The last mile of retail – 3

Crossing the threshold and entering the store

The next step of the shopping journey of the customer is entering the store to begin shopping.
Figure 1 details the three steps of the journey as the customer crosses the store threshold. The left
column identifies the influences that a retailer uses to prompt a customer to elicit a response. The
middle column identifies the senses by which a customer engages with the prompts used by the
retailer or the key sensory driver and mechanism at work. The column on the right identifies the
goal of the stimulus, what the retailer is keen to educe in the customer. When a customer is at a
distance from the store, the store façade is the primary source of stimulus that is in the control of
the retailer. Nearer the store threshold retailer options to influence customers increase; he can use
store features like design of the entrance, quality of lighting, window displays, and entrance
displays to engage customers. Until the customer reaches the store threshold, he can only „see‟
what the retailer is doing to engage him. His primary means of engagement with the retailer is
visual. Once he is inside the store, the customer can engage with merchandise using all his
sensory faculties. He can touch the merchandise, examine it, evaluate it, and reach conclusions

Figure 1 – Diversity of options a retailer has to engage with customers on their shopping
journey

Location of the customer Primary Customer choices

customer faculties at retailer seeks to
Source of stimulus for the retailer to influence work influence
customers

At a distance Visual Perception Customer choice -

Store façade is a stimulus To visit or not

Near the threshold

Influence of store features - Visual Perception Customer choice -
entrance, lighting, windows, and To enter or not
displays

Inside the store Tangible Customer choice -

Products, displays, signage, and experience – sight, To browse and
staff begin to influence touch, hearing, buy
taste, and smell
about it. His ease of engagement with the merchandise is determined by how it is displayed. The
customer can also acquire knowledge about the product through interactions with store staff.
Therefore once the customer is in the store his shopping behavior is influenced by a more
tangible „engagement‟ with what is around him, increasing the tactical choices available to
retailers to stimulate buying behavior.

To put this knowledge to work it is necessary to link the actions of retailers to in-store consumer
behavior by identifying the mechanisms at work. Deconstruct the retail environment in three
dimensions; product-related (the product categories, and their variety), space-related (the product
displays and signage, how customers can move around the store, and how goods move from
delivery to shelf), and people-related (how customers engage with retail staff in the store). A
retailer can act on any and all these dimensions to engage with customers. The outcome of
retailer actions can also be evaluated on three criteria; their functionality, their contribution to
aesthetics, and their role in creating an ambience. The functionality of design refers to the
effectiveness of the retail environment, assessed on how it enables increasing conversion of
customers to shoppers. Design achieves this through product-presentations, customer in-store
routing (guiding customers reach different parts of the store), displays (assisting customers
notice and examine merchandise), signage (enabling customers acquire knowledge to ease
buying), and the actual buying process itself (its ease and efficacy). One aspect of store
functionality, often ignored, is the ease of merchandise replenishment, the flow of merchandise
from store delivery to shelf. Shelf availability is an important retail challenge, a cause of lost
sales, reduced customer satisfaction, and store loyalty. In store, the last ten yard supply chain
bottlenecks often hamper material flow through the store to the shelf. The aesthetic elements of
the design encompass the features that make the store attractive, making it pleasant and
enjoyable for customers to spend time in the store, inducing browsing, and greater store walk-
around or store coverage. The ambience of the store sets the mood for the shopping experience.
A positive disposition nudges the customer to explore a store, search for merchandise, talk to
staff and enquire, and evaluate merchandise. This doesn‟t happen automatically. Small
experiences, early on in the shopping experience when the customer enters a store, induce a
customer to become positively disposed towards committing time and effort in the store.

Table - 1 enables linking the actions of the store designer to the outcomes. Every aspect of a
retail store design can be developed and evaluated using following table. A retail designer uses
products, displays them in three-dimensional space, and guides customers through the store, past
product displays and signage, to achieve retail conversion.

Entering the store

The feeling that a particular store is an option to be considered to find desired merchandise is
evoked in the mind of consumers when initial examination of products in the store suggests that
the product variety, quality, and price appear to be „suitable.‟ This feeling is enkindled when a
customer examines a few products that „establish,‟ „create‟ or „reinforce‟ a benchmark

Table 1 – Connecting designer actions to outcomes

What design
achieves  Functionality Aesthetics Ambience

What designers use ↓

Products Display efficacy Appealing quality of Setting of the displays
Displays to enable visual displays to evoke meaning of
noticing, reaching, intended store
understanding and ambience
evaluating products
Space Space utilization for Directional elements Music
efficient store layout Graphic and visual Temperature
elements Color
Material flow in the Filled displays Lighting
store
Displays and signage Efficacy of displays Visual merchandising Colors
and signage to match Materials Lighting
customer choice logic Colors
Staff Customer service Staff uniform and Service quality to suit
Product knowledge presentation ambience

product-quality-price standard in the mind of the customer. Consider that you are in the market
for tableware. You have a choice of visiting Crate and Barrel, Pottery Barn, Williams-Sonoma,
Villeroy & Boch, and Macy‟s. Stores are either single own-brand, or multi-brand outlets.
Previous browsing excursions have narrowed your choice to Crate and Barrel. As you are about
to enter Crate and Barrel, you see the entrance to Macy‟s, and take a detour to visit Macy‟s
before making a final choice. You have not carefully browsed the household section of Macy‟s
in the recent past. What will make you commit time to Macy‟s beyond the initial interest? As
you near the tableware section of the store your eyes must focus and be „hooked‟ by displays that
communicate meaning, showcasing the designs and quality available in the section, whatever it
be that the buyer wants to represent to you as a „typical‟ target customer. The first engagement
with displays should engross you, firming your perception about what is available deeper in-
store, making you commit time to searching the store. If your initial perception of product-
quality-price is reinforced by a second engagement with products, you will stop evaluating the
„suitability‟ of the store to fulfill your needs, and continue browsing. Once a customer enters the
store the functional aspects of the store become increasingly important because they determine
how well the store „works‟. The aesthetical and the ambience related aspects remain in the
background forming the backdrop of the shopping experience. The browsing behavior, the way
customers actually behave inside the store, is an indicator of their comfort in the environment,
the ease of shopping, finding the right products, and quality of service. The success of a retailer
requires considerable more attention to detail at each stage of the customer journey in the store.
The retailer has to identify locations in the store that customers will notice and then create
displays on those locations with messages to communicate cues that they can easily understand
and interpret. He has to continually reinforce customer perceptions about products and their
variety-quality-price developed both outside and inside the store, and enabling them make
commitments to search and shop.

This entire process takes place in seconds. The attention of the customer quickly shifts from the
store façade to other visual signifiers that could be images, graphics, fixtures and fittings,
product displays, product packaging and other product level communications. From relatively
few dimensions of the store façade (structural, affective, and symbolic aspects) many tangible
and intangible factors now begin to communicate meaning to customers, and the consistency of
the different cues becomes important. Retailers need to pay a great deal of attention to different
store level cues. A customer inside the store is absorbing and interpreting information from
multiple sources. All the cues need to be attractive, consistent and relevant for customer choice
making. The number of cues, if executed with care, reinforcing the messaging, is an opportunity
to ease customer experience in the store by enabling choice making. Walmart executed a major
repositioning in 2008, implementing changes in its category strategies expanding and contracting
product variety, remodeling stores, and its POS display and signage. Walmart not only changed
its name from Wal-Mart to Walmart but also its tagline from „Everyday Low prices‟ to “Save
money, Live better.‟ In 2010 Walmart took the decision to roll back some of the major changes.
Consumers understanding and behavioral response to the repositioning strategy „received‟ and
„interpreted‟ at the store through the diversity of cues was inconsistent with Walmart objectives.
I am presenting hereunder the story of the Walmart „Project Impact,‟ using extracts from diverse
sources, Walmart and external observers, illustrating the challenge of orchestrating store level
strategies to engage customers.

What Walmart did?

In the April 1st 2009 Morgan Stanley Retail Conference Bill Simon the COO Walmart explained
the changes being implemented in Walmart.

…our new tagline – “save money, live better”; “win, play, show”; and “fast, friendly, clean.”
“Save money, live better” is what we stand for. “Win, play, show” is how we go to market, and “fast,
friendly, [and] clean” is how we want consumers to experience our brand…
 For us “save money, live better” in store …is about price presentation…as you walk into our stores, we are
making a very loud, bold price impression as we go forward.
…substantial price advantage for people who are looking to save money. Same products, lower price.
And…a good and getting better shopping experience. 1

In a September 2009 story Time magazine ran a story titled „Walmart‟s Latest Move to Crush the
Competition.‟ It presented a store level perspective of the intended changes, seen from the eyes
of a senior operating staff.

… the company is in the beginning stages of a massive store and strategy remodelling effort…dubbed
Project Impact... goal of Project Impact is cleaner, less cluttered stores that will improve the shopping
experience…

…One …weekday afternoon I toured a brand new, 210,000-sq.-ft. Walmart in West Deptford, N.J., with
Lance De La Rosa, the company‟s Northeast general manager. “We‟ve listened to our customers, and they
want an easier shopping experience,” says De La Rosa. “We‟ve brightened up the stores and opened things
up to make it more navigable.” One of the most noticeable changes is that Project Impact stores reshape
Action Alley, the aisles where promotional items were pulled off the shelves and prominently displayed for
shoppers. Those stacks both crowded the aisles and cut off sight lines. Now, the aisles are all clear, and you
can see most sections of the store from any vantage point…

…And the discount price tags are still at eye level, so the value message doesn‟t get lost.

“They are like roads,” De La Rosa says proudly. “And look around, the customers are using them. We‟ve
already gotten feedback about the wider, more breathable aisles. Our shoppers love them.” 2

Intended changes in the merchandising strategy called “Win-Play-Show” was based on achieving
consistency in all possible customer contact points – product variety, displays, and messaging.

Win-Play-Show is really a merchandising strategy … In a “show” category, the company carries fewer
SKUs than it has in the past. A “show” strategy is a defensive approach that limits product selection but
does not cause a buyer to go somewhere else for a product. In “win” categories, price leadership is deemed
absolutely critical, along with having more pronounced and well-positioned displays in the stores. This
program has led to a reduction in the number of SKUs available in stores… 3

So how was the strategy experienced by customers?

The cleaner appearance of the store, akin to Target, appeared to communicate a price
repositioning upwards.

… the new look reminds some of a blue version of Target, and has resulted in sinking sales and customer
confusion about whether Walmart is still about low prices or if maybe it‟s going more upscale.

Everything about the remodel, including the new name, seem kinda hipper, more dot-com friendly…and a
hair more refined. It includes wider aisles, better signage, fewer displays clogging the aisles and improved
lighting. Which has some worried that customers are being driven away because they think Walmart is
repositioning its prices upwards. That‟s not part of the plan - it‟s just a store refresher. But the style may be

1
Transcript available on http://investors.walmartstores.com/phoenix.zhtml?c=112761&p=irol-calendarPast
2
http://www.time.com/time/business/article/0,8599,1920698,00.html
3
http://logisticsviewpoints.com/2009/07/23/walmarts-win-play-show-assortment-strategy/
 putting customers off.

As Howard Davidowitz…told the Columbus Dispatch, “They can‟t appear expensive. It‟s got everyone
confused.” 4

The reduction in product variety was experienced by some customers as a „frustrating

experience‟ not the traditional image of a big-box retailer who is expected to have category
width and depth.

“If I go to Wal-Mart, I expect to find almost anything,” Abella said. “Reducing inventory makes things
leaner and meaner, but it‟s also very frustrating when a big box does not have what you want.” 5

Self-reflection and learning by Walmart

In March 2010 Walmart, cognisant of declining sales over three successive quarters, admitted
that the changes were a self-inflicted wound, taking decisions to reverse many of the changes.

“Self-Inflicted Wound”

… Walmart, which is one of the few retailers that saw same-store sales rise for eight consecutive quarters
during the recession, suddenly experienced sales declines. At stores open for a year or more, sales fell 1.5%
in its second quarter, ending July 31, 2009. Third-quarter sales dropped 0.5%, followed by a 2% retreat in
the fourth quarter.

… Walmart is dialing back. On Mar. 10, COO Simon said the store is reintroducing 300 of the items that
were removed. Dubbing the remodel process a “self-inflicted wound,” Simon said at a consumer
conference: “The traffic decline in the Project Impact remodel stores during the remodels is deeper than we
projected it to be. It‟s responsible for some of the traffic and some of the sales decline as well.”

“Inaction Alley”

One of the key Project Impact moves that hurt Walmart …was the decision to clear out “Action Alley,”
which is the main aisle and primary traffic corridor that separates various departments in supercenter stores.
This corridor has been a big sales generator over the years and usually features pallets piled high with some
of the fastest-selling items…

Sales started to decline immediately after the rearrangement. JPMorgan analyst Terry Bivens calls it
“Inaction Alley” …

Repositioning

Reducing the products that attract customers to the store might not be the best option, even if it makes the
store look better. Customers don‟t walk into a Walmart for its looks. They‟re drawn in by its low prices on
the best-known brands. 6

Walmart took a decision to return the „Action Alley‟ back into the stores.

4
http://www.dailyfinance.com/story/company-news/walmarts-project-impact-leaves-a-crater-in-sales-but-the-
ret/19419711/
5
http://www.bloomberg.com/news/2010-07-22/wal-mart-shifting-focus-to-sales-from-margins-cleveland-research-
says.html
6
http://srph.it/amGrJi
 … Walmart will reintroduce pallets of merchandise displayed as special promotions in the aisles - or
“Action Alley” - …

“Currently we have various levels of merchandise in action alley in about half of our stores. We‟ve given
more autonomy to our store managers to make the decisions on what is right for their customers,” says the
spokesman. “We have to balance the amount of promotional intensity with clear site lines but we think we
can do both and provide customers the shopping experience they expect.” 7

Goals of store design

Architectural design is conventionally understood as the creation of a plan to achieve an outward

appearance by a physical arrangement of spaces and objects. This involves shapes, their
positioning, layouts, lighting, colors, materials, textures, and patterns, all related to the sensory
dimensions of the physical world. In addition to these physical and somewhat static aspects,
design also considers the functionality of space, the way the space will work and the purpose it
will serve. This is the dynamic dimension of design, the movement of people and material in
spaces. Architecture also has a psychological aspect, the emotions that are evoked by the design,
how people feel when they are within the designed space.

Design of retail stores builds upon these three characteristics of architectural design in a very
deliberate way. Retail design is strategic. It is a component of the business strategy. It has to
achieve an outcome goal that is beyond people applauding the visual design. Customers have to
visit the store, be in the store for a while, and shop.

One approach to retail design is to emphasize the creativity of the store and visual
merchandising. The assumption being that creativity makes the store attractive, pulling
customers in, and visual merchandising makes the store effective, helping achieve retail business
goals. Creativity is just one aspect of retail design. Retailers and designers need to look beyond
the primary visual sense. They need to take into consideration the „details‟ of the customer
experience in a store. What is the meaning of this „detail?‟ Retail space is a three dimensional
space with products, fixtures, lighting, sound, and smell, etc. Customers engage with retail stores
using all their faculties of sense. Retail design needs to understand how human beings engage
with space, how the human body sees, moves, smells, touches, hears, and even tastes within the
space. Retail design also needs to factor how customers „behave,‟ „think,‟ and „feel‟ in the store;
the thoughts and emotions evoked when in the store. Once the customer journey is mapped, retail
design contributes towards enabling and easing the customer experience by overcoming
customer uncertainties, hesitations, and fears. This awareness and sensitivity of the retailer and
designer makes the store comes to life. The retailer is like a composer who orchestrates space.

7
http://srph.it/9TDpo7
He synchronizes different aspects of the store as a retail theatre for functionality and aesthetics
through the senses (figure 2).

Figure 2 the three aspects of retail store design that need to be

synchronized

Store
aesthetics

Evoked
Funtionality
emotions

In design of retail stores all these three aspects of design come together. Retail design has three
objectives. It focuses upon store appearance as a means of differentiating the store versus
competition. The creation of an aesthetically appealing store through design is a means of value
enhancement and possible differentiation within the market. The design of the store is a means to
attract customers. And once customers are in the store, they need to become shoppers. Design
must enable conversion, or selling. Application of creative skills within the store is a means of
improving the appearance of a product, presenting its functionality, and reinforcing product
differentiation to enable customer‟s understand the value of the product. It is inside the store that
design, products, and ambience cohere together.

The different stages of a customer journey in a retail store are shown in figure 3.

Figure 3 Different locations of customers

store store store product

product
window threshold walkway category
Each stage of the customer journey has the potential for retailer and customer engagement. The
customer is out shopping with an intention to browse or shop. This need creates an opportunity
for the retailer to engage and interact with the customer. Each location of the customer is like an
„act‟ in the „Retail Theater‟ for which the retailer can write the script and device a screenplay to
choreograph interaction with customers. Effective execution of this strategy requires the retailer
to map the steps of a customer journey, identify and understand customer needs and motivations
at each location, and then, using products, fixtures and displays, signs, graphics, and staff,
strategize to engage, communicate with, and assist the customer. The table 2 presents a working
tool to assist a retailer analyze, plan, and execute this strategy. The horizontal row details the
sequence of thinking required. It begins with identifying the customer location and delineating
their important needs and motivations. The third column describes the retailer goals and
objectives. With the context (location and customer) and retailer goals defined, the execution
details, column four, can be planned and detailed. This is an exhaustive process, requires
painstaking attention to detail, and asking the following reflective questions to make the store
design effective.

1. How does the store design accomplish gathering, holding, and focusing customer
attention? It is necessary to „engage‟ or „hold‟ the attention of the customer and
not allow it to „float‟ over the panoramic perspective of the store façade, entrance,
or a category department. The ability of a retailer to nudge and direct attention of
a customer, so that it appears natural and not contrived, is a factor in achieving
design effectiveness.
2. What is the „most likely‟ psychological state of the customer at this stage of his
journey? Customers in a store can have a wide spectrum of expectations and
uncertainties in a store. The emphasis is on „most likely‟ psychological state.
Retailers need to identify and prioritize the most probable state of mind from the
shopping perspective. Asking questions like - Is he searching for the location of a
category department? Or does he require assistance in confirmation of his choice?
Is he uncertain about a product? Does he require information? And so on.
3. Once the attention of the customer is secured, the retailer has to identify the
content of the communication. Retailers have numerous messaging options –
either enabling or uncertainty reduction messages, using product-quality-features-
price. At earlier stages of the customer journey, the emphasis will be on the
enabling messaging whereas at other locations emphasis will shift towards
uncertainty reduction, as customers may be closer to choice making.
4. What next? Does the message require reconfirmation?
5. Is it necessary to create a need and commitment to explore the store or product
category or a product?
6. Is the customer experience enjoyable?
7. Is the customer engagement easy and effortless?
8. What is the role of staff in the engagement and customer journey? Does the
customer requires assistance, or prefers self-discovery?
 Table 2 – Table to enable retailers strategize to engage, communicate with, and assist the customer

Customer Customer Retailer goals Engagement with the customer What to

location needs and avoid
expectations
Gather attention / hold the attention / focus the attention /engage / information needs
/ communicate
Outside the Is this store for Image and visual Signage Mismatch
store – in me? identity Material positioning
the mall or commensurate with Windows vis-à-vis
high street target customer Lighting evoked image
Store design in perspective
Outcome
Evoke feeling of comfort
Window Does the store Within the Criteria to plan and assess the display Dissonance of
have what I am limitations of space Planning the display message
looking for? highlight the Identify what to display and how – will it engage and hold
positioning of the Identify the visual message based on thought and feeling to be evoked
store / brand and Graphics should reinforce product in use imagery
induce entry Identify the category / product / feature and price message to be communicated –
will the message be easy to decipher and understand
The how of the execution – colors, lighting, features, props, etc.
Outcome
Evoke interest to enter
Store 1. Reconfirm 1. Welcome the The threshold display of products have to hold the customer attention Dissonant
threshold that the choice customer Communicate the message product variety, quality and price experience
to enter is 2. Hold the attention More focused than the window displays
correct – of the customer and Planning the display
product variety, allow the customer Identify what to display and how – will it engage and hold
quality and assess the quality and Identify the visual message based on thought and feeling to be confirmed
price match price. Identify the category / product / feature and price message to be communicated –
expectation. 3. Direct customer will the message be easy to decipher and understand
2. Visualize and eyesight so as to The how of the execution – colors, lighting, features, props, etc.
product in use. attract and pull Graphics should reinforce product in use imagery
customer inwards. Outcome
4. Confirm key Evoke commitment to spend time evaluating products
customer choice
criteria to reinforce
quality and price.
Walkway 1. Where to 1. Easy to find Signage Search
find the 2. Expose the Directional signs behavior not a
products? customer to different cause of stress
2. Easy to find categories
Category 1. Product 1. Product variety The displays of products should present the product variety, quality, and price to Dissonant
variety is arranged to enable develop a scale in the mind of the customer experience
available see range. Planning the category display
2. Browse and 2. Signs and staff to Identify the visual message based on thought and feeling to be confirmed
search assist. Identify the category / product / feature and price message to be communicated
The how of the execution – colors, lighting, features, props, etc.
Graphics should reinforce product in use imagery

Product Evaluate 1. Ease the process of Planning the product display Dissonant
displays products and engaging with Identify the product / feature and price message to be communicated experience
compare products. Easy to touch and feel
2. Product variety The how of the execution – colors, lighting, features, props, etc.
arranged to enable Graphics reinforce product in use imagery
see range. Staff to clarify doubts
3. Logic of display to Product trial
match choice Outcome
behavior. Induce buying
4. Signs and staff to
assist.