Program Name

BBA (Retail Management) III rd SEM

Course Name
Store Location Identification, Design and Layout Planning
 Objectives

 To understand the importance of store location and the significance of locating the retail unit properly.

 Locating the right catchment area in order to include the target customers of the store.

 To understand the relationship between strategic retail planning and the process of choosing a location
and to evaluate the various retail locations available.

 To understand the concept of store design, the principle of store design, layout the techniques related to
retail space planning and associated performance measures.

 To evaluate the concept of and approach of visual merchandising.

 To understand the usage of color, wall, music, lights, physical material etc. in the context of retail
planning.
Sr. No Module/Units Detailed Topic wise Syllabus

1 Trading area Analysis Store location  The importance of location to a retailer

 The use of geographic information in trading Area
   The size and shape of trading area
   Characteristics of Trading area
 Analysis of trade area
 Type of retail location
 Factors for choosing a location.
 The choice of location
 Location and Site evaluation.
 

2 Store Design  The concept of store design.

 The principle of store design
   Elements of store design
  Exterior design and Interior store design.
 
3 Store layout  Introduction to store planning
   Types of fixture
   Purpose and planning of fixtures
 Introduction to planogram
 Circulation Plan

4 Term paper on Store design and Store  Term project has to be done in groups.
layout:  Each group should have 4-5 students.
   The group list should be submitted to the faculty at the end of the
first session itself.
   The selected store by each group should be submitted to the faculty
  at the end of the second session
 The report should have the following parts: introduction, objectives,
methodology, analysis and interpretation, findings, conclusions,
learning’s.
 The report should be typed on one side with 12 font, Times New
Roman and 1.5 line spacing and spiral bound.
 Hard copy to be submitted before of the presentation.
 
Topic Presentation.
 
Store location & layout for different categories i.e Apparel.
Footwear, watches, sports, groceries departmental store.
This exercise to enhance the Classroom participation; and to relate
theory to the practical.
 Why location is important?
• 1. Attracting and retaining talent. In most cases this will mean a city center location. Cities draw in increasing
numbers of young and international people. These places also become accessible.
• 2. Real estate costs. It’s the second largest expense after labor costs—naturally, ensuring real estate is efficient.
• 3. Clusters. Having a network of connected businesses could give companies access to a better and bigger talent pool,
regulatory bodies, investors and economies of scale. However, this could be expensive; weigh up the pros and cons
and decide what’s important for your organization.
• 4. Regulation and tax. Bearing in mind regulations can change, speak to your C-suite and agree on one of the either:
Do you want to be based in a country with lower tax rates or one with fewer regulations?
• 5. Growth or a change in corporate strategy, technology or leadership. Different structures work for different
companies. In some cases, I’ve seen corporations opting for a central hub with meeting spaces while supported by
multiple smaller spokes elsewhere. Meanwhile, others are maintaining large, centrally located corporate
headquarters. Again, consider what works best for the function of your organization.
• 6. City dynamism. In Europe, some governments are transferring power to regions and cities, which might offer
grants and stimulus to businesses. Be aware of up and coming urban centers that incentivize businesses as this could
prove advantageous.
• 7. Accessibility. It sounds simple but, whether it’s accessing new markets, customers or resources, transportation is
crucial for not just your people but everyone you work with to get around effectively
 Importance of Store Location

Customers Retailor

●
Accessibility ●
Cost of real estate
●
Ease of Traffic ●
Competition
●
Connectivity ●
Regulation and Taxes
●
Parking Space ●
Employee retention
 Types of Retail Locations

1. Isolated Store / Freestanding Location:

• Located in major traffic areas
• No competition available
• Low rent
• Ample parking space
• Advertising cost is high
• Lack of options
• Travelling time of the customer is the key factor

Eg: Petrol Pumps, Convenience stores, hotels, fast food restaurants on a

highway.
2. Part of a Business District
It’s a place of commerce or center of trade with varied structures. They are
classified in three categories.

Central Secondary Neighborho

Business Business od Business
District District District
●
Main center of commerce ●
City may have many ●
Unplanned
and trade
●
Good accessibility of SBD. Population shopping area
transport based. ●
Serves the need of
●
Higher rent ●
Smaller stores neighborhood
●
Facilities like parking is ●
Wide range of stores ●
Supermarket,
cumbersome
●
Nariman Point,
●
Adequate public Stationary stores,
Connaught Place. transport medical shops etc.
3. Part of a Shopping Center
• International council of Shopping Centers defines a shopping center as, “a
group of retail and other commercial establishments that is planned,
developed, owned and managed as a single property”
Types of Shopping Centers:

A neighborhood center
•A neighborhood center is a small scale mall that serves a local neighborhood specifically. They mostly have a drugstore or a
supermarket as an anchor. They are also commonly arranged in the format of a strip mall. These types of malls have a retail area of
around 30,000 to 150,000 square feet. They also serve a primary area in a 3 mile radius.
A community hall
• A community hall can be said to be larger than a neighborhood center. It also offers a very wide range of goods. They mostly feature
two anchor stores that are extremely larger than that of a neighborhood center.
A regional center
• A regional center is a type of a shopping mall that is designed in such a manner that it can serve a much larger area when compared to
a conventional shopping mall. Thus it is capable of offering a much larger retail area and thus it can serve numerous customers at a
single point of time.
Superregional center
• This is a very large type of shopping center. It covers an area of over 800,000 square feet and this is a gross leasable area.
A fashion center
• A fashion shopping center usually consists of upscale boutiques and apparel shops and these cater to customers who are rich or have
access to a higher level of income. They also have a retail area that ranges between 80,000 to 250,000 square feet.
A power center
• A power center is a very large shopping center that features a lot of big box retailers as anchors. They have a retail area that is in
between 250,000 to 600,000 square feet and they also have a primary trade area of 5 to 10 miles.
Festival center
• These types of shopping centers have a very distinct and unifying theme that is followed by individual shops and also their
architecture. They are mostly located in the urban areas and cater to a large number of tourists.
 How to choose a retail store location?
It is a systematic process and not gut feeling or imitation of competitors.
First and foremost is identifying the region.

1. Identify the market in which to locate the store.

2. Evaluate the demand and supply within that market, i.e. determine the
market potential or the market size and estimate the number of shops that
would be required to serve the market.
3. Identify the most attractive sites.
4. Select the best site available.
 Market Identification

• Market can’t be identified on mere attractiveness.

• In country like India, every region has its own peculiarities and needs.
• Even characteristics of international market are different for different
regions.
 Determination of the Market Potential

Following elements are important in determining the market potential:

1. Demographic features of the population

- To find out population data
- Mere size of population is not enough.
- Break-up of urban and rural population is essential
- Understand level of literacy and level of population
2. The characteristic of households in the area
- Understand average household income and distribution of this income in
the area.
- Understand the average age profile
- Understand the employment level and type of employment also indicates
preferences.

3. Competition and Compatibility

- Check the compatibility with other retail outlets in that area.
- Evaluate strength and weakness of the competitors.
4. Laws and Regulations
- Various permissions needed
- Opening and closing hours
- Minimum wages of workers and their holidays requirements etc.

5. Trade Area Analysis

- A trade area or catchment area is the geographical area that generates
the majority of the customers for the store.
- Know the boundaries of the store.
- Demographic and lifestyle information.
3. Identification of Alternate Sites and Selection of Sites

Traffic
- Traffic that passes through the store is an important determinant of
the potential sales.
- Both pedestrian and vehicular traffic is to be noted.
- Traffic should be suitable to the kind of product to be retailed.
Accessibility of the market
- Availability of public transport
- Total number of stores and the type of stores available.
- Large number of stores means large number of foot fall.
- Types of stores that exist
- Presence of food and entertainment avenues is also important.
Amenities available; like free and ample parking
To buy or to lease
- Length of the lease period should not too long or too small
- Lease rent should be appropriate
The product mix offered
- This also effects the choice of location.
 Why store design is important?

• The store environment is the ultimate showcase and the physical touch
point between the brand and the customer. It physically and emotionally
reaches out and embraces them and it‘s also a great opportunity to actually
talk to customers directly. Creating this space where a customer can be
completely immersed in the brand really brings it to life and is what allows a
customer to fall in love with a brand, becoming a true brand advocate.
 Why store layout is important?
A good store layout serves many purposes, such as for instance customer flow, the prevention of shoplifting and logistics.

1 Customer flow
• One of the main purposes of the layout is undoubtedly to create smooth customer flow through the store. To achieve this,
it is important to create the right balance between fast and smooth (customer) flow on the one hand and provision of
space on the other. Creating smooth (customer) flow is necessary in stores that have a high frequency of customer visits.
Well organized routing and sufficiently wide aisles can achieve this.
• The danger of too smooth a customer flow is the speed. If the customer is accustomed to walking through a store at a
certain pace, it is important to slow down this speed deliberately, effectively and gradually. This can be achieved by means
of certain ‘tools’. It does not need to involve a different layout of the available space. It can also be accomplished by a
special product range or eye catchers in the store.
• A customer needs some time to decide to buy a product. The purchase of goods from particular product ranges is
determined by ambiance. For instance, a customer does not want to be disturbed by other customers when a choice has to
be made between two types of lingerie.
2. Prevention
• The layout also has a preventive task. The more poorly organized a store, the more opportunities shoplifters have to take
advantage of the unclear situation! When developing the layout, precautions can be taken that make it more difficult for
shoplifters to steal goods.
• Examples of this are: not to install the shelves as a poorly organized maze, adjusting the height of the shelves or placing
theft-sensitive goods within sight of sales employees. These are just a few examples. At any rate, both preventive
precautions and a deterrent policy can reduce the risk of a negative cash balance.
3. Logistics
• You will also want to keep logistics under control. Studies show that the so-called 'final 50 yards' are the
highest cost item of the logistics chain. This is where the turnover rate is highest and so are the proportionally
increasing staffing costs.
• A good layout cannot completely reduce these costs, but it can make them more controllable. Short supply
routes, wide aisles where necessary and adjusting the warehouse build-up to the store are important factors
that can result in an improvement of the cost structure.
4. Other functions
• Naturally, a good layout has other purposes as well. In accordance with the principle that first impressions
count, the layout can either attract customers or put them off. A layout can provide solutions or it can
complicate matters. A logical product layout will help customers make a decision to purchase, whereas an
illogical order creates confusion and dissatisfaction.
• Depending on the business type and the sales formula, there is an ever-growing need for increased flexibility.
Product ranges change more and more frequently and you want to be able to respond rapidly to seasonal
changes. A good layout allows for this. Flexibility is key where the need for space, margin in the market and
presentation are concerned.
 Retail Trade Area

•  The retail trade area is the sphere of influence. Determining the trade area
is data-driven because retailers can use transaction data.
• It is the geographic area that a retail store draws from, the longest drive a
customer is willing to make. 
There are different ways retailers define trade areas. One way is using three tiers:
• Primary - The primary trade area provides 55 to 70 percent of store's business; this is where
the frequent customers are.
• Secondary - This is where the next 15 to 20 percent of the business comes from. The
combination of the primary and secondary areas is know as the Main Trade Area (MTA).
• Tertiary - This is also known as the fringe area and is the source of the remaining business.
It is usually only seen in larger population centers.
 Trade Area Analysis
Trade area analysis is a methodology, process or technique that provides a basis for understanding,
visualizing and quantifying the extent and characteristics of known or approximated trade areas.
Trade area analysis provides the foundation for:
• Understanding the geographic extent and characteristics of store patronage.
• Spatially assessing performance.
• Performing competitive analysis.
• Evaluating market penetration and market gap analysis.
• Target marketing.
• Merchandising.
• Identifying/quantifying effects of cannibalization.
• Developing and exploiting demographic profiles.
• Site suitability and site selection studies.
Benefits of Trade Area Analysis
• Identify gaps or overlaps in the market coverage of your existing store network, and make
corrections by opening, closing or moving stores
• Make better site selection decisions by using characteristics of existing trade areas to
predict trade areas around potential locations
• Define a geographic area to analyze for market potential, market penetration, and
competitive threats
• Become more efficient and effective at target marketing by reaching out only to those
customers and prospects in a store's trade area
• Use as a key input into customer profiling.
Factors to be considered while analyzing trade area:

1. Total size and density (demand and supply) of the population.

2. Per capita disposable income.
3. Education level.
4. Family system (joint / nuclear).
5. Occupation (job / professional / own business).
6. Standard of living.
7. Age group distribution.
8. Number of residents owning homes.
9. Number of manufactures, suppliers, wholesalers available.
10. Size of competition.
Factors that Impact Trade Areas

• Analyzing trade areas should be performed regularly to provide key metrics for improving
sales and marketing performance.
• Adding new stores to your network will cause the trade area of nearby stores to change. In
a saturated market, or if stores are placed too close to one another, cannibalization can
occur.
• A change to product offerings will impact the trade area, as will shifts in population and
demographics, the existence of competitors, changes to highways and roads, and the
addition of other businesses that attract people to the area.
 Types of Trade Area
• Generally, a trading area may be divided into primary, secondary and tertiary zones. The
primary zone is the first layer of any trading area that provides 60-65% of its customers. It is
close to the store and includes nearby colonies and residential areas. The secondary zone
comes after primary zone but before the tertiary zone. It is the geographical area that
contains around 20% of the total customers of the respective store in terms of customer
sales and merchandise demanded.

• The tertiary zone commonly known as outermost circle contains the remaining 10- 15%
customers, who occasionally visit the store and shop. These are the customers who travel a
long way to reach the store because their nearby stores are not able to fulfill the local
demand. Further, there are some forces of attraction that lure the customers from tertiary
zone such as wide merchandise assortment, lower pricing policy, payment options and
high-level customer service.
 Site Evaluation and Selection
Location decisions have great strategic importance because they have significant effects on store choice and
will be difficult for competitors to duplicate. Picking good sites for locating stores is part science and part art.
Some factors retailers consider when evaluating an area to locate stores are
The economic conditions, competition, The strategic fit of the area’s population with the retailer’s target
market, and the costs of operating stores.

• Having selected an area to locate stores, the next decision is how many stores to operate in that area.
• When making the decision about how many stores to open in an area, retailers have to consider the trade-
offs between lower operating costs and potential cannibalization from multiple stores in an area. Most retail
chains open multiple stores in an area because promotion and distribution economies of scale can be
achieved. Although scale economies can be gained from opening multiple locations in an area, there also are
diminishing returns associated with locating too many additional stores in an area due to cannibalization.
The next step for a retailer is to evaluate and select a specific site. In making this decision, retailers
consider three factors:

1. The characteristic of the site,

2. The characteristics of the trading area for a store at the site, and
3. The estimated potential sales that can be generated by a store at the site.

We know that trade areas are typically divided into primary, secondary, and tertiary zones. The
boundaries of a trade area are determined by how accessible it is to customers, the natural and physical
barriers that exist in the area, the type of shopping area in which the store is located, the type of store,
and the level of competition.
Estimating the Potential
• Once retailers have the data that describe their trade areas, they use several analytical techniques to
estimate demand.
• The Huff gravity model predicts the probability that a customer will choose a particular store in a
trade area, based on the premise that customers are more likely to shop at a given store or shopping
center if it is conveniently located and offers a large selection.
• Regression analysis is a statistically based model that estimates the effects of a variety of factors on
existing store sales and uses that information to predict sales for a new site.
• The analog approach—one of the easiest to use—can be particularly useful for smaller retailers.
• Using the same logic as regression analysis, the retailer can make predictions about sales by a new
store based on sales in stores in similar areas.
• Finally, retailers need to negotiate the terms of a lease. These lease terms affect the cost of the
location and may restrict retailing activities.
• Thus, opening a retail store is an laborious task and requires meticulous planning and detailed
knowledge.
Selecting the Specific Site
One must evaluate the development potential of specific sites. The following factors will help one decide
whether a particular site is viable for ones development
• Site conditions - Slope, topography, and environmental conditions
• Physical constraints of site - Utilities, easements, and any existing structures that might need to be
demolished.
• Accessibility and visibility - Roads serving the site, traffic count, proximity to public transportation
routes and major intersections, and site’s orientation
• Availability of adjoining parcels of land
• Size and shape of unit plots - Length and depth of unit plots: developers often want deep parcels
• Location and neighborhood - What is the context of your site? Is it near amenities, institutional uses?
Will the proposed development and uses fit in your neighborhood?
• Zoning- specified use and requirements such as parking, building height, lot coverage and set-backs
While deciding upon a particular site, the retailer should make sure that

1. The site is physically available for sale/lease/rent etc. and

2. The conditions require to secure the site are free from regulatory hassles.

The conditions with regard to lease/rental/owning should be studied from all business angles. Supposing
retailer decides not to own the property but to secure on the basis of entails then following issues must
be compared and analyzed being a strategic and non- repetitive decision:

A. For how many years the landlord is agreed upon giving land on lease basis?
• 1. What will be monthly/quarterly rent?
• 2. When it will be due?
• 3. Is there any advance payment? If yes how much? When to deposit?
B. What are the taxes that will be applicable and when?

• The primary objective of site availability exercise is to see that new store is established at an attractive and best
possible location.
• It means selected site is not only preferable from traffic flow point of view but from cost, taxes and their liabilities
point of view.
• In metro cities business incubators have come up that provide space to new retail sites (organized/ unorganized) or
to retailers who want to start their own trading business.
• These incubators serve fledgling services by providing vacant space along with management expertise, legal
assistance, and clerical assistance on reasonable prices.
• An incubator renter (retailer) can start his business the same day he enters in, without having electricity, phone,
copier, generator, canteen facilities. The objective is to make certain that new business hatch, prosper and leave
the incubator.
• Getting ‘best’ site is not an easy task for any retailer All retailers are not fortunate enough to have such ‘best’ site.
The reason is demand and supply differences.
• The demand for site is increasing from all spheres of businesses but space is limited. Further, the costs to secure a
new site may be unaffordable or prohibitive (when it exceeds the retailer’s budget).
• Supposing that ‘best’ site is available, the retailer must decide to purchase or lease. Knowing that
purchasing a site and having ownership not only saves several fixed expenses but confers greater
freedom, it is always recommended that new retailers must go for lease option because of following
reasons:
1. Retailer’s financial risk is avoided by substantial investment and by delaying obligations for space
until the triumph of store is assured.
2. Leasing avoids hefty cash out flow, which usually each retailer would like to avoid in the beginning
of business.
Common Errors While Selecting a Site

Some of the common errors are:

• Personal factors like preferences, emotional attachment, prejudices, liking and disliking of
entrepreneurs sometimes result in poor location selection.
• Sometimes, due to political reasons, public stores are set up in backward areas.
• Unwillingness of key executives to move from existing location to a far better new location only
because of distance matter.
• Preference to residential or suburban area which already after sometime gets converted into
congested and overcrowded area.
• Selection without thorough investigation.
Sources of information about the Trade area

• Census data
• GIS data
 GIS-Geographic Information system 
A geographic information system (GIS) is a computer system for capturing, storing, checking, and displaying data
related to positions on Earth’s surface. GIS can show many different kinds of data on one map, such as streets,
buildings, and vegetation. This enables people to more easily see, analyze, and understand patterns and relationships.
System of hardware and software used to store/retrieve/map/analyze geographic data.
With GIS technology, people can compare the locations of different things in order to discover how they relate to each
other.
For example, using GIS, a single map could include sites that produce pollution, such as factories, and sites that are
sensitive to pollution, such as wetlands and rivers. Such a map would help people determine where water supplies are
most at risk.

• Identified with a coordinate(latitude/longitude)that references a particular place.

• Firms offer GIS combine data with updated demographic census data, consumer spending pattern and lifestyle.
• Data can be analyzed easily and output are maps which enable to visualize implications easily
• GIS applications include both hardware and software systems. These applications may
include cartographic data, photographic data, digital data, or data in spreadsheets.
• Cartographic data are already in map form, and may include such information as the location of
rivers, roads, hills, and valleys. Cartographic data may also include survey data and mapping
information that can be directly entered into a GIS. 
• Photographic interpretation is a major part of GIS. Photo interpretation involves analyzing aerial
photographs and assessing the features that appear. 
• Digital data can also be entered into GIS. An example of this kind of information is computer data
collected by satellites that show land use—the location of farms, towns, and forests.
• Remote sensing provides another tool that can be integrated into a GIS. Remote sensing includes
imagery and other data collected from satellites, balloons, and drones.
• Finally, GIS can also include data in table or spreadsheet form, such as population demographics.
Demographics can range from age, income, and ethnicity to recent purchases and internet browsing
preferences.  
• GIS technology allows all these different types of information, no matter their source or original
format, to be overlaid on top of one another on a single map. GIS uses location as the key index
variable to relate these seemingly unrelated data. 
• Once all the desired data have been entered into a GIS system, they can be combined to produce a wide variety of
individual maps, depending on which data layers are included. One of the most common uses of GIS technology involves
comparing natural features with human activity.
• For instance, GIS maps can display what man-made features are near certain natural features, such as which homes and
businesses are in areas prone to flooding. 
• GIS technology also allows users to “dig deep” in a specific area with many kinds of information. Maps of a single city
or neighborhood can relate such information as average income, book sales, or voting patterns. Any GIS data layer can be
added or subtracted to the same map.  
• GIS maps can be used to show information about numbers and density. For example, GIS can show how many doctors
there are in a neighborhood compared with the area’s population. 
• With GIS technology, researchers can also look at change over time. They can use satellite data to study topics such as the
advance and retreat of ice cover in polar regions, and how that coverage has changed through time. A police precinct
might study changes in crime data to help determine where to assign officers. 
• One important use of time-based GIS technology involves creating time-lapse photography that shows processes
occurring over large areas and long periods of time. For example, data showing the movement of fluid in ocean or air
currents help scientists better understand how moisture and heat energy move around the globe.
• GIS technology sometimes allows users to access further information about specific areas on a map. A person can point to
a spot on a digital map to find other information stored in the GIS about that location. For example, a user might click on a
school to find how many students are enrolled, how many students there are per teacher, or what sports facilities the
school has. 
• GIS systems are often used to produce three-dimensional images. This is useful, for example, to geologists
studying earthquake faults. 
• GIS technology makes updating maps much easier than updating maps created manually. Updated data can simply be
added to the existing GIS program. A new map can then be printed or displayed on screen. This skips the traditional
process of drawing a map, which can be time-consuming and expensive.
 Assignment

• Assume that you are planning to open up a store somewhere in an urban

area.
• What are the factors to be considered while selecting a store location?
• List all the factors with some logic supporting your strategies.
• Jot down your points in a word documents and share.
Estimating a sales potential for a store site

Three most common models are;

- Huff’s Gravity Model
- Regression Analysis
- Analog Model
 Huff’s Gravity Model
This model can help you to determine areas with high and low sales potential based on several factors
including how many people live within a certain radius of your proposed location and what the
disposable income is in this market. Incorporating the Huff model along with GIS and census information
can give potential new businesses a great deal of information about several possible sites. Based on
concept of gravity.

The Huff Gravity Model assumes that a store’s attractiveness is based on its size and distance, you are
going to need these 2 essential data sets for this analysis:
1. Existing retail locations and store size
2. Census tracts (as detailed as possible)

Also, you will need some GIS software to calculate distance and display the model in a map.
• As an illustration, here is where our five retail stores are located with census tracts as the base map.
Calculate distances from retail stores to census tracts

• First, you will take your census data and calculate distance from each census tract to each retail
location. In our example, we have 5 retail stores and 738 census tracts.
• Calculate the distance for each retail location to each census tract.
• Now, each census tract will have a distance to each retail store in its respective distance fields.
Incorporate attractiveness with store size and distance

• In this step, we will incorporate attractiveness for each retail location. To clarify, attractiveness is

related to the store size (as in square footage) and inversely proportional to distance.
• In the census tracts data set, add fields to hold the attractiveness score for each retail store and a total
score.
• Attractiveness uses distance and the size of retail location. Take the size of the retail store and divide
it by the drive-time (or distance square).
• Finally in the ‘totattract’ field, sum up all the attractiveness scores.
• When you plot this on a map, retail store 3 will attract these census tracts the most based on its
distance and store size.
Measure the probabilities for each retail store’s market share

• Now that we have each retail store’s attractiveness score, we can start calculating the probabilities
where shoppers are most likely to go for each census tract.
• Add fields for each retail location which will be percentages.
• Take the attractiveness score for each retail location and divide it by the total attractiveness. 
• When close to a retail store, it will capture a large share of the market – hence higher values in the
color red.
• Equally important where other stores are located, it will capture that market share.
• In particular, the yellow patches indicate there are other retail stores with higher probability of
grabbing that share of the market.
• How about where there are census tracts at distances equal between two retail stores?
Regression analysis
• Statistical model based on assumption that factors which affect the sales of existing store in a chain
will have the same impact on stores located at new sites being considered. It employs a technique
called as multiple regression to estimate sales.

Analog Model
• Computerized site selection tool in which potential sales for a new store are estimated based on sales
of similar stores in existing areas, competition at a prospective location, the new store's expected
market share at that location, and the size and density of a location's primary trading area.
Module - II: Store Design
• A good store layout does the hosting for you. It draws your customer in, perhaps introduces him to
products that he didn’t know he needed. It informs the mood of the customer, draws his eye to
merchandise in a way that influences shopping decisions, and, in general, allows him to experience
the store in a way that encourages buying.

• Shoppers make up to 80% of their purchasing decisions while they’re in the store. Store design—
everything from the height of the shelf to the carpet on the floor—can help influence those shoppers
in a way that’s favorable to the sale.
• An effective retail design can have a tangible and far-reaching impact on a business. It can increase
footfall and sales, ensure that a brand is correctly positioned and allow differentiation from its
competitors.

• An effective design helps to boost customer understanding and enjoyment of the products and the
brand itself – and therefore sales! Retail design helps to narrate the brand and product story, educate
consumers about the pieces, and – ultimately – make the items displayed more desirable as a result.

• Design should indeed drive sales. Of course, it does not exist in a vacuum – the product, distribution,
staff, pricing and location need to be considered – but good design should deliver increased sales. We
have seen recently completed projects recording a 40% spike in sales above aggressive targets,
because the brand has been captured and correctly portrayed in-store as a brand touch point.
• The store environment is the ultimate showcase and the physical touch point between the brand and
the customer. It physically and emotionally reaches out and embraces them and it‘s also a great
opportunity to actually talk to customers directly. Creating this space where a customer can be
completely immersed in the brand really brings it to life and is what allows a customer to fall in love
with a brand, becoming a true brand advocate.

• In the digital age its importance only increases. As customers can buy almost everything online, retail
environments definitely need to offer a richer experience for consumers than ever before. The
physical space can be smaller and the levels of stock can be lower but the actual experience needs to
be more stimulating with the brand turning up the volume on aspects such as design, knowledge and
service.
• The environment in which products and services are displayed and purchased does add an inherent
value and consumers infer a huge amount about the relative merits of a brand from their in-store
experience. Even other players in the retail space will elevate their perception of a brand and store as
a result of the messages their in-store environment portrays.

• Retail design also has an incredibly important role to play in positioning a brand to its consumers –
and, perhaps more importantly, re-positioning it when it‘s incorrectly aligned.
 Customer Behavior

Before we even start talking about store design, we should go over a couple of customer behaviors that
inform those designs. Mainly,
• Shoppers walk counterclockwise. Every time you enter a mall, a supermarket, the corner store, you
will turn to the right if you’re able. It’s just what people do.
• Shoppers avoid upper and lower floors. In fact, shoppers really enjoy staying on the same floor they
started on when they entered the store.
• Shoppers hate narrow aisles. In most cultures, that is. If customers have to pass each other at an
uncomfortably close distance, they won’t go down the aisle.
• Shoppers gets disoriented.
 Principles of Store Designing
1) Define your Space

• First things first, defining your space is all about your brand and image, how it gets people into your
store, and what they do once they’re there. This is the big picture—what are you selling, and who are
you selling to? There needs to be a consistency of style and function in your store that reflect all of
these different factors, to tie the whole shopping experience together.
• A good example of this is Starbucks, a brand that has built its empire by focusing not so much on
coffee, but on the experience of drinking it, by providing customers with cosy, comfortable chairs and
free wifi, to encourage them to linger for long periods of time, and potentially make multiple
purchases in a single visit.
2) Organizing the Space

• When a customer shops online, they have an entire store at their fingertips, with the ability to look at
multiple different types of products at essentially the same time. This isn’t the case for the in-store
shopping experience, so it’s important that the space is well-organized, and as intuitive and easy to use, as
possible.
• A customer who enters a store should have a clear path to follow, with different categories of products
clearly sign-posted, logical and clear product groupings, and a means of quickly finding help if they need it.
A well-organized store is one that makes customers feel safe and comfortable, and is structured so that
they can get what they need without wasting time.
3) Offer a Sequential Experience
• Successful stores deliberately plan the customer experience, both figuratively and literally. Literally,
it’s about planning the store’s layout for the optimal customer experience; figuratively, it’s more
about the chronological path a customer takes to get there—awareness through advertising that
encourages them to stop by (whether print, online or a store-front window), the visit to the store
itself, exploring the store and browsing products, and finally, making a purchase.

4) Provide Visual Communication

• Visual information includes signage, branding, and other written and graphical information that
communicates essential information to customers. It should be clearly legible, and provide only
important information that will actually enhance the customer’s experience, and ideally, each
element should conform with the store’s visual branding design.
• This is a good place to take inspiration from the world of exhibition design, where the focus is on
providing information quickly and succinctly, to people whose attention is typically divided between
multiple different brands at once. Visual communication needs to be immediately recognizable, and
provide information that can be interpreted and used quickly.
5) Invite Customer Participation
• Good visual communication invites customers to participate actively in their shopping experience—
for example, by ensuring that staff members are available and clearly visible as such, and providing
the opportunity for the customer to have different types of experiences within the store.
• With the massive shift that online shopping has brought, this part of the store design process is also
about offering experiences that the customer can’t get online, whether it’s one-on-one help and
advice from staff, or the opportunity to try products out before purchasing.
 Importance of Store Design
Retail store exists to cater the needs of their customers.
• Certain needs ,anatomical abilities ,tendencies, body limitations are common to all customers of the
store.
• Retail store environment has to fulfill above needs of customers.
• Differences in shoppers environment requirement bound to exist in particular stores catchments area,
still stores needs to be designed to reflect an environment in which majority shoppers can feel
comfortable.
• Creating a suitable design for the store and provide a feel good shopping environment becomes a
competitive edge for the store in retail market. Retailer first needs to catch the customer’s eye and draw
his attention to their store to keep him staying away from other stores.
• In most cases it is the image and perception of the store that sets one store apart from other.
• Shopping today has become sensory experience, and while other components like merchandise mix also
plays in building image of the store it is the manner and store environment which differentiates based on
sensory appeals like sight, touch, sound and smell which makes shopping experience for customers.
• Store design and layout tells what the store is all about. Like giving a personality to store. A very strong
tool in the hands of a retailer for communicating and creating the image of the store in the minds of a
customer.
• It is the creation of store image which is a starting point in any marketing efforts.
• Store design is important not only from retailers perspective but also for consumer.
• Retailer looks at store design from view point of target audience, their needs, buying habits and
merchandise which is going to sell.
• Consumer feels store design should be simple to move, navigate, must be appealing to his sensory
perceptions, create a sense of belongings, a sense of relationship- security-assurance and a pleasure in
shopping experience.
• Merchandise in store, sales people, location and pricing all works towards creating an image and physical
attributes of store affects sensory perceptions of customers through which customers relates the store in
a particular manner
 Elements of exterior design

Many a times exterior draws attention and provides first impression to customer. Interesting window
displays, an impressive building, and inviting entrance all customer to enter store. Even a style of shop
sign/name board forms an input for customer Retailers are aware today about impact of exterior for
favorable image of store.
Exterior store design is a function of
1. location and combination of facilities like site, ease of access, parking,
2. building architecture,
3. frontage and entrance,
4. exterior display space,
5. health and safety provisions mainly in west.
• Some retailers use frontage to showcase campaigns or use heritage buildings for a look of store.
Theme for exterior depends on target to serve and merchandise mix to b offered.
• In case store located in mall or center overall look of the mall or center, its image decides the exterior.
Store located in Taj also gets same tag

• Exterior store design –a combo of store windows+lightings+identity, commonly known as ‘marquee ’

 Elements of interior design
Aesthetics forms integral part of interior design
1. Fixtures- used for storing and displaying merchandise, either wall or floor fixture
,Racks, stands ,shelves r made of wood or glass, steel ,synthetic. Usually fixtures r
flexible so as to adjust size to suit merchandise.
2. Floorings and ceilings- lighting are at ceilings, AC ducts, floorings could b changed
to suit image, e.g. jewelry needs carpets and super market easy maintenance floor.
3. Lighting.- as per theme, kind of products sold for favorable impression of
merchandise
4. Graphics and signage-Meant for informing customers about products, special
offers, prices. If signages used in windows it customer to enter in store. E.g..
enlarged photos, posters r used and merchandise is kept ear to enhance product
look.
Graphics and signage used inside store can help
• 1-identifying brands,
• 2-indicate –new arrivals/releases,
• 3-offer directions to various departments ,
• 4-helps customer to locate products while seeking.
Graphics are classified as-
1-Theme graphics-fallowed in store or in chain,
2- Campaign- related to current ad campaign,
3- promotional-related to promotional campaigns to particular dept
Signage used as-
1-merchandise related- to inform customer about its location, prices ,features etc.
2-directional signs- to direct customers for cash counters, wrapping areas etc,
3-Instructional signs- to inform customers that store having electronic surveillance,
lift under repairs etc,
4-courtesy signs—to say thank u, visit again etc,
5- store directory-inform C location of various departments placed near entrance,
staircase or lifts
Food stores use best graphics and signage-fast food restaurant for quick guide what
to buy e.g.mac-donalds shows meal combinations graphically with price and
product name. C while waiting in Q decides his order or get induced to purchase
more
Atmospherics-An imp element of interior store design.
Design of an store environment thru,
1-visual communications,
2- lightings,
3-color,
4-music and scent.
Mainly meant for stimulating perceptual and emotional response of customer.
to offer pleasant, on-intrusive atmosphere to C to feel relaxed from worries of
wrong measurement, fittings and color combo etc. weekend music etc.
• IKEA: A Case Study in Leveraging Store Layout to Impact Sales
• We mentioned in the last section that the forced path layout is not the most logical or pleasant shopping
experience for the customer, who more often likes to wander around at his leisure, looking at the things he wants
to see, when he wants to see them. Imagine, for instance, if your grocery store was set up in a forced path layout.
You’d have to go through the baby food section even if you didn’t have kids. You’d go past alcohol even if you
weren’t a drinker, and through the junk food section even if you were on a diet. No one wants to waste their time
on a forced path layout, right?
• IKEA begs to differ. In fact, IKEA breaks all the rules, and yet they win in the end.
• We learned that customers like to shop on the same floor they entered the store on. Not at IKEA. Almost always,
a shopper enters the store and is shepherded right up an escalator to the second floor, like in the diagram above.
• We learned that customers also like to start out going to the right. Not at IKEA. Left is okay at IKEA. Clockwise is
also very okay at IKEA. In the diagram above, people head to their left and start their way around the display
showrooms. And, before you question it . . . you almost never see people going in the opposite direction of the
suggested path. That’s not okay at IKEA.
• Finally, we learned that people like wide aisles, which IKEA features in their paths . . . but not in their room
displays. And yet, in an IKEA display, people will gather three and four deep to marvel at how the Swedish can
live so economically in such a small amount of space.
• IKEA breaks all the rules, and yet it provides a shopping experience beyond all others. Shoppers clamor for it. So
why does this forced path floor plan work for them?
• Alan Penn, director of the Virtual Reality Centre for the Built Environment, claims, “IKEA’s store layout is a
psychological weapon used to confuse and disorientate (sic) shoppers into spending more.”
 5 important things to remember while
designing store
• Traffic Flow - Typically people will come into a store and turn right, browse around the store in a
counter-clockwise direction and then exit the store.  However, you have the power to stop and re-
direct where you would like them to go by setting up focus points.  You can use your displays to do
this, but remember that it still needs to feel natural so have it make sense and no drastic direction
changes.   Aisles should be min. 2.5'-4' (depending on the size of your store).  Main aisles and two-way
traffic areas should be wider to allow for two people to pass easily.
• "Power Wall" - This is the wall to the right as you enter the store.  This is the area that your customer
will look to first (since they are naturally turning to the right).  If you have orchestrated the traffic flow
to be otherwise, consider the first wall they look at to be your 'power' wall.  This is an area to put
featured items, or seasonal items.
• Tell a story - Does your store tell a story?  Men to the left, women to the right is a start but it needs to
be more than that.  Is there a logical progression from one purchase to the next?  Are there
opportunities to have accessories next to large purchase items for add-on sales? For example:  Bike
stores will typically have their bikes in one area, but they will probably keep the road bikes and the
mountain bikes separate.  Next they may purchase shoes & pedals that will go along with your bike. 
Then a helmet which is a key safety product that we all use when we ride.  And so on.
• Senses - Make sure you are appealing to all the senses to heighten your customer's experience.  The
sense of smell is a very powerful memory trigger.  New research shows just how powerful this can be. 
Selling baked goods?  Think of how the smell of chocolate cookies baking would get you in the mood. 
How about a Spa environment and the smell of lavender in the air?   Sound is another powerful sense. 
For instance, if you are selling high-end women's clothing, you should probably not play loud rock
music.  Make sure all senses contribute to an enjoyable shopping experience for your target audience.
• Displays - Much to cover on this topic, but some key things to remember - size smallest to largest /
front to back, people don't see what is below their knees, and use color blocking / or color stories as
often as possible to keep the visual clutter to a minimum.  When thinking about the overall look of the
store when designing your displays, remember that the perception by your customers (typically) is
that fewer displays and fewer items on display often means a higher ticket price.
 Objectives of Store Design
1. Implement the retailer’s strategy
2. Influence customer buying behavior
3. Provide flexibility
4. Control design and maintenance costs
5. Meet legal requirements.

In order to achieve these objectives, Store Design should;

• Be consistent with image and strategy
• Positively influence consumer behavior
• Consider costs versus value
• Be flexible
• Recognize the needs of the disabled
 Creating a Store Image

• Store Image serves a critical role in the store selection process ➢➢ Important criteria include
cleanliness, labeled prices, accurate and pleasant checkout clerks, and well-stocked shelves
➢➢ The store itself makes the most significant and last impression In sum, once the
prospective customers are inside the store, they should be converted into customers buying
merchandise. ➢➢ The more merchandise customers are exposed to that is presented in an
orderly manner, the more they tend to buy ➢➢ Retailers should focus more attention on in-
store marketing ‘expensive’ spent in the store, in the form of store design, merchandise
presentation, visual displays, and in-store promotions, should lead to greater sales and profits
(because it is easier to get a consumer in your store to buy more merchandise than planned
than to get a new consumer to come into your store).
 Shopping window design

• General guidelines;
• Tell shoppers through the window design, precisely what is going on inside.
• Change you windows at appropriate time interval. Customer have thirst of variety.
• Avoid empty storefronts. They do not produce good image. Even when you are changing the design.
• Change everyday if possible.
• Fantasize less and be realistic.
• Try to provide everything you have if space permits.
• Use effective or emotional stimuli.
 Store Entrances

• Clearly indicate where to enter

• Make the entrance free from barriers
• Welcome the shopper
• Provide an overview of store
• One entrance only, if possible.
 Storefront

• Types,
• Standard Front – Entrance is on the same level as the rest of the store.
• Open Front – Entrance is open
• Recessed Front – Entrance is little inside than the storefront.
 Display

• Unseen often remains unsold

• Visibility is a must
 Point of Purchase (POP) Display
First and foremost, it should be flexible
POP display helps in;
1. Create demand for specific products
- firstly al the products creates demand
- it triggers unplanned purchase
- for example?
2. Enhance the store image
3. Enhance shopping convenience
- during promotions like Diwali, Akshay Tritiya etc, POP displays are used in front of the store.
4. Control the store traffic movement
 Elements for display
Store offers various brands but offering too many POP display will create a confusion and may overstrain
customers. Thus, store managers should consider following elements for display:
1) Merchandise
- which POP display should be selected
- depending upon store type and overall store image
- either product with higher margins may be selected or latest arrivals or latest discounted stuff
2) Props and Colors
- Props such as mannequins and other accessories that show products in their usage context, as well
as different colors, will support the effectiveness of POP displays
- In general, strong colors like red or yellow, will attract more attention then pastel colors will. Green
displays, however, were found to make people hungry.
3) Lighting
-Ensure that there is special lighting source (eg. A spot that is available and ready to put products in
the right light)

4) Show Cards
- use price tags if the POP display is used to promote special offers.
- Use benefit signs if the product is not price reduced but offer special benefits to the shoppers
In general there are two kinds of displays
1) Content Display that provide information to the shoppers for eg. About the latest
promotion.
2) Product Display, which are mainly used for dual placement. A dual placement refers to
a product second location in the store, away from its regular placement in the shelf. For
eg.instant soaps in a supermarket are often located in dump displays at the front of the
store, offering special promotions such as “buy two, get one free.” A shopper will find
these same soups at their regular spot in the aisle that offers convenience foods.
• Within these two categories, there are several kinds of possible displays

POP Displays

Product Displays
Content Displays
- Dump displays
- Store displays - Related-item displays
- Freestanding floor displays - Formal displays
- Elevator signs - Freestanding displays
- New-media displays - Endcaps
- POP counter displays
 Ceiling Designs

• The Sistine Chapel in Rome

• Ceiling of Bellagio hotel in Las Vegas
• Galleries Lafayette department store in Italy
Factors to be considered for ceiling designs
• 1) Performance
• 2) Design
• 3) Ceiling height
 Mirrors

• Losing weight at a glance

• Claustrophobia
• Color enhancement
• Lighting
• Visually enlarge store
• Vertical mirror vs horizontal mirrors
 Checkout Counters

Things to consider;
• 1) How many checkout stations or checkout counters will you provide?
• 2) How much space do you need to consider for waiting lines?
• 3) How can you keep your customers happy during waiting time?
Making checkout counters comfortable;
• Ten-items-or-less line
• Self-scanning checkouts
• No-candy checkouts
• Stress reducing atmosphere
 Experiential Retail Design
 Retailers are increasingly investing in and researching experiential design, to provide shoppers with
memorable experiences which give them a reason to keep visiting physical stores.
 As the amount of online purchases increase, retailers are working hard to create omnichannel
experiences that seamlessly combines online and in store sales whilst providing consumers with
brand experiences, whether physical or digital.
 More and more consumers are researching products online to find out information such as price,
availability and product details, which means when people finally visit a store in person, there is
higher intent to purchase.
 If retailers can offer ‘more’ i.e. added value services such as personal assistants, or complementary
collaborations, shoppers are more likely to make the effort to visit a store.
 Retailers can also take a more psychological approach to ‘experiential design’. Westfield found that
shoppers like all their senses to be engaged when visiting, and incorporating these can create better
experiences.
What does experiential retail do differently than
traditional retail?
1. Creates an immersive and shareable experience
Immersive design describes the activity of a new generation of designers who work
inclusively across all story-driven media, from film and interactive media to live audience
environments.
2. Prioritizes customer engagement—not sales
3. Stimulates your customers’ senses
4. Defies customer expectations
5. Leverages in-store events and services
6. The store experience addresses consumer needs
 Few examples of experential retail design

 Experiential stores are designed with the aim of providing an out-of-the-box experience to customers. The primary goal is
not necessarily to sell products, but rather to improve brand image and to minimise the distance between the company
and their customers. The purpose of this concept is thus recreational rather than commercial.
 Experiential retail has developed out of the need to adapt to the changing market due to the rapid growth of the online
market. While a considerate percentage of shopping nowadays takes place online – especially among millennials and Gen
Z – it remains favourable for brands to keep one foot on the ground. Even if the buying-selling aspect of a business
operates online, it poses a challenge to maintain good client relations when the only interaction between the company
and the customer is through a smartphone or computer screen.
 Think of retailtainment as a unique space where both existing and prospective customers can familiarise themselves with
the particular brand or business without the pressure of committing or immediately digging out their wallets to pay for a
product or service. Experiential retail creates a safe space for new customers to be charmed by what the store offers, and
for customers already familiar with the brand to promote their idea of it and solidify their commitment to it.
 Avengers S.T.A.T.I.O.N.

 The store is part of a 10, 000 square foot replica exhibit of the Avengers S.H.I.E.L.D. set, using a combination of real life movie props and
cutting-edge interactive technology. From initial design to final installation, it took about six weeks to finish this store.
 This is a prime example of successful implementation of experiential retail. In an experience like no other, customers, or ‘civilians’, who
visited the Avengers S.T.A.T.I.O.N. are immersed in a fictional world. After completing the S.H.I.E.L.D. Agent Training, civilians enter the
experience store where a range of limited edition uniforms and other merchandise items are on sale to prepare them for returning to the
‘real world’.
 This entertainment concept store has proven incredibly successful and plans are underway to establish a more permanent location for it in
Las Vegas.
 In a concept store based on a franchise like in this case, the aim of the store itself is not selling a product or even profiting from a service,
but rather to promote the public’s perception of the brand.
 A billion dollar company like Marvel Entertainment has a social obligation towards its fanbase to maintain good company-client relations.
Visitors to the Avengers S.T.A.T.I.O.N. concept store enter a dream-world where their favourite movie scenes come to life, which is why this
instalment has been welcomed with so much success.
STORY at Macy’s
Estée Lauder’s Power of Night Pop-Up
Galaxy Harajuku
Hermès Carré Club
 Module 3

STORE LAYOUT
 Introduction

• A store layout is the design in which a store's interior is set up.

• Effective layouts are designed to expose customers to the most products possible in the
given amount of floor space available.
• Store layouts generally show the size and location of each department, any permanent
structures, fixture locations and customer traffic patterns.
• Each floor plan and store layout will depend on the type of products sold, the building
location and how much the business can afford to put into the overall store design
 Importance of Store Layout

•  To create desired store image and increase space productivity.

• Influence customer’s behavior by designing the store’s flow, merchandise placement and
ambiance.
• Layouts also help retailers understand how much revenue per square foot they are making ;
using this information, they can properly assess the strengths and weaknesses.
• It can guide the flow of customer traffic to all parts of the store, thereby giving the best
exposure of merchandise.
• It can provide stooping power for impulse buying.
• It permits the store to maximize the amount of sales space in relation to non-selling space.
• It aids the customer in selecting and comparing merchandise.
• Departments and merchandise categories can be placed and emphasizes according to sales
potential for maximum effect.
• It provides scope for studies of customer traffic patters and the ‘stopping power’ of various
types of displays and thereby suggesting alternatives.
 Factors to be considered

• Effective Use of Space: To break up the store into logical and functional areas such as POS,
Back Office, Changing Rooms, Pantry, Toilets, etc.
• Inviting Customers: guide customers to all the areas of merchandise.
• Interiors: appearance, walls, sections, and areas should be planned and positioned well.
• Lighting and music arrangement: It should be placed to suit the kind of shopper. These
arrangements can be changed during different hours in a store.
 Rules of Store Layout

• It should be convenient for shopping.

• Products should be presented well.
• Product selection should be limited.
• The environment should be educational.
• The environment should be interesting; for example, have some fun with design.
• Use excellent lights.
• Ensure that products have enough space.
• Exterior signs should be positioned in the best places for visibility.
• Signs should compliment the store’s architecture and most importantly, should
be readable.
• The store should always be clean, and it should b free from dirt as well as clutter.
• Cash or checkout counter should not be located to the right of the main
entrance of the selling floor.
• The exit zone should be the area after the cash wrap/checkout counter and
before the doors to exit the store.
 Store Planning

• There are six key areas of retail store planning that need to be considered:
• Store Format – An effective store format provides the basis for delivering
your products to the right type of customer. Using the store format as a
starting point allows you to build your retail plan and put processes in place
accordingly.
• Site Selection – The best location for your store is one close to where your customers live
or work, or one which is easy to travel to by car or public transport.
• Site & Building Planning – Once you’ve selected the ideal site for your store, you need to
make the best use of the site in terms of access, car parks, traffic flow, and the size of the
building in relation to the site. You need to work out how big the stockroom needs to be in
relation to the sales floor, as well as where to position the service, office, and staff areas.
• Space Allocation – Certain product categories will perform better than others, and
correct space allocation can add 15% to your sales and profits. It’s important to identify
your best performers and work out how much space to allocate to each department. For
example if you are a supermarket, how much space will you allocate to non-food,
household items, and fresh food?
• Store Layouts – In order to determine your retail store layouts you need to get inside the
heads of your customers and identify their decision-making hierarchy. How does your
customer move around the store and decide which product to purchase? Each category
should be placed in its ideal position, with related categories adjacent to it.
 Steps for designing Store Layout

• Determining the availability of space in the facility.

• Determining space needs for the selling and non-selling areas.
• Fitting ‘space needs’ to available space to achieve a good traffic flow and
maximum sales per square foot.
 Determining Space Needs

• The more merchandise the customer are exposed to, that is presented in the orderly
manner, the more they tend to buy.
• In-store Advertising and displays let the customer know that what is happening in
other shopping areas and thus encourage to visit that area.
• Retailers are spending more on in-store design, merchandise presentation, Visual
displays and in-store promotions instead of advertising.
• It is easy to make; that customer buy more who is already in the store than getting
new one.
Consumer Behavior
• Supermarket Style
- Most Customers are not only right handed but also right headed. Stock national brand in the right of store
brands so that consumer goes across store brand to get the national brand.
- Display higher gross margin product on right side of the aisles
- Put bakery product on right so as to make the customer hungry. Supermarkets know hungry customer is the
best customer.
- Most customers think neatness counts ‘ Dump Displays’ are haphazard displays, they give cheap looks.
- Great Bargain Handwritten signs create the impression of recently lowered prices
• Most Customer are likely to focus on large central display
- Follow 25-25-50 rule Of all endcaps 25% should have advertised sale merchandise (that the customer will
seek out) Other 25% should be unadvertised sale items (that causes customer to remain alert when looking at an
endcap) Remaining 50% should be regular priced seasonal or impulse merchandise
• There is little bit greed in every one of us
- “ Limit 3 to a customer” interprets as great deal tend to buy 3. Customer are so excited to buy great price on
butter that they fail to notice that item’s complementary product i.e., jelly and breads prices have increased.
 Allocating Space
Starting point for developing a floorplan is analyzing how the available store
space measured in square footage, should be allocated for different
departments.
Types of space needed:
1) Back Room
2) Office and other personal space
3)Aisles, Service Areas
4) Wall Merchandise Space
5)Floor Merchandise space
• Back Room:
- Back Room is required to receive, process and hold inventory. This space varies with the
type of retailer (50% in Department store, 10% in Specialty and Convenience store)
• Offices and other Functional Spaces
- This includes break room, training/meeting room, cabin, bathroom facilities This space
gets lesser priority.
• Aisles, Service Areas and other non-selling areas.
- Main aisles should be broad and should lead to smaller aisles like herringbone structure
These aisles should be wide enough up to 15 ft.
- Other non-merchandised area are dressing rooms, layaway areas, service desks.
• Wall Merchandise Space
- They serve as fixtures; holding tremendous amount of merchandise
Provide visual backdrop to the floor merchandise. Space Allocation Planning
20% of the inventory is not looked by the customer This stresses to know the
productivity and profitability of all merchandise Two reasons for the space
planning – 1)Revising the space allocation of existing store OR planning a new
store One such measure is Space Productivity index % age of total gross
margin dollars for a particular merchandise %age of space required by that
merchandise =
• If the index is below 1 than category is underperforming For Apparels the index is
highest, for furniture- least (lesson?) Underperforming categories sometimes have
to be continued Space Allocations for a new Store In the absence of past data, space
allocation is based on industry standards Robert Kahn to Sam Walton – Store
profitability is not the function of adding more merchandise displays, but Sales per
square foot = f (Number of Customers) x (The length of time they spend on the store
Wal Mart then built ten 85,000 sq. ft. store and ten 1,15,000 sq. ft. store Larger
stores produced higher sales per square foot Parking space was always full, showing
shoppers were spending more time
• Comfortable space should be there for the customers to pass through the
aisles Myth: If customer is sitting down, he is not shopping. Put at least one
bench for the customer to rest Put a water stand in the corner
Space Planning Considerations
• High traffic & highly visible areas - Entrances, escalators, check-out area,
end aisles, feature areas
• Profitability of merchandise - Private brand, higher margin categories
• Customer buying considerations - Impulse products near front -
Demand/destination areas in back, off the beaten path
• Physical characteristics of product - Bulky vs. small/easily stolen
• Complementary products should be adjacent
• Sales rate - Display more units of fast-selling merchandise (tonnage
merchandising
 Steps in Planning Store Layouts & Maximize
Space
• It is essential to understand your customer flow and the general patterns of
navigation in your specific retail environment before you can optimize
customer experience and plan a strategic store layout.
• Retailers, consultants, store planners, interior designers, and architects all
use a variety of retail floor plans and concepts to influence customer flow
and behavior.
• Retail giants along with small, independent retailers can improve customer
experience, and in return, long-term profitability with efficient store layouts.
 Step One: Target The First Floor
• The first step to maximize your profitable retail space might be the most unavoidable, however the
principle and knowledge behind the customer behavior is crucial for understanding your overall design
strategy.
• Customers prefer to navigate the floor of a retail store they initially entered. Walking up and down
stairs or using elevators and escalators to navigate a store hurts customer flow.
• When possible, planning for a single floor store design will optimize the customer experience.
Exceptions exist, such as downtown locations where real estate is at a premium or large department
stores with multiple categories of merchandise.
• Retailers should consider customer perception if they are a luxury retailer, as shoppers often associate
multi-level stores as “elite.” Conversely, if a discount retailer is planning store layouts, as customers
associate single floor layouts with “less high-end” merchandise.
• Consider your overall retail strategy and store layout design prior to selecting your store location. If
you have multiple floors, account for the preferences of first floor shoppers by using this space for the
feature or high-margin merchandise in your retail mix. 
 Step Two: Identify Customer Flow

• Customer flow patterns vary depending on the type of retailer, the size of the store, and the
target customer.
• Retailers should use their observations to discover the problems and opportunities unique to
their environment.
• The most effective method for understanding your existing customer flow and identifying
areas of opportunity is video recording and heat mapping analysis.
• However, setting aside different times of the day to make in-store observations in person and
recording your notes is a step in the right direction for identifying customer flow patterns. 
 Step Three: Avoid The Transition Zone

• After you identify how your customers navigate your entire retail space, turn your attention
back to the entrance.
• The transition zone area, coined the “decompression zone” refers to the space just beyond
the entrance to a retail store.
• The average customer needs this space to transition so they can familiarize with the new
environment.
• It is said that nothing of value to the retailer, not high-margin merchandise, prominent
signage, or brand information goes inside this zone.
• Customers need time, however brief, to adjust to new lighting, smells, the music, and the
visual stimulation in the store. 
 Step Four: Design for Clockwise Navigation
• The next step moves beyond the transition zone and shifts the focus on how to leverage a
customer’s tendency to navigate the retail environment.
• The area just outside of the transition zone is where most retailers make a first
impression.
• Customers consistently turn right after entering the store and continue to navigate the
store in a counterclockwise direction.
• This customer behavior repeats itself time and again in consumer research.
• Although researchers and design professionals have different explanations for the
reaction, in general, many recommend displaying high-margin merchandise and valuable
information just to the right of the entrance (outside of the transition zone).
 Step Five: Remove Narrow Aisles
• Finally, follow your customer flow through the transition zone and around the retail space in a counterclockwise
pattern.
• Search for tight spaces or bottlenecks along aisles or around fixtures and displays. Repeated analysis of Underhill’s
video research demonstrates that customers in the US — women in particular — value their personal space when
shopping.
• If a customer is touched, bumped, or otherwise interrupted when interacting with merchandise, they are likely to
move on from the items or exit the store altogether.
• Video analysis showed fewer customers entering narrow aisles in the store compared to the more expansive,
accessible walkways.
• These aisles send positive signals to shoppers and positively impact customer flow and merchandise interaction.
Avoid narrow aisles and corridors when planning your store layout and strive to protect customers from banging into
each other.
 Types of Layout
GRID LAYOUT
The grid layout is the most common store layout you’re going to find in retail. Used in
supermarkets, drug stores, and many big box retail stores, it’s used when stores carry a lot of
products (particularly different kinds of products), or when a retail location needs to maximize
space.
Pros of the grid layout
• It’s easy to categorize products
• Shoppers are used to the grid layout style and shop it easily
Cons of the grid layout
• It’s boring, and it’s difficult to use this layout to create a “shopping experience” for the
customer
• Customers often can’t take shortcuts to what they need
• Line of sight is limited, forcing a customer to look up and down aisles
• Visual “breaks” are needed to keep shoppers engaged
The grid format is so common in retail that it’s been well studied and retailers know how to leverage
it to increase sales conversion. Here are some ways they do that:

• Well-placed promotions. Eye level and a little to the left, in fact. If you’re walking through a grid
format store counterclockwise, you’re going to notice that which is a little ahead of you. On a turn,
that means the promotion will be at eye level and a little off to your left, where you’re looking as
you walk. Things don’t get noticed in corners.
• Power walls. Because you can leverage your wall space so well in a grid format store, you can take
advantage of this to build power walls. Power walls allow you to display merchandise to draw
shoppers into an area they might otherwise skip over in normal traffic patterns. Retailers use
repetition by putting a lot of a particular product on the wall, perhaps in different colors or sizes.
• End caps and visual displays. Aisle fixtures have to end, and usually the ends of those aisles are
prime real estate to put up a product display. We’ll learn more about these in the next section, but
suffice it to say, you have more opportunities to leverage the ends of those aisles with displays and
signage in this format than any other.
 Racetrack or Loop Layouts
If you’re selling a product that people want to browse, touch and look at, then the racetrack, or loop, layout is
one to consider. Customers follow a prescribed path through the merchandise and experience it the way the
retailer wants it to be seen.
Pros of the racetrack layout
• Retailers can provide a great “shopping experience” using this layout
• Promotions are easier to execute, because the layout really controls what the shopper sees
• Encourages browsing
Cons of the racetrack layout
• Customers who want to run in and pick up something quickly are often discouraged when faced with this
layout
• Not a good layout for a high-turnover store, like a pharmacy or a convenience store
• In this kind of layout, the retailer doesn’t really need to influence traffic flow, because traffic can really only
move one way. This is what makes the layout so perfect for executing promotions. The retailer knows where
the shopper is going to look next, and promotions are arranged accordingly – eye level and a little to the right.
 Mixed, or Free Flow, Layout
This layout can be anything the retailer wants it to be, in any shape or place. Customer behavior is the
only consistent aspect of this kind of layout: we know they will enter and turn right, we know that they
won’t want to go up or down a floor and that they won’t shop in too narrow an aisle.
Pros of the mixed layout
• Ideal for a store offering smaller amounts of merchandise
• Easy to create a shopping experience in this layout
Cons of the mixed layout
• Less space to display product
• Easier to confuse the customer
Traffic flow can easily be disrupted if there isn’t some logic to how items are displayed in the store, and if
that logic doesn’t exist, it’ll create shopper confusion. Confused shoppers exit the store nearly
immediately and usually without purchasing anything.
Retailers can control traffic flow by placing promotions and visual displays as “speed bumps” can entice
the shopper from one merchandise “lily pad” to the next. Power walls can be created in this format to
attract the shopper as he or she moves along the store. If customers are missing a part of the store,
retailers can alter traffic flow by altering the fixtures within to create a new path.
Planogram
• A planogram (also known as a plan o gram) is used in retail to show the
placement of products on a shelf. Placement is important in retail to
maximize sales and minimize wasted space.
• Planograms are sometimes used by manufacturers to suggest optimum
display for their merchandise at stores.
• Planograms can also serve as a reference when trying to analyze retail
performance to identify one of the potential culprits in lower sales.
Other terms and abbreviations for a planogram include:
• POG
• Shelf space plan
• Space plan
• Schematics
A planogram is usually a single component to more comprehensive visual merchandising documentation. It is by
no means the end-all, be-all solution to your visual merchandising needs.
• They’re especially useful for big-box retailers or grocery stores that carry many products (and product
categories) from a multitude of suppliers and have a lot of space to fill. Think about it this way: Grocery stores
have to know whether a product will fit on a certain set of shelves, which is where the level of detail included
in a planogram is crucial.
• As such, planograms vary depending on the retailer. In the example we just described, you’re likely looking at
a detailed planogram. For a smaller store with fewer products and displays, the planogram may not be as
comprehensive.
 The Benefits of Planograms
• There are many benefits to using planograms for planning out your store layout, and they generally fall under
two overarching advantages: maximizing sales and space.
• Maximize Sales
• When you use a planogram in your visual merchandising planning process, you’re able to collect data about
how products and displays work. Mapping it out to the exact location on the shelf is like taking a magnifying
glass to your data, and that’s how you can glean really actionable insights to optimize product placement for in-
store sales.
• Over time, you’ll learn how product placement impacts purchase behavior and can thus deduce strategies to
capitalize on sales opportunities. Look at historical sales data and compare that to your planogram to see
which products sold most and where they were located, and do the same for slow-moving merchandise. Place
those items together to increase sales of stock that’s getting old or stale.
• You’ll also be able to identify the highest-converting locations in your store, so you can put merchandise there
that you want to prioritize.
• Planograms also allow for strategic product placement from a cross-merchandising
standpoint. Notice how the milk and bread are in the far back corner of the grocery store?
That’s because those retailers want to make customers walk past other items, which can
help increase impulse purchases.
• With a planogram, it’s easier to map out these routes. If there’s an item that customers
regularly come back to purchase from your store, consider placing it somewhere that forces
them to pass other items that you want to sell, or placing complementary products nearby.
For grocers, for example, this could be peanut butter and jelly.
• Maximize Space
• Retail space is expensive. And while the exact costs vary depending on a variety of factors
(location, size, lease term, etc.), property management company Hartman says your gross-to-
rent percentage could be anywhere between 1% and 13%.
• Regardless of your rental expenses, maximizing the use of that space can help you run a lean,
cost-effective business. Planograms help you stay organized and allocate a purpose to every
area in your store.
• Plus, planograms support more effective inventory management. More organization means it’s
easier for staff to stay on top of stock levels since there’s a place for everything, and everything
should be in its place.
• And if you’re working with wholesale, vendors, and other third parties, have a guideline as to
what and how much space they’re responsible for. This kind of setup can create ownership and
accountability.
 Other benefits of using planogram in store
1. More revenue generation
• Using the planogramming technique, retailers display products with the highest sales and high margin at the
prime location of the store, which helps in more revenue generation.
2. Lower out-of-stock situations
• Planogramming techniques create a system and order in the retail store. The retailer will learn immediately when
a product is running out of stock by looking at the emptying shelves and can place an order on time to avoid out-
of-stock situations.
3. Inventory management
• Using planogramming techniques, the retailer has control over the stock left in inventory. In this way, the retailer
has to spend less on inventory management. Moreover, a balance can be created between the demand of
customers and shelf inventory.
4. Proper use of retail space
• Retail space is significant for a retailer as he pays for this space. Therefore, using planogramming techniques
store space can be used effectively to generate maximum profit.
5. The strategic advantage of suppliers and manufacturers
• A supplier or manufacturer can provide a high margin on his products to retailers to get his product’s prime
location in the store. The placement of products at prime location means more sales. In this way, the supplier can
get maximum Return on Investment (ROI).
 Other Purposes of Planogram
• To communicate how to set the merchandise .
• To increase customer purchases.
• To adjust the visibility, appearance and presence of products.
• To make them look more desirable.
• To ensure sufficient inventory levels on the shelf or display.
• To use space effectively whether floor, page or virtual.
• To optimize short- and long-term returns on investment.
• To provide a logical, convenient and inspiring product- customer interface.
• To make right selection of products available.
• To facilitate communication of retailer’s brand identity.
• To maximize profit per centimeter of shelf space.
• Understand the relationship between space, sales and profit
 How to Use a Planogram for the Store
• Making a planogram is a delicate balance of logical organization such as grouping items in
the same category and taking advantage of consumer behavior and psychology to expose
them to new or highly profitable products, and increasing sales by using cross-selling
techniques and triggering impulse buy behaviors. For example, stores will first group all
bread-like products in the same aisle and then will often place peanut butter, jelly and other
condiments in the same place to help remind shoppers to stock up on those items at the
same time.
• Products placed at eye-level may sell better than products placed on the bottom shelf.
However, products on the bottom shelf may be eye-level for children. Their lower level
placement may even make it easier for children to grab products to add to their parents'
carts. For example, you'll often find sugary kid-centric cereals on the bottom shelves while
healthy, high-fiber ones will be placed higher.
How to Use a Planogram to Increase Revenue
You can combine historical sales data with your planogram to identify high and low selling
items and their placement. If you need to nurture some products, you may want to move
them to an area with higher sales. And low-selling products in traditionally high-selling
placements should probably be replaced.
Planograms can help grow your retail business by:

• Grabbing a consumer's attention using a pleasing layout

• Creating incentives to trade-up to higher margin items
• Emphasizing bestsellers using placement
• Tracking success and failures to offer future improvement
• Monitor inventory and reduce both overstocked and out-of-stock products
 Planogram Best Practices

Start Simple
• Too many retailers make the planogram process too complicated and eventually lose steam after a
few months. In other words, if it takes a ton of time to create, then your likelihood of doing it every
month will grow less and less as time passes. Eventually, you will stop. Your time is limited and
valuable. Do not adopt a process that you cannot sustain. It will only frustrate your employees. 
Train Your Employees
• Spend time training the employees on how to use a planogram. Your veteran employees especially
will think they don't need it. Simply handing them a diagram is not enough. Be specific. Have
general visual guidelines they can follow. 
Measure Your Plan
• Each month, pull reports on your sales and look at your planogram.
Assign Your Champions
• In your store, you should have champions or leads for each section. This person is in charge
of the sales out of that area and this includes the visual merchandising. Allow them to
design and plan their part of the planogram as part of the process. A well-merchandised
store is the best defense against theft. It's easy to tell when you have lost something. 
Know Your Customer
• Today's shoppers want a product at eye level. They not only want to touch and feel them,
but they want to interact with them. For some stores, less merchandise on display with
more interactivity is the right technique. 
 Types of planogram

• Planogramming can also be referred to as visual product placement. The

visual product placement is a technique to place products in a store in such a
way so that it grabs the maximum attention of customers.
1. Product placement based on its market share

• This is the most straightforward strategy of planogramming. In this planogramming

strategy, different products are allocated space on the shelves of a store based on their
ability to generate revenue.
• For example, a product that helps in generation of maximum revenue will be given the
prime location in the retail store. This strategy is used so that the customer can quickly
locate these products and buy without any hassle.
2. Product placement based on margin
• A retailer sells products manufactured by different manufacturers in his store. The retailer
agrees to sell these products based on the margin given to him by the manufacturers.
• In this type of planogramming strategy, the retailer provides the prime location of his store to
the products, which help him generate maximum profit. Small retailers mostly adopt this
strategy because they are more concerned about their benefit than the sale of the products.

3. Product placement based on its commercial status

• In this type of planogramming strategy, the products of higher brands are allocated the prime
location on the shelves of the stores as compared to the products of lower brand value.
• This is because most people nowadays buy products influenced by their image and brand
name in the market. A product with maximum revenue generation gets the priority among
the similar products of the top two brands. This type of planogramming technique is adopted
by big retail stores such as Target, etc.
4. Block placement planogramming technique
• Block placement is the most straightforward and easy way of placing products in the store. In
this planogramming technique, all products of one family are placed together irrespective of
their brand value or margin percentage.
• Most discount stores adopted this planogramming technique to place products in their store.
Customers prefer block placement planogramming techniques as they can easily compare
the price and qualities of similar products of different brands and can make purchasing
decisions easier.
5. Horizontal product placement planogramming technique
• In the horizontal product placement planogramming technique, products are placed
horizontally on the side by side shelves at the same eye level. In this way, customers can easily
learn about similar products from different brands.
6. Vertical product placement planogramming technique
• In this technique, related products of different brands are placed at different shelf levels.