How can retailers create a distinctive and profitable store environment?

At the new Ailes de la Mode store in downtown Montreal, tot-toting moms can drop their brood at the nursery, and weary shoppers can unwind in a piano lounge or catch a free flick in the 49-seat theatre.
Parent company Boutiques San Francisco's mantra is to offer consumers an environment at the specialty store chain that they can't get elsewhere, explains communications director Diane Jubinville. 'We're trying to reinvent what shopping can be,' she says. 'Our promise is to constantly surprise people. We want them to spend more time with us, and enjoy being at Les Aisles.'

At the new Ailes de la Mode store in downtown Montreal, tot-toting moms can drop their brood at the nursery, and weary shoppers can unwind in a piano lounge or catch a free flick in the 49-seat theatre.

Parent company Boutiques San Francisco’s mantra is to offer consumers an environment at the specialty store chain that they can’t get elsewhere, explains communications director Diane Jubinville. ‘We’re trying to reinvent what shopping can be,’ she says. ‘Our promise is to constantly surprise people. We want them to spend more time with us, and enjoy being at Les Aisles.’

The 223,000-sq.-ft. space, which houses cosmetics, fashion and home décor, is the Boucherville, Que.-based chain’s fifth venue and there are plans to expand into Toronto as well. A location that was unveiled in Ottawa last year – the first Ailes de la Mode outside Quebec – appears to have been well received, as the firm credits it with boosting sales 8% – despite the aftershock of 9/11 – for the third quarter ended Nov. 3.

There’s no question that the in-store set-up should play a significant role in the overall marketing strategy of a fashion retailer, says Wendy Evans, a Toronto-based retail consultant, who adds that more Canadian chains are beginning to realize this. ‘My feeling is that there’s now more interest in store design,’ she says. ‘Competition, especially from the U.S., is driving this.’

Holt Renfrew is another Canadian retailer that is upping the entertainment factor in its Toronto store, where it recently introduced digital communications through a deal signed with Waterloo, Ont.-based Digital Display & Communication (DDC). Video screens will broadcast fashion runway programming, while its in-house café will have a live wall. ‘Holt’s is about service and being attentive to the clientele,’ says Stuart Kirkpatrick, president and CEO at DDC, who has seen his client roster grow from one to a dozen retailers in the last six years.

By all indications, in-store advertising does indeed work. In a recent U.S. survey of 1,200 consumers by Washington, D.C.-based Point-of-Purchase Advertising International (POPAI), 40% of respondents, who were approached outside convenience stores, recalled the presence of P-O-P material. Another 59% said they appreciated the degree to which the ads educated them about product benefits, and 69% said window displays caught their eye.

But in categories such as fashion, where P-O-P isn’t always used, can a retailer affect sales through its ambiance? In 1999, retail guru Paco Underhill shook up the industry with his book Why We Buy: The Science of Shopping. He talked about his New York-based research firm Envirosell’s techniques, namely the use of trackers – who followed shoppers in situ and recorded their every move – and cameras strategically placed in stores to monitor behaviour.

Underhill, who observes about 50,000 to 70,000 people annually for clients like Coca-Cola, McDonald’s and the Gap, made some fascinating discoveries. For instance, he found that women who shop with their male partners spend less time in boutiques; therefore, it’s a good idea to give the guys a comfy chair and magazines to read.

Nike, which has long been crowned as the Michael Jordan of in-store marketing, has been investing in its retail space for 12 years, since launching its first Niketown in Portland, Ore. According to John Harper, retail development manager at Nike’s Thornhill, Ont.-based Canadian headquarters, the sportswear brand simply sees the store as another means of communication.

‘We look at retail as another means of advertising right at the point of sale, where research has proven that it helps,’ he says, pointing out that the Nike Toronto store is stocked with hockey memorabilia and video screens that broadcast sporting events. ‘We have relationships with teams and athletes, so we’ve created environments … that help reinforce the connection.’

Nike also integrates its in-store campaigns with what it has going on a traditional advertising scale. For instance, it used graphic images from its recent ‘Rucker Park’ spots, starring Toronto Raptor Vince Carter, at stores. ‘You have a consumer who sees something cool in an ad or on TV, but at that point they can’t make a purchase,’ explains Harper. ‘The retail development is the last stamp to hopefully make the sale.’

Meanwhile, Vancouver-based Bruce, the one-year-old boutique that sells clothing, books, art and CDs, among other items, all geared to the hip set, relies exclusively on its in-store ambiance to cause a word-of-mouth buzz, says owner Campbell McDougall. ‘The in-store experience is everything – business, return business and the inclination to go tell your friends about it,’ he says. ‘Sales and foot traffic are both up substantially over year one.’

While Starbucks set the bar for coffee retailers to perk up their environments and book chains have also reinvented the in-store experience, fashion, despite similar competitive threats, is lagging behind the times. Below, three experts share their insights on the tools retailers can use to build a happening space.

Jeff Spriet, guerrilla marketing consultant

Wiretap, Toronto

Jeff Spriet praises retailers who have nailed their in-store marketing strategies, and gives advice to others who haven’t.

‘People think of a lot of ideas when it comes to advertising, but very often they don’t start with an idea when it comes to the retail environment. There’s a lot of equalization as opposed to separation. One example of a retailer who has done well in this area is Nike, because with each new Niketown, they’ve remained authentic to sports in that city. For example, if you go to Boston, there are marathon cues in the store.

The other retailer that had it right was Old Navy. They had old freezer units, and T-shirts shrink wrapped on Styrofoam meat plates. It was so fresh and quirky at the time, and in line with the Old Navy brand.

When you stand out from everyone else, it says something about your brand. It says you’re different from the crowd. Retailers need to start with an idea and own it. For example, why can’t Mark’s Work Wearhouse be all exposed plywood and corrugated steel so that it has a blue collar feel? Right now it has an antiseptic feel and it could be a Thrifty’s.

[Or] you can even take a boring positioning like great basics [such as at the Gap] and make it zing at retail. You could tie it to the basic elements of water, fire, and earth, for example.

Even when it comes to sound, most of the time, it’s the same radio station, the same type of music playing in every store. What about doing something completely different from music? Or if you’re an independent store, only play independent music that people bring in to you.

I think you have to ignore trends and find a style that suits your brand vision.’

Wendy Evans, retail consultant

Evans and Company, Toronto

Wendy Evans adds that in-store marketing is worth the investment, and that there are ways to measure its effectiveness.

‘In-store design is becoming increasingly sophisticated and competitive. People are realizing there is an art and a science to merchandise placement. Is it eye level? Is it up or down? Is it 10 feet past the door because, if not, people won’t see it. It needs to be visually pleasing, a simple, welcoming layout. I think those elements are really important.

Sometimes it’s harder for smaller chains and independents that don’t have research to back that up and understand the nuances of what it means to a customer. But you’ve got Paco Underhill, who has been foremost in dealing with in-store retailing as a science. In the U.S., they now have cameras [in stores] and quasi-laboratories where they study customers and their responses to items, colour, placement and various brands.

You can also look at relative performance with how many shoppers come into your store, how many buy, and how many actually transact. You can have a loosely organized scientific method by saying, ‘in this layout, purchasing happened in 80% of the cases, while with this layout, it was only 60%.’ You can test it, but you have to be fairly controlled and disciplined about it. Maybe it’s return on customer, instead of ROI. It’s gross margin ROI in a sense too, because you’re going to put the highest gross margin items in the most obvious places – at the endcaps, and perhaps on the most visual walls.’

Jeffrey Gottheil, president and CD

J. Gottheil Marketing Communications, Toronto

Jeffrey Gottheil, an expert on in-store branding and P-O-P material, suggests zeroing in on a specific demographic, then hiring the proper sales staff and introducing the right merchandising elements to appeal to them.

‘You have to know the market, and create a feeling that reflects your brand message in staff, culture and merchandise. It’s really important to hire employees of the right age and the right look, because the staff reflects the brand of the store. A 20-year-old can sell to an 18-year-old, but a guy in a plaid shirt and tie can’t. Give substantial discounts to staff, to make sure they wear the clothes. I would make sure they all wear something a bit different, so that they act like a walking fashion show.

If it’s youth, you can’t try to cater to too many different markets. The Gap has tried that and they’re having trouble. It’s very important to specialize. The key is to create a sense of belonging. They need to feel it’s a trendy place to go. But you can’t look too trendy or cool; the P-O-P has to be less contrived, and more natural. Counterculture plays a role – don’t be like everybody else, and don’t do anything that the adult stores are doing.

Retail stores always have to update themselves, but renovation is a major cost for a retailer, so they can’t do it more than every five to 10 years. But merchandising programs, displays and product can have more of a fashion forward element. Make the store the place to be – have visits by celebrities and monthly parties.’

However, Gottheil also advises against relying exclusively on in-store marketing.

‘It’s possible for stores to rely only on the retail experience, but it’s difficult, because how do you tell people who you are? While word-of-mouth is key for youth marketing and you can do well with a trendy little store (and no marketing), you’re throwing the dice in the air.’