In devising a strategy around a store’s entrance, there is no one solution that meets the needs of retailers across all channels. So, it is interesting to analyze the strategies that have become staples in the industry.
A retail store’s entrance is strategically designed to set the tone for the trip. The façade entices passers-by into the store, and the entryway evokes a consistent emotion.
This post will compare entrance strategies in three different categories:
- Drawing Passers-By into the Store
- Number of Items in the Front-End
- Product Types in Entryway
Drawing Passers-By into the Store
Consider a popular shopping destination. Stores – in areas like shopping malls, streets like 5th Avenue and Rodeo Drive, and even in high traffic commuter areas – reach a large number of people who make purchases in various different channels.
Specialty retailers (Apple, Disney, and Lego) find ways to differentiate themselves and grab the attention of potential buyers. On the other hand retailers in other channels, like discounters (Dollar General), embrace a much different approach to the strategy behind their stores’ façade.
The Apple Store on 5th Avenue in New York City is a great example of how a retailer can use its entrance to convert a passer-by into a buyer. Apple recently remodeled the entrance to its famous underground store downtown Manhattan. The famous cube, which opened in 2006 and was remodeled on November 4th this year, is the fifth most-photographed landmark in New York City and is the 28th most photographed landmark in the world! So, by leveraging human curiosity, Apple is able to dramatically increase foot traffic.
The thought that needs to be taken away from the ‘cube seen around the world,’ is that the entrance is an extension of the ideas associated with the Apple brand. The recently remodeled cube has a seamless design which is naturally associated with the clean, innovative look of all its products.
The newly remodeled Disney store in New York’s Times Square is known for providing an incredibly visual and hands-on shopping experience. The entrance to the store attracts the attention of tourists, as well as New Yorkers, through the use of bright lights and a large electronic billboard.
Disney has multiple businesses and revenue streams stemming from theme parks, cartoons, movies, and TV shows. Each branch generates revenue through the love for, and the ability to relate to, the characters found in the aforementioned branches. So, this Disney store cleverly uses a large ad display above the store to help the people remember their favorite Disney icons. The billboard, bright lights, and featured characters help the retailer break through the clutter that is Times Square.
It is difficult for a parent to visit the mall with a child without being begged to enter this Lego store. An entrance like this, similar to the Disney store entrance in Times Square, boosts traffic levels by simply appealing to children. For example, in the 2011 holiday season, 72% of those with a child in the household say they plan to purchase toys compared to 42% of those without a child in the household. (According to a new survey from Harris Interactive)
An equally effective, and comparably interesting entrance strategy comes from the discount channel. The entrance to a Dollar General store is bland, and relatively uninteresting. It does, however, help communicate to shoppers that they will be able to find great bargains at inside. The thought is that by devoting a smaller percentage of the budget to the aesthetics, customers will feel like they are getting the best prices.
Number of Items in the Front-End
The number of items visible in the first few steps after the shopper walks through the door can be very impactful. While one very effective approach is to give customers an immediate understanding of the full range of products available in the store, sometimes a more minimalistic approach can garner similar returns.
Leroy Merlin is a French home-improvement and gardening retailer. The store, which averages around 86,000 Square Feet, look to capitalize on impulse pick-ups at the beginning and the tail end of the trip. The entryway is littered with a range of low cost items that represent each department in the back end of the store. So, while this entryway is more cluttered, it is effective in reminding shoppers about the more expensive items in departments like lawn & garden, large appliances, building supplies, and home goods.
The new Uniqlo store on 5th Avenue in New York City is a great example showing the other end of the spectrum. Instead of greeting its customers with a large number of SKUs at the entrance, the Fast Retailing subsidiary takes a minimalistic approach. This store, similar to Leroy Merlin, has a multi-level store layout. However, the tone of the trip is set right from the beginning. The store, at 89,000 Square Feet, seems more like a museum than your every day apparel store. Shoppers get a less ‘in your face’ feeling, as they are greeted by high ceilings, hard wood flooring, and very few items. This is a very effective approach for a high-end apparel specialist, as it helps create the feeling that each item in the store is more special.
Product Types in Entryway
The type of product displayed in the entrance can either set the tone for the trip, or it can be used to increase the average basket size.
Retailers need to determine whether they can be more effective by selling few big ticket items with higher margins at the entrance, or many small ticket items with lower margins. A retailer with high foot traffic levels can dramatically increase their annual revenue simply by marginally increasing their average basket size. On the other hand, high-ticket items with large profit margins like electronic devices, major appliances, and jewelry can achieve a similar result.
Whole Foods Market prides itself on providing the freshest goods in the industry, and their entrance helps to emphasize that. Their floral entrance strategy appeals to the subconscious by helping its customers get the feeling, through vibrant colors and strong aromas, that the items throughout the store came straight from the farm.
People associate flowers with freshness, partly because people are subliminally aware that flowers that have been removed from the ground die quickly. So, when freshly picked flowers are the first thing the shopper sees at the entrance to the store, it is assumed that the rest of the shelves in the store are restocked just as frequently.
Target is taking advantage of their high shopper traffic levels by placing high impulse, low ticket items at the entrance to their store. Knowing that foot traffic at Target Supercenters exceeds 30 million every week, it strategically makes sense to capitalize on this astounding number. The items in this department range from $1 to $10, but if the impulse items at the entrance are able to add even just $0.50 to the average basket size Target will see a $15 million increase in revenue.
After seeing the revenue generated from this department, JCPenney hired Target’s top marketing executive, Michael Francis, as its new president. Soon after the news broke, we got the first glimpse of JCPenney’s new impulse merchandise department, branded the Wrapt Assortment. The Wrapt Assortment is designed to boost impulse purchases during the 2011 Holiday season.
BJ’s Wholesale Club
The warehouse clubs’ biggest asset lies in its customer loyalty. Customers pay an annual membership fee to receive access to the low prices on bulk purchases, but the membership fee also keeps them coming back. At BJ’s Wholesale Club, like many of the other membership clubs, the entrance of the store is littered with high ticket items. Although these items have a low turnover ratio, their high margins generate more than desirable ROI. Because it is the first thing the customer sees in the store, every member becomes more aware of the availability. So, when it comes time to buy a new TV, computer, or other expensive device the loyal member will recall the very noticeable and affordable assortment available at their warehouse club.
Drawing up the appropriate entrance strategy is certainly very dependent on the channel in which the retailer operates. Specialty retailers, discounters, DIY, and Warehouse Clubs will all benefit from different strategies. However, the thought that requires the utmost consideration is whether or not the merchandising strategy, being implemented in the most pivotal area of the store, is expressing the values that directly correlate with the brand image.
Retailers must remember that the first impression is everything. So, the questions that must be asked are: What is the first impression a shopper receives when they visit or pass my store? Is this impression an extension of the ideas associated with my brand name?