Classify customers on the following two basis

1. Hypothetically 2. Empirically derived evidence

Theoretically customers can be divided in to

Prospectors

Reluctant shoppers

 Prospectors:
Customers who are generally positive about

shopping
View retail environment as a hunting ground for

fresh ideas, fashion & bargains

Such persons play a game with retailers in which

they get good value for their money

 Reluctant shoppers:
Customers who have little interest in shopping Take it as only a necessary means to achieve

goods

Based on surveys the following customers are classified

(differentiated on the basis of their motivation and store preferences).

Based on analysis of survey responses of customers , A study was done way back in 1992 at supermarkets in Britain & US And this revealed three categories: The heavy buyers Congestion (overcrowding) dislikers Local shoppers

The heavy buyers:

Having larger incomes & households
age below 45 years have preference for large volumes

Select out-of-town stores

Congestion Dislikers:
Similar to reluctant shopper
Claim to avoid peak time shopping Hold management responsible for any delay

Local shoppers:
Prefer to shop at small local stores Spend less money More often are old people, coming from small

households

Customer Classification - 2

Compulsive (habitual) shoppers:

More often own credit cards
Young in age Usually women Lower self-esteem Indicate addictive shopping behavior Thus more of customers having emotional problems

Loyal shoppers:
Prefer to frequently patronage a particular store Purchase merchandise sort by them.

Indian market is no more a mass market which can be served in a single way
Thus based on that KSA Technopark, consumer outlook study proposed three customer categories:
Technology babies Impatient Aspirers Balance seekers

Technology babies:
Shoppers who fall in age between 8-19 years Techno savvy Gadget loving young customers who love spending

money More spending on books, music, mobile phones, eating out, footwear & apparel

Impatient Aspirers:
Shoppers who fall in age between 20-25 years Aggressive, independent, indulgent (non-judgmental)

& career driven shoppers For whom creativity and Customization counts great while shopping

Balance seekers:
Fall in age between 26-50 Sober and sophisticated Fond of high end gadgets but spend cautiously

Indian retailer aggressively foray (venture) in to retailing by

Adapting multiple store formats Diverse product line

Dispersed location

But now faced inter-related issues

Ever transient customer preference
Diminishing operational margins Increasing competition from the other players

Hence continuous pressure to create increasing value for the customers

Have you ever thought of why a customer moves all the way to MusicWorld to buy his/her favorite album Same is available more cheaper at neighborhood stores.

Has redefined the shopping for music Its store design and visual merchandising initiatives provides an enduring shopping experience.

MW has used bright colors in its interiors Has set up listening posts (where customer can listen to music and buy if they wish) Music is played on Bose speakers continuously & thats probably the most attracting feature.

Is the primary concern of the retailer But creating an image is not an easy task As the attraction is relative to various stimuli attached Like

Physical facilities
Location Merchandise offered

Services provided
Pricing policies Promotional activities

Quality of the merchandise offered, prices & assortment Advertising, external attractiveness, salesmanship & fashionability.

Convenience of location, products offered, shopping experience, ease in transaction

Cleanliness of the premises, credit facilities, level of customer sophistication, free space inside and outside.

In broader sense THE EXTERIOR & THE INTERIOR design of the store are some of the key determinants of a retailers image.

It is the most significant exterior As it displays the store name. Marquee is the painted Signboard It typically carries
Store name
Trademark Other relevant information like captions

E.g.: McDonalds Golden arch is the most popular marquee in the world.

Careful planning of this element is also essential First of all retailer should first determine the number of entrance Ideally an outlet should have 2 entrance one for the pedestrians and a side entrance for the vehicular traffic. Both should be designed separately as they serve different purpose

Retailers may select

A regular Revolving Electric Self-opening Push-pull Climate controlled door ( a door with an air curtain in the entrance whose temperatures is fixed same as inside stores).

A wide & rich walkway makes a very unique feature of a stores image Compared to narrow & constrained walkway. Thus retailer while constructing should ensure that ample space is available for a walkway.

This helps the customers to identify the store and the merchandise offered And motivates them to enter the store Display windows carry lot of information to customers about the stores Along with the following benefits

1.

Creating particular mood by displaying the merchandise being offered Conveying the store Contemporariness by displaying seasonal merchandise that is currently in fashion

2.

3.

Attracting the price sensitive customers by displaying merchandise that is for sale
Catching the attention of pedestrians by displaying eyecatching goods that are not directly linked directly with the merchandise being offered. (E.g.: Furniture that are not for sale but still displayed to attract) Show its concern towards the society by displaying messages that are for the common good of the public

4.

5.

Creating good display windows requires proper planning Including Number, Size, shape, color, theme & frequency of changes in a year Usually retailers in shopping mall do not have display windows facing the parking area

As they feel that vehicular traffic is generally not attracted by the display windows.

The size also does matters The height of the building can be disguised / nondisguised
Disguised : means some portion of the store is hidden

i.e. below the ground

Non-disguised height of the building means all its

portion is visible to the pedestrians

A retailer cannot go for a huge building for a Fashion boutique And can neither go for a small building for a department store

Apart from a

Unique store design Elaborate marquee Recessed open air entrance Decorated window displays Distinct size of the building

What about the surrounding areas & the stores around E.g.: An up market premium store will not fit in an area dominated by low price discount stores. Like say Asopalav finds it difficult in its Rantanpol branch Even the demography & lifestyle of the area matters a lot to the store

At a very first sight it creates an impression in the customers mind Psychologically proved do leave an impression in their minds It also do convey the meaning about the store

Steel Exteriors: tend to project an image of strength Glass Exteriors: creates an unique impression of contemporariness (modern) Concrete structures: creates an impression of a low cost & value based stores Bricks: creates an upscale image

Colors also creates a strong image in the minds

But this depends on three things

Hue + Value + Intensity.
Hue = Shades of Color Value= Lightness / Darkness of the hue Intensity= Brightness / Dullness

Red, yellow & orange are Warm Colors (comfortable & informal atmosphere)
Blue, green & violets are Cool Colors (Formal, Lonely & Chilled atmosphere)

Prevention involves controlling Employee & Customer pilferage While planning the exteriors flow in & out of the customers should be managed well As well as proper monitoring devices at entry, exit, inventory receiving doors & trash disposal corridors

The principle objective of any retailer to manage interiors is

To maximize its sales Customer satisfaction Minimize the operational cost

Interior of the store should be designed well so as to meet the above purpose

Retailers Can make the best out of the available space By proper layout management & thereby make it unique That can be done through a proper
Store Layout Visual Merchandise

1. 2.

Value of the space Space utilization & allocation

1.

Value of the space

It represents the measures of square foot allotted to each category

Sales/Sq foot measures: by stores, departments or free standing stores

Sales/ Sq foot of exposure: Shelf space allocation for merchandise like grocery & cosmetics Sales / Cubic foot: for the goods in freezers & refrigerators.

The space near the stores entrance is the most valuable The space value starts decreasing gradually as move towards the end of the store Similarly as height increases the value decreases.

2.

Space utilization & allocation

The retailer basically requires five types of space in its store:

I. II. III. IV. V.

Back room Office & other functional space Aisle, service areas & other non-selling area Floor Space Wall Space

Allocation based on historical sales Allocation based on Gross margin Allocation based on Industry averages Allocations based on strategic objectives

Is used to analyze the performance of the merchandise and then allot them space It follows 80-20 rule i.e. 80 % of revenue comes from 20 % of merchandise, thus should identify the stock that generate maximum revenues

First step ranks the stock based on different parameters (most of based on contribution margin) = S-COGS

Second Step is measure the margin/ Sq Foot.

Third step is to sort the stock in to A-B & C category.

A = 5 % of items Contributing 70 % of revenue B = 10 % of items Contributing 20 % of revenue C = 65 70 % of items Contributing 10 % of revenue D = Remaining SKUs that don't contribute anything Should get rid of such SKUs By Mark downs

Merchandise Presentation Techniques

Grid Layout:

Like classroom benches Generally found in Grocery stores Consists of long aisles Best in supermarket where consumer comes to buy similar kind of product

Race track layout:

Has a major aisle running inside the store Customers can view various other departments through this aisles Best suiting in the departmental store Here the color and flooring is different from the merchandise area Each department has natural or virtual breaks Gives concrete concentration to each separate departments (as its not hotchpotch customers have selected that area and then came there)

Free-Form Layout:
Otherwise known as Boutique layout
Aisles and fixtures are asymmetrical Works more in Specialty stores Where it is most needed to show the entire room as a

fashion living room Arranged in such a way that gives a look which creates a wide range merchandise impression in the customers mind

E.g.: Westside & all other international fashion boutiques