Visualising profitability

Visual merchandising is often regarded as an extra by small independents, but getting it right can make a crucial difference to the bottom line, as Belinda Smart reports

At some time or another, anyone who has been shopping as opposed to living under a stone -- will have had a negative retail experience. Retail trauma victims will be familiar with the scenario; you walk into a boutique, flit aimlessly from rack to rack and then, for reasons you can't really fathom, head for the door faster than you can say, ?mothball?.
While the escapee may not be able to articulate exactly what he or she found off-putting, in all likelihood their feeling of ?switching off is the result of poor visual merchandising.
The art of good visual merchandising is underrated by many Australian retailers, claims Angie Bell, a visual merchandising specialist who acts as a trainer and consultant to the National Retail Association (NRA).
While much visual merchandising relates to subconscious consumer psychology, there is a formula to effective visual merchandising. Unlike chains or department stores few smaller retailers have in house visual merchandising specialists, but if statistics are anything to go by, they ignore this part of their business at their peril.
Some U.S studies say that 25 per cent of the purchase decision is based solely upon how the merchandise is presented, Bell says.
In Australia smaller independent retailers are increasingly being squeezed by the chain stores but are dying out because they?re not competitive. They have to realise that it's vital to have a point of difference and visual merchandising is a key to this, she says.
First impressions through shop window displays and the entrance to a store are vital, says Bell, retailers have an unnervingly small window of opportunity to work with.
The theory goes that a first impression is clinched within the first seven seconds of entering the store, but I would say it?s more like three seconds.Small independent retailers who may not be active with their advertising -- and whose front window and entrance areas are the only point of contact with the consumer often overlook the importance of the first impression.
Retailers who fail to create effective displays at this point are missing out on sales opportunities they don't even know exist; in other words the customers who don't walk into their store can never be converted to sales, she says.
But getting the first impression right is pointless if there is a disconnect, between the image conveyed by the front window, catalogues or advertising and that conveyed by the store interior.
The overall experience once a customer has entered a store is a central tenet of retail concepts such as retail theatre? and ?experiential retail, where customers no longer simply enter a store with the specific aim of purchasing, but in order to experience the store itself.
This is particularly true of the fashion sector, where consumers frequently shop for pleasure and visual merchandising is changed more often than in any other retail category, claims Rachelle Lawler, retail solutions specialist for Sydney-based graphics company Flash Photobition.
Flash specialises in large format visuals and includes Oroton, Zegna, One Teaspoon, Tsubi, Quiksilver, Billabong and Surfection in its suite of fashion retail clients
Fashion retailers need to continually update their stores, and one of the most cost effective ways of doing this is with graphics, says Lawler.
The company's recently launched graphics system Tuffline is a direct response to this. It comprises a mount free graphic display system that dispenses with the costly and environmentally damaging method of mounting graphics on foam and PVC panels and is designed to suit the ever-changing requirements of fashion retailers.
Graphics aside, outdated shop fittings or mannequins detract from rather than enhance stock, adds Martin Henry, proprietor of shop fitting company Storeworks.
Fashion is ultimately all about making you feel good, and if the store doesn't do that the clothes don't have a chance,? he says.
Mannequins alone are a fashion item, and need regular replacement to properly dress the latest fashions, he says; and retailers are increasingly demanding mannequins that can be customized to their changing needs.
?We recently started stocking [Chinese] mannequin brand Stare, which features models that can be moulded to clients? specific requirements,? he says.
Investing in striking graphics or the latest mannequins and displays is crucial, agrees the NRA's Angie Bell, but it?s also a waste of time and money if the rest of the visual merchandising mix is inadequate, she warns.
Less tangible but no less important factors can make or break a sale, and selling is ultimately the point of the exercise. Even the floor layout plays a vital role in controlling stock impact and maximising sales, with specific areas or ?hot spots? within the store well placed to achieve this.
Maximising margin in these areas is crucial to maintaining and growing sales. New or advertised lines should also be placed in these areas, which may include displays at eye level and entrance and payment areas. Statistics show that products placed in hot spots can increase sales by up to a massive 22 per cent.
All stock should be considered as important, after all [retailers] have invested a lot of time and money in it. The trick to incorporating effective visual merchandising principles is to come up with the right formula for your store to maximise sell-through of the largest possible percentage of items, without compromising margin, she says.
One of the ways to achieve this is through stock rotation and the elimination of cold or dead spots in the store, a practice that Swedish homewares giant IKEA has used to impressive effect.
The reason this retailer is the most successful on the planet is that it creates impactful, interesting and interactive displays that encourage browsing, and appeal to 90 per cent of the population. As a result, [IKEA] has managed to eliminate cold spots altogether. Therein lies the challenge.
Lighting, sound and colour are also important, as are the level of comfort whilst shopping, including store temperature, adequate seating and good customer service.
Retailers should also think carefully about negative subliminal factors such as bad odours, she warns.
I walked into a store once that smelled of dog poo and I had to walk out almost immediately because I couldn't stand the smell,? she recalls, while positive odours can seduce shoppers into purchase mode.
The real estate industry got wise to this concept years ago by recognising that the smell of coffee brewing would make prospective purchasers more willing to buy, but very few fashion retailers apply the same principles.
Fixtures and fittings should be thoughtfully arranged so as to avoid clutter and promote merchandise to best effect while merchandise itself should be as varied and interesting as possible, with a ?perceived value? that is consistent and easy to understand.
Much of visual merchandising -- such as organising visual merchandising activities to avoid peak foot traffic or avoiding wasting time by careful planning of materials, tool kits and lighting requirements is pure common sense, says Bell.
?I encourage businesses to make individual members of staff accountable for a particular area of the store, which breeds a level of pride and ownership. This is particularly relevant to small independent retailers who often do not have an in house visual merchandising professional.
Constructing effective displays requires knowledge of the principles of display including balance, harmony, emphasis, proportion, rhythm, repetition, uniformity, colour and depth, she adds.
But clearly there is more to visual merchandising than attractive displays. It is a process that incorporates psychology and the effect on consumers of visual, audio and spatial factors.
Moreover it must do so in a way that produces a positive effect on the shopper without his or her conscious knowledge. If this can be achieved, the results will be evident in the bottom line, says Bell.
Studies have proven that around 50 per cent of advertising is ineffective, so smaller retailers might be wise to invest some of the money they spend on advertising in visual merchandising.
Anyone who realises the value of this area of their business can learn to implement it, but too few small and independent retailers are currently doing so, she says.
Retailers need to wake up to the fact that visual merchandising is a science and a formula, not a hobby. I think at the moment there are too many hobbyists out there.
Underestimating the power of visual merchandising is the most common mistake small retailers make and the most costly. If you think you can?t afford retail visual merchandising, I'm telling you, you can't afford not to incorporate it into your business.