As published in Home Furnishings Business
Know your target customer and give the products they desire, the services they need, and a great shopping experience.
Given today’s economy, Walgreens has captured attention across the retail landscape by boosting sales and revenues as it freed up $500 million by trimming excess SKUs.
Last month, the 109-year-old chain announced its “consumer-centric retailing” initiative is boosting sales by 2 percent in test markets. That comes on top of the 4.6 percent increase in net revenue the 7,180-store chain posted in its most recent quarter.
Walgreens’ consumer-centric initiative began with intensive research to better understand its customers and, as importantly, shoppers it wanted to attract. With this focus, Walgreens made its stores easier to shop with better signage, lower shelves and less clutter. Using market research, it eliminated lots of items (about 3,500 products in all), but added food and wine, as well as more vitamins and skin care items. The format has been so successful in 700 stores that the retail giant’s plans call for converting nearly half its stores by this fall.
The good news for Walgreens is that cutting excess SKUs helped free up cash it can use for store renovations.
In addition to cutting clutter, Walgreens is focused on making its stores feel more comfortable, because the more time a consumer spends shopping, the more they tend to buy.
Retailers like Barnes and Noble and Starbucks have shown that making a store comfortable can involve everything from its smell to open sight lines to upscale bathrooms.
However, no retailer should begin a store redesign until it’s done market research to understand its customers—the ones it have as well as potential new ones. This target can be quickly identified and strategies adjusted to appeal to these consumers. This step requires analyzing the entire marketplace and determining a store’s relative strengths versus the appeal of competing retailers.
Once a retailer’s identified its consumer marketing objectives, refined the product mix, and planned advertising to drive customers to the store, the job of designing the store can begin. Consumer-centric store design is focused on orchestrating the store environment to encourage target customers to buy. Every effort should be made to remove obstacles and facilitate an easy buying experience. Stores should be clean and bright. Seating areas and children’s play areas and large-screen Tvs can help increase dwell time and, therefore, sell time.
Some furniture retailers have had success with in-store “strike zone” displays set up like store windows to show consumers how products can be grouped in a living space.
Other stores have used digital signs to showcase end results and create catalogs of product that can be ordered.
Yet, many furniture stores have old design centers that don’t use new technology to empower customers to see design success stories, make their own selections, and cut the time spent on design projects.
Investments in market analysis, consumer research, store design and renovations are guaranteed to pay back healthy returns. The right product mix for the right customer presented the right way is a winning formula.
A furniture store remodeling project typically results in a 10 to 15 percent sales increase, and a more comprehensive, strategically planned “re-do” store project based on market research can produce increases of up to 50 percent in our experience.
As with Walgreens, it’s all about stimulating better sales by configuring the store to appeal to valuable customers, making it so comfortable they’ll spend more time (and money). For furniture retailers, the addition of design ideas help to convert browsers into shoppers, increase the value of each sale and create more reasons for them to come back.
Here are some consumer-centric retailing concepts that are successfully being used inside and outside of the furniture industry:
• Product presentations in-store, refocused to maximize purchasing.
• Design centers are being replaced with customer resource centers.
• Customers are being empowered to use databases and computer-aided design facilities inside retail stores.
• Store way-finding signs are improving, making it easier for customers to get around.
• Services like free design and white glove delivery are being given better signage.
There are only a few ways to stimulate sales: bring more customers in, increase their word-of-mouth, convert more customers, increase units each customer buys, increase value and margin of each sale, increase the number of rooms a customer is furnishing, and create more reasons to come back. All of these can be enhanced by the design of more consumer-centric stores. In other words, know your target customer and give the products they desire, the services they need, and a great shopping experience.