiles
6. Poor illumination
7. Horrible & Odious Odors
8. Crowded Aisles
9. Disorganized Checkout Counters
10. Lack of Shopping Baskets

Motivating customers to visit the store and making them buy are two different things and require different strategies. Research has revealed that 60% of customers make buying decisions while they are moving in the store. This revelation clearly signifies the value of ambience, design, and display in the retail store that influence customers to make purchasing decisions.

Small and few simple thoughts can revitalize a store's displays. Apart from proper utilization of space, a strategic mix of colors, layout, and overall atmospherics  can do wanders to create an enticing ambience for their customers.

The most common agendas kept in mind before designing and investing of store designing are;

* Consistent with retailer's image, positioning, strategy
* Should provide positive influence on purchase behavior
* Cost effective space productivity
* Sales-per-square-foot
* Flexible

In addition to bearing in mind these preconceived agendas, retail professionals should attempt to innovate and recreate their displays periodically. Effective administering and analysis of store's layout can be extremely advantageous.

Methodology

In this project we have taken the mid income group as the means of study. The reason behind choosing it is that it acts as a bridge between the upper and lower income group. Moreover the organization taken for study is found to attract all segments of customer segment due to its positioning. The merchandise segment is taken into consideration as heavy crowd inflows are seen and moreover the browsing of products is higher in merchandise compared to other items in the floor. The first floor is taken for study because of two chief reasons.

Firstly, it is ladies department and women are in majority are the one who takes the purchase decision.

Secondly, the floor has toilet and drinking water facility for which customers from all other departments do have chances of coming to the floor and their behavior can be monitored after relieving their nature calls and other needs.  Thus the segment taken is considered to provide better tools for study in the given topic.

The layout of the stores is taken with the approval of the stores and the operations area is analyzed. The operational efficiency is studied by observation method. The study is based on the observation of 100 customers in the retail format and their activities are monitored to get the analysis.

Interpretations

There are four possible entries to the first floor of the ladies section of garments. The first goes through the Forum mall, the second through lift which operates from within the store and the third and fourth being the staircases which provides entry from the ground and second floor. The combination of four gives free mobility to check in and out for the customers. The first entry leads us to the middle of the section. On the right is the formal section and towards the left we have the casual section. Straight to the middle is the extension of the casual section with accessories. The right section of the floor, just after the formal section is the cash counter and behind is two trial rooms, and it is followed by the stairs and the lift. Next to the lift is the washroom. The washroom is both for the ladies and gents and has a facility for drinking water. The left side which deals with casuals ends with five trial rooms which are behind the section. The next section is SKD (Salwar Kameez Dupatta) which has ethnic and Indian formals. It is the single and the biggest department in the store. Next to it is the lingerie/undergarments section which is again followed by two trial rooms.

The middle section, as mentioned deals with extension of the casual wear and is followed by the western casual and Indian casuals. The end of the middle segment deals with "un-stitched cut pieces". The saree section is at the end most which is supported by the lingerie section on the left and washroom on the right. There are six pairs of mannequins on the floor. The first one faces the entrance from the forum side. The remaining is positioned in formals, casuals, "SKD" and lingerie section respectively. The floor area stands to be at 13000 sq ft approximately. Spaces on wall are also used to stack the garments and display some of them.

Findings and Analysis

According to the studies conducted on the behavior of people while shopping, it is found that when ever a person enters a store, the natural tendency is to turn to the right. The reason provided behind this phenomenon is because most of the people are right handed and the body turns quickly towards the right rather than on the left.

Irrespective of this the right side of the section which deals with western formals, fail to generate the desired revenue. But here the general findings did not apply. From the observation of 200 walk-ins in the store from the forum side, it was seen that people generally turn towards the left side of the store. If we see the entry, both the sides provide similar distances to enter in but irrespective of that customer choose to move to the left. The following picture gives a fair idea of what stands wrong with the counter. There are five gondolas in the front, followed by other gondolas aligned to it. Moreover it has a pair of mannequins which fills the floor area completely. Now whenever a customer enters looking for some western wear, he/she gets a block view which is a big turn off for the person. The natural tendency in such cases is to browse from outside and then go to some other section or asks for assistance. Most of the people hate asking for assistance and thus there is a loss of sale irrespective of the availability of the merchandise. There are other factors that do affect the sales of the section, which will be discussed in due course of the thesis.

The average passage between two gondolas ranges between 20-26 inches. The psychology of women t shopping is completely different from men, and it also differs with the selection of the merchandise. When we are in a hunt for some formal dress, our min set is different from what we have while shopping for a casual dress. Moreover while choosing for formals people usually choose clutter free space where they can walk freely and browse. People do seek for variety but at the same time care must be taken to ensure that there are not too much of merchandise to confuse the prospective consumer. Here this section provides the least revenue. The merchandise is costly and the items are also in large quantities. The idea should be to use a "U" shape layout for this section to pull in the customers by offering a free space to come close to the merchandise which is priced at a higher range. The area stands to be at nearly 250 sq ft for the section. The target for the period (when the study is being conducted) was Rs. 10, 70,000. So we can say,

* Per sq ft sale should be: Rs. 4280
* And per day sales should be in terms of sq ft. Rs. 122.28.

Before going into the calculations, we at first will have the figure that are section wise, which is composed of few department (brand wise).

SECTION                                                  TARGET (Rs.)

The western formal section                16,35,000
The western casual section                13,71,000
The Indian formal section                   18,99,000 
The Indian casual section                    6,85,000
The designer wear section                   5,49,000
The "Do it yourself" section                  6,79,000
The lingerie and nightwear section         8,65,000
The winter wears section (seasonal)      6,49,000

Total                                             1,00,87,000

The entire area taken by the organization is 52000 sq ft., and the store has ground plus three floors. Therefore we can have the per floor area to be approximately 13000 sq ft. Thus the sq ft target for the floor stands to be at Rs. 775.92 in terms of sq ft. and the per sq ft target per day for the period stands out to be Rs. 22.16.

The actual area of operating however is less than that as the area is also used by stock rooms, trial rooms, washroom, lift space and the walk in area and cash point, where the sales are not generated but are important for the operation of the firm. Here the wall area is not taken into account. However the wall area plays an important location for the display of the merchandise.

The availability of merchandise is very high. Due to this there is also an increased cost in terms of procurement and also in terms of the maintenance of the stock. The longer the stock remains in the store, the higher becomes its relative price. The reason for this is that as the goods remain in the store, it occupies a substantial area of the store, and the store operates with fixed cost that needs to be borne irrespective of the sale. This forces to rotate the stocks as much as possible through sales. There is a lack of shopping space in this floor from the consumers' point of view. This being a section devoted to women, has a space less than what is needed for them to move around. The following are the conclusions of the observation studies that were conducted within the store.

* Women at large tend to turn to their left while entering a store.
* Women tend to come in groups and their purchase decisions are taken after much of evaluation, which is completely different from men purchasing habits.
* Women tend to look for that place to shop where they can gather with their friends and family so that they can discuss while shopping. On the other hand men prefer to choose independently even if they come in groups. Women look for coziness rather than single space.
* Women tend to look more at the items which are stacked at the bottom compared to those kept above their height.
* Women tend to inspect the merchandise themselves rather than asking for assistance where as men tends to ask for assistance rather than wasting their time in making a purchase decision.
* Women use more of their left hand for browsing merchandise rather than using the right hand.
* If there are any items that need stooping down to access, they go for it and look ample of space behind them to do so.
* Light colors at front and dark colors at the end tend to create more space visually which helps women to pull in.
* Greater walking space makes women more comfortable and makes them more confident of their buying decision process.
* Mid aged and older aged people tend to make big bills and hence they need wide aisles to walk-in and look for their needs.
* Women tend a "wait and shop" behavior, so they look for more items at one place instead of having to more here and there.
* The waiting space near trial rooms also influence purchase decision. Mirrors near it acts as a stimulant to them and the urge to try the garment becomes more. Moreover the reflection of a garment on the mirror attracts them more than the ones kept on the floor. 

The free space allows customer to look at the items on the wall as well as the items displayed on either side of the walk-in area.

The display follows a strict method which puts all the merchandise to be within the black line on the floor. This symmetry attracts people for the neat and clean look. Women love organized things and thus a well organized and displayed section like the one above, pulls maximum crowd.

Recommendations

From the above studies it was found that the poor performance of some of the sections is because of the weak layout strategy that has been followed. The revenue generation of the SKD section cannot be said to be satisfying as there are no other shopping destination nearby where customers can go. For this very reason there is a satisfying sale in this section. But the recent coming up of the Big Bazzar which stands just next to it, can pull in more of the customers because of the price and layout factor. It is more mass oriented and hence has been planned to accommodate maximum number of people. Thus a person who once visit it will find shopping more comfortable here and chances are there that they will stick to this store. Hence the store must revise its layout following the current market scenario.

As for the western formal section, which is not doing up to the mark because of the above reasons cited, can be re structured. Red carpets have a physiological impact on shoppers. Hence, a red carpet can be used to divert the people to the right side. Secondly the layout can be turned into a "U" shaped so as to make the customers come in the section and trap their attention further with the visuals. The extreme corner where the trousers are stacked can be shifted beside the cash point(near the trial room). This will ensure maximum view of the high priced items. Moreover all low priced items should be pushed to the rear end of the section so that there are less chances of swapping a high end product with a low priced item while billing of the items.

The lingerie section can be also given a new look. This section follows somewhat a "U" shaped layout, but the section is over shadowed by the Indian formal section. Some of the gondolas at the end can be tilted so as to allow vertical entry of the customers. In this way more and more customers will be encouraged to enter this section.

As for the overall efficiency, some gondolas can be removed from the Indian formal and the western formal section. This will lead to wide walking space and will in turn help to shop more. Since the floors combined effort fails to achieve the overall target of Rs. 1,00,87,000, some changes can be definitely taken and implemented. Moreover an immediate action needs to be taken at the western formal section which never achieves its targets set. There has been a significant rise in number of women professional in the city and thus there is a great potential of sale in this section. An immediate action will boost up the sales and help reap maximum in terms of revenue per sq ft of the store.

Lastly, wherever there are items stacked at the knee level, a minimum of four feet of space must be ensured so as to let the customer's accessibility at any given point of time. High priced items should not be placed at the bottom as it looses the chances of getting noticed.

Conclusion

Providing superior service has always been a complex and challenging job for retailers. This is because of the intangible and inconsistent nature of services. Retailers generally use customization and standardization to deliver customer services. While customization motivates the service providers to customize services according to the needs of individual customers, standardization ensures that they follow established guidelines when delivering service.

The various services provided by retailers to customers can be grouped under three categories; pre transaction, transaction and post transaction services. Convenient store hours and information availability are the most common pre-transaction services offered to customers. Pre transaction services help target customers gather information about a store's merchandise and methods for purchasing it easily. Transaction services are delivered to customers while they are shopping at a store. Retailers provide post transaction services after the merchandise or the services have been purchased.

The failure to provide services according to the set standards leaves the retailer with little opportunity to build and strengthen relationships with his customers. Though recovering a service failure is very difficult, retailers can re-establish and strengthen their bonds with customers by following a three step procedure; listening to customers, providing a fair solution, and resolving the problem quickly.

Bibliography

* http://www.nenaghguardian.ie/
* http://www.lloydwrites.com/
* http://www.bized.co.uk/
* http://www.sideroad.com/
* http://www.psychologytoday.com/
* http://psychologytoday.com/topics/personality.html
* http://13-Store Layout & Design_New.htm
* www.icmr.com
* www.retailbiz.com
* www.thetelegraph.com
* www.google.com
* www.shoppersstop.com
* www.businesstoday.com
 


Pramit Das
B.Com(H), MBA, PGDJMC, Fellow-HRD, CSMT, AIMA
Faculty Member-Marketing
Prakash Kumar Gupta
MBA pass out (2006-08)
INC Park Street
 

Source: E-mail October 22, 2008

           

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