Store Rules!

A store assembles multiple functions. These functions involve the following actions: select, arrange, display, accumulate, store, supply ...

In fact, the role of any store - whether physical or virtual (e- or m-commerce) - is that of selecting suppliers and products, assuming financial risk and loss for storing and displaying them in a way that facilitates the process of identification, choosing, temporary storage (in carts) and transport from the store to outside.

The role, being well defined, the next question would be as to what are the elements that "make" a store.

These elements would be: goodwill, assortment, people, and design-layout. On the whole such elements are those responsible for "making" a store.

Goodwill is not just location but it is power of attraction. Goodwill is the combination of location with communication.

The definition of location will take into account the following basic elements:

(a)    traffic, frequency and socio-economic profiles;  
(b)    access;
(c)    public signage;
(d)    visibility;
(e)    parking;
(f)    neighborhood (competition and complementary stores)

Such elements can be obtained through observation as well as through simple searches such as visitation, traffic counting, conversation with lessors and store managers, and, if available, performance analysis of previous occupants. In addition, if more financial resources are available, geo-referencing or specialized consulting services can be hired.

A good location greatly reduces the investment in communication!

The definition of the assortment is simplified when one has references (other stores or competition). However, some important aspects must be taken into account, such as: clients that will be served (individuals or professionals, social class, geographical region, customs and local products); the physical store size (physical space is a limitation); existing exhibition and display equipment; and last but not least, competition and what it offers.

The assortment also has a great relationship with replenishment (more space is dedicated to the leading products on sale, due to productivity), pricing and, consequently, profitability. As a result, there is a simplified classification into four categories, whose nomenclature may vary depending on the company: leaders (lower margin); second price or second brands (have a better margin); own/private label brand (better margin and differentiation); and first price (product for "combat"). The sales volume between these categories may vary according to the audience they serve. Generally, the leader and the first price have higher sales volume, while the second price and the own brand have smaller sales, but contribute to better margins.

In a store, we could identify the following main activities and in all, human intervention is required: reception of goods, replenishment of goods, production/transformation, customer`s service, receipt/closing of sale, cleaning, security and maintenance.

When receiving goods, the conference between order and supplier`s invoice is already done automatically, both in terms of price and taxes and quantities. The use of barcode readers in the reception of merchandise makes the process of loading the quantities more efficient and fast.

In the production / transformation of products, the use of appropriate equipment and utensils has made the process simpler and with fewer people. An additional step would be to set up production plants (i.e. butchery, bakery and pastry plants) common in Europe and the USA.

The receipt / closing of the sale with the use of barcode readers made the process less painful.

The areas in which technology still need to be more present is in customer service and product replenishment. To resolve replenishment the installation of sensors detecting the lack of a product on the shelves would be a solution. In the case of customer service, the installation of consultation terminals containing the store map and the respective product location, as well as an intercom or the possibility of sending a message to someone, including the supplier's own customer service area, would be helpful. Such experiments are already underway and are expected to be implemented by large retailers soon.

The store itself is the most significant communication between the retailer and the customer. Therefore, its design should be consistent with the retailer's image, positioning, and strategy. Its layout, on the other hand, should influence purchasing behavior, mainly through product exposure, flow / traffic facilitation, and the creation of the "wow" factor.

The elements that must be worked are:

(1)    Visual communication: identity (customer perception about the store) and signage (navigation).
(2)    Design: exterior (store front, access and windows), environment (color, music, odors) and lighting.
(3)    Planning: allocation of space, layout and circulation. The most common types of layouts in large stores are:

a.    Free Flow, more common in department stores, where exhibition equipment and goods are grouped in a scattered manner, allowing free navigation;
b.    Grid, most commonly used, in which exposure equipment is placed in line or corridors, usually at right angles;
c.    Race track or Loop, in which one enters and exits through one acess, circulating throughout the store and departments. Examples are Ikea and Aldi.

(4)    Exhibition: selection of exhibition fixtures (racks, gondolas), presentation and exhibition (style, idea, colors, price, and vertical - accompanying eye movement).

Two legitimate questions would be: Does the physical store have a future? Would the principles of creating a virtual store differ from those used to create a physical store?

The physical store has a future that goes through:

•    Experience (senses, touch, education, personalization);
•    Integration between physical and virtual store (e-commerce and m-commerce);
•    Experimentation of alternative models to the sale of products, such as: rent and complete solutions offer (cleaning, or maintenance, not only providing ready to eat meals but catering);
•    Become a manufacturer-funded demonstration site for products and services (testing; tasting);
•    Smaller in size but not in the assortment, by using technology combined with delivery at home or in the store itself.

The ecommerce store faces the same challenges as a physical store with regard to: goodwill (location + communication), assortment, people and design-layout.

Location must be selected among search engines, marketplaces or even virtual malls. The advantage is that there is a greater number of information available: number of visits, conversion rate. The downside is that data are often not reliable or not applicable. And, mainly, occupy a well located space is expensive!

The construction of the assortment will be done, as in the physical store, targeting the customers they want to serve and what the competition offers. The idea that in a virtual store the assortment can be unlimited is fallacious. There is financial limitation. It is true that a virtual store can make use of the purchasing only after the sale takes place, as long as there are agreements in place with suppliers.

The main activities of a virtual store and the equivalent of those of a physical store are linked to:

(a)    customer service: checking customer ratings on social networks, answering questions about products and tracking delivery;
(b)    marketing and sales: definition of promotional calendar, definition of banners;
(c)    checkout: checking for receipts (for order fulfillment).

The importance of design and store layout in a virtual store is just as important as in the physical store. Elements involve: Visual Communication (identity and navigation), Design (Home page, colors, movement); and Planning (allocation of space for products, product data, photos, category page). The item Exhibition (presentation) is the one with greater weight and with more options to compensate for the absence of physical contact. The exhibition should count on: large and quality images; 360 degree vision, clear call to action: 'buy' button; Icons that create trust; Use of "last units" to make the customer decide; educational videos (including in partnership with suppliers); price comparison; customer feedback; clear description of products in a way the customer understands and researches; possibility of contact via chat; clear and visible exchange policy; and a fast page loading.

In the end the virtual store (e-commerce and m-commerce) is not so different from the physical store. In fact, they are complementary. This is so true that virtual stores are opening physical stores. Retailing is meant to serve the customer, interacting with him in conditions that fit their lives. The new store should reflect this!

At 2B Partners Consulting we are dedicated to help companies to address the questions such as those above via the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.        

This email address is being protected from spambots. You need JavaScript enabled to view it.  | Advisory Board | Interim Management