Marketing Chapter 16 Homework The design must be consistent with and reinforce the retailer’s strategy by meeting the needs of the target market and building a sustainable competitive advantage.

CHAPTER 16

STORE LAYOUT, DESIGN, AND VISUAL MERCHANDISING

ANNOTATED OUTLINE

INSTRUCTOR NOTES

• Recognizing the significant impact of store

environment on shopping behavior,

retailers have devoted considerable

resources to their store design and

merchandise presentation.

A. Implement the Retail Strategy

• The primary objective for store design is

to implement the retailer’s strategy.

• The design must be consistent with and

reinforce the retailer’s strategy by

meeting the needs of the target market

and building a sustainable competitive

advantage.

See PPT 16-4

For examples of retail store design strategies used

abroad, see PPT 16–5 and 16-6

Chapter 16 – Store Layout, Design, and Visual Merchandising

• Store design provides hedonic benefits by

offering customers an entertaining and

enjoyable shopping experience.

D. Control Costs to Increase Profits

• The fourth design objective is to control

the cost of implementing the store design

and maintaining the store’s appearance.

• Store designs can also affect labor costs

and inventory shrinkage.

• Store designers attempt to design stores

with maximum flexibility. As the

merchandise mix changes, so must the

space allocated to merchandise categories

and the layout of the store.

See PPT 16-9

Discuss with students design elements of a luxury

store as compared to a discount store and how the

elements impact costs.

after 1993 must be fully accessible.

they are being considered on a case-by–

F. Design Trade-Offs

• A store design rarely achieves all of the

design objectives described above.

Managers need to make trade-offs among

them.

• One more trade-off is the balance

between giving customers adequate space

in which to shop and productively using

the space for merchandise.

See PPT 16-12

Ask students how often the design of a store

influences their decision to shop there.

II. Store Design Elements

LO 16-2 List the advantages and disadvantages

A. Layouts

• Today’s modern retailers use three

general types of store layout design: grid,

racetrack, and free-form. Each of these

layouts has advantages and

disadvantages.

See PPT 16-14

1. Grid Layout

contains parallel aisles with merchandise

on shelves on both sides of the aisles.

Cash registers are located at the

entrances/exits of the stores.

• The grid is not the most aesthetically

pleasing arrangement, but it is very good

for shopping trips in which customers

need to move throughout the entire store

and easily locate products they want to

buy.

• The grid layout is also cost-efficient

because space productivity is enhanced

and fixtures are standardized.

Ask students what is the best type of store for a

grid design and why.

2. Racetrack Layout

• The racetrack design encourages impulse

purchasing.

3. Free-Form Layout

• A free-form layout (also known as

boutique layout) arranges fixtures and

See PPT 16-18 for a description and illustration of

the free-form layout

aisles asymmetrically. It is successfully

used primarily in specialty stores or within

the departments of larger stores.

• In this relaxed environment, customers

feel like they are in someone’s home,

which facilitates shopping and browsing.

Ask students why upscale specialty stores often

use a free-form design.

B. Signage and Graphics

• Signage and graphics inside the store help

customers locate specific products and

departments, provide product

information, and suggest items or special

purchases.

Ask students to discuss ways to enhance the

effectiveness of a retailer’s signage. Can a retailer

have too many signs?

See PPT 16-19 and 16–20

1. Digital Signage

• Many retailers are beginning to replace

traditional signage with digital signage

systems.

See PPT 16–21

Ask students to develop a list of the benefits of

digital signage. Do students even pay attention to

• Digital signage provides a number of

benefits over traditional signage for the

retailer. Digital signs are dynamic, can

provide an appeling atmosphere, can be

tailored to a store’s market, and

overcomes the time-to-message hurdle

associated with traditional print signage.

C. Feature Areas

wraps.

See PPT 16–22

1. Freestanding Displays

• Freestanding displays are fixtures that are

located on aisles and designed primarily to

attract customers’ attention and bring

them into a department.

• These fixtures often display and store the

newest, most exiting merchandise in the

particular department.

2. Mannequins

3. End Caps

• End caps are displays located at the end of

an aisle in stores using a grid layout

4. Promotional Aisle or Area

• A promotional aisle or promotional area

is a space used to display merchandise

that is being promoted.

5. Walls

• Because retail space is often limited, many

6. Dressing Rooms

• Today, retailers are recognizing the

importance of dressing rooms as the

critical space in which customers decide

whether to make a purchase.

• Virtual dressing rooms are becoming more

important and interesting to online

shoppers. People cannot try on clothes

displayed on a website, but the spread of

webcams embedded in laptops, tablets,

and desktop computers is making it

possible for programmers to create

“virtual dressing rooms” that could permit

Internet customers to “try on” clothing

and accessories, simply by standing in

front of their webcams

7. Cash Wraps

• These areas can be the most valuable

piece of real estate in the store, because

the customers often wait there for the

transactions to be completed.

D. Store Exteriors

• The exterior includes not just the physical

store (e.g., windows, entrances) but also

signage, parking, and landscaping.

1. Windows

• Window displays draw customers into the

store and provide a visual message about

the type of merchandise offered in the

store and the type of image the store

wants to portray.

2. Entrances

• The entryway also is critical because it

determines whether consumers believe

they can and should enter and affects the

customer’s image of the store.

3. Exterior Singage and Store Design

• The signs that appear on the exterior are

the primary means for shoppers to find

the retail location

4. Parking

• Regardless of the design and image they

choose, most stores must address the

practical question of parking.

5. Landscaping

• Like so many retail decisions, whether,

how much, and what kind of landscaping a

retailer should seek depends on the type

of store, its image, and in what type of

location it has.

III. Space Management

• The space within stores and on the stores’

shelves and fixtures is a scarce resource.

Space management involves key resource

decisions: (1) the allocation of store space

to merchandise categories and brands, (2)

the location of departments or

merchandise categories in the store, and

(3) the size of the store.

LO 16-3 Describe how to assign store floor

space to merchandise departments and

categories.

A. Space Allocated to Merchandise Categories

deciding how much floor or shelf space to

1. Space Productivity

• A simple rule of thumb for allocating

space is to allocate on the basis of

merchandise sales.

• In practice, retailers should allocate space

to a merchandise category based on its

effect on the profitability of the entire

store.

• A more appropriate productivity measure,

such as gross margin per square foot,

would consider the contribution

generated by the merchandise, not just

the sales.

2. Inventory Turnover

• Inventory turnover affects space

allocation in two ways.

3. Display Considerations

• The physical limitations of the store and

its fixtures affect space allocation.

Ask students to consider situations in which the

retailer might strategically want to “over–allocate”

space to certain merchandise categories.

B. Location of Merchandise Categories

See PPT 16-26

• By strategically placing impulse and

demand/destination merchandise

(products that customers have decided to

buy before entering the store) throughout

the store, retailers increase the chances

that customers will shop the entire store

and that their attention will be focused on

the merchandise that the retailer is most

interested in selling.

• From here, the most heavily trafficked and

viewed area is the right-hand side of the

store.

1. Impulse Merchandise

• Impulse merchandise includes products

that customers purchase without prior

plans, like fragrances, cosmetics, and

magazines.

2. Demand and Promotional Merchandise

• Demand merchandise and promotional

merchandise are often placed in the back

left-hand corner of the store. Placing high-

demand merchandise in this location pulls

Ask students where they would expect to find the

travel and/or beauty salon (in an out-of-the-way

customers through the store, increasing

the visibility of other products along the

way.

location).

3. Special Merchandise

• Categories like furniture and appliances

that require large portions of floor space

are often located in less desirable areas.

4. Category Adjacencies

• Another option is to contradict traditional

placement schemes to surprise and excite

shoppers.

5. Location of Merchandise within a