GULU UNIVERSITY

FACULTY OF BUSINESS AND DEV’T STUDIES

DEPARTMENT OF MARKETING & ENTREPRENUERSHIP

COURSE: MASTER OF BUSINESS ADMINISTRATION

MBA 6510: RETAIL STRATEGY

LECTURER: MR.OCAYA PATRICK

17/U/2639/MBA

OYITE DANIEL

QUESTION

1. Explain Retail Store layouts

2. Explain the emerging trends and challenges in Retailing
Background
Although the retail industry is transforming as technology continues to shape the consumer landscape,
the primary goals of a sound retail strategy have not changed: Deliver value in the supply chain and
create a unique customer experience. The rebirth of retail stores — after years of digital disruption and
economic challenges — is possible if retailers can successfully contend for their consumers’ attention,
and in return, earn their business. One way to do this is to design a digital and physical retail environment
that captures the overtaxed attention of consumers today.

The interior retail store layout has two important components:

 Store Design: The use of strategic floor plans and space management, including furniture,
displays, fixtures, lighting, and signage.
 Customer Flow: This is the pattern of behavior and way that a customer navigates through a
store. Understanding customer flow and the common patterns that emerge when customers
interact with merchandise based on the store layout is critical to retail management strategy.

While the exterior retail store layout includes exterior store design and customer flow, it also includes
the following factors:

• Geographic location of the retail store (real estate)

• Size of the building and length of the walkways accessible from the entrance and exit
• Use of furniture and exterior space for people to gather and interact
• Style of architecture of the retail building
• Color of paint and choice of exterior building materials
• Design of the physical entrance and exterior window displays

Types of Store Layouts

A. Grid Layout
The grid store layout design is a familiar, repetitive pattern favored by retail drugstores like Walgreens
and hardware stores like Ace Hardware. According to Ebster, there are multiple advantages to the grid
layout, including the following:
 • Customers can move quickly through an efficient floor space using standard fixtures and
displays.
• The presentation is uniform and comfortable due to its popularity, creating a seamless
customer experience.
• Design simplifies inventory control for the retailer - a key to retail strategy that leverages store
design to maximize profitability.
• Long gondolas in repetitive pattern.
• Easy to locate merchandise
• Does not encourage customers to explore store
o Limited site lines to merchandise
• Allows more merchandise to be displayed
• Cost efficient
• Used in grocery, discount, and drug stores.

B. Racetrack (Loop) Layout

Also known as the “racetrack” layout, think of the loop design as the “yellow brick road” of retail store
layouts. Ebster uses this analogy to describe the way a loop store layout uses a path to lead customers
from the entrance of the store to the checkout area. This is a versatile choice for store design when
implemented with another layout style or used as a prominent feature of the retail store. Ebster
recommends this layout for a larger retail space (over 5,000 square feet) and encourages a clear and
visible loop for customer flow.

Designers accomplish the loop effect by making the floor path a standout color, lighting the loop to
guide the customer, or using a different floor material to mark the loop. Lines are not recommended, as
they can be a psychological barrier to some customers, potentially discouraging them from stepping
away from the loop and interacting with merchandise. Ebster encourages a loop design that rewards the
customer with interesting visual displays and focal points on the way to the checkout area.

• Loop with a major aisle that has access to departments and store’s multiple entrances.
• Draws customers around the store.
• Provide different site lines and encourage exploration, impulse buying
• Used in department stores.

JCPenney Racetrack Layout

C. Free-Form (Boutique) Layout

A free flow layout rejects typical design patterns and styles commonly used to influence customer
behavior. In a free flow layout, the intent is not to lead the customer using predictable design patterns,
displays, or signage. There are no specific design rules followed for this retail store design, and
customers have more liberty to interact with merchandise and navigate on their own. For this reason,
the free flow layout is sophisticated in its simplicity.
Ebster points out that customers feel less rushed in this creative environment. Retail stores look less
sterile in the free flow design, and merchandise may seem more intriguing. The only limitation for
retailers using this layout is the overall space available, but that doesn’t mean that the research on
customer navigation behavior and tendencies shouldn’t be accounted for as well. The main disadvantage
to this experimental design layout is the risk of confusing customers past the point of their preferred
behavior and disrupting customer flow.

A step-by-step guide to planning store layouts that maximize your 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. In Store Design and Visual Merchandising: Creating
Store Space That Encourages Buying, author Claus Ebster offers valuable insight into maximizing your
retail space.

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. Ebster’s research indicates that 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.

Step Two: Identify Customer Flow

Ebster presents some general rules for customer traffic. Customer flow patterns vary depending on the
type of retailer, the size of the store, and the target customer. Ebster encourages retailers to use their
observations to discover the problems and opportunities unique to their environment. The next step in
maximizing your space for profitability is identifying your customer flow. The most effective method
for understanding your existing customer flow and identifying areas of opportunity is video recording.

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” by Underhill, 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. Underhill is adamant 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 Clockwork 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. Ebster points out that this customer behavior
repeats itself time and again in consumer research.

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.
Emerging Trends of Retail: Its Challenges and Opportunities. A case Study Of the
Ugandan Retail Market
Introduction
The retail sector in Uganda is unique and although disorganized, enjoys being one of the largest
following agriculture. The share of wholesale and retail trade in GDP averaged around a steady
18% in the past decade and that in services, around 47%. It is also one of the country’s largest
employers, employing around 16% of its total labor force. Since wholesale and retail trade
comprises more than a third of Uganda’s service sector which itself constitutes more than 47% of
Uganda’s GDP, a strong correlation exists between growths of the three.

As it appears, Uganda’s wholesale and retail trade bears potential to steer the country’s overall
economic growth by possessing a strong influence over contraction and expansion of services and
GDP growth. Thus, given the significance of Uganda’s retail sector in the economy’s overall
growth and the immense potential it carries, it is imperative to shed light on the sector’s future
development and the opportunities it has to offer.

Retail Formats in Uganda

1. Small Retailers
Historically, the retail scenario in Uganda’s major cities has been dominated by a large number of
small sized retailers. Traditional “Dduuka” (mom and pop) stores have overshadowed consumers‟
grocery shopping experiences in Uganda. However, after a long absence of large retail chains, new
preferences emerging among consumers indicate the advent of important developments at the
country’s retail front.

More recently, a number of international wholesalers like Tuskys have established large centers
within the country and are operating successfully. Such evidence, therefore, points to the decline
of traditional stores and small retailers and the shift in consumer preferences in favor of large
departmental stores, supermarkets and hyper-supermarkets centers.

2. Supermarkets and Hyper-Supermarkets

Amidst popular local stores, like capital shoppers, mega standards and quality supermarket in
Kampala and suburbs, the metropolitan cities of Uganda recently witnessed the advent of huge
international wholesale chains that proliferated rapidly in the following years. Uganda has become
home to three of these large supermarkets chains with approximately 12 branches flourishing
already and expansion plans underway for many more. Shoprite, the first modern supermarkets
chain to establish in the country, offers high quality products at competitive prices for 20,000-
25,000 varieties of food and non-food items under one roof.

Highlights – Current Trends

• The most recent being the use of Information and Communications Technology which
is in adoption by most retailers today.
• Uganda’s retail sales are likely to increase by 30%in the next 5 years
• Retail formats in Uganda are transforming rapidly - the share of community small shops
(mom and pop) and general stores is expected to decline by 50% in future years in favor
of large wholesalers and retailers
• In 6-7 years, retail giants like Tuskys, Mega Standard and Shoprite have established
more than 12 branches in Uganda with immediate expansion plans for at least 10 more
• Demand for such is driven by individual characteristics like income, education and
household size and external factors like quality, quantity, variety and convenience of
shopping
• Innumerate retail investment opportunities exist in a range of sectors in Uganda like
food, apparel, footwear, health &beauty, consumer electronics and home furnishings
• Retail developments are also fueling the demand for commercial real estate. Low share
of organized retailing, comparatively low real estate rents and growing consumer
aspirations are attracting investments in both retail and real estate
• A growing population size with more than 40 million people dominated by youth which
will boost the environment to develop the retail industry
• Uganda is one of the African emerging markets with an increasing income index,
people to spend more for consuming, and therefore boost the retail market in the future.
• There is an increasing urbanization which is an important factor increasing a
convenient environment for the development of the retail market.
• There is a growing number of female workers with increased purchasing power.
Such growth in Uganda’s retail industry is crucial to maintaining its competitiveness compared to
other African giants and neighboring countries. Trends in Uganda, however, remain quite
encouraging in the development of new retail formats and establishment of an increasingly large
number of international organizations‟ retail outlets all across the country.

IMPORTANT SECTORS
1. Foods& Beverages
It is estimated that the average Uganda consumer spends up to 64% of his income on food. As far
as fresh food produce is concerned, consumers have historically preferred to shop at traditional
wet markets, obtaining the satisfaction of hand-picked fruits and vegetables and negotiable prices.
The trend, however, gradually shifted towards local mini-supermarkets and more recently, towards
hypermarket centers like Mega Standard, Capital Shoppers, Quality, Shoprite and Tuskys, where
consumers now increasingly shop for better quality, quantity, variety as well as competitive prices
in a much more consumer-friendly environment.

2. Apparel – Clothing Industry

Having experienced a fashion revolution in the last couple of decades, Uganda is dominated by
used clothing industry by both the middle class and third class citizens. The Ugandan clothing
industry sector deserves a special practical body/association to plan and represent this retail
subsector which is always attracting attention from tax authorities, policy makers and regulators
resulting in a well-informed, rather transformed industry.

The local apparel market partly centered in Kiyembe business centre is growing slowly facing
competition from increased demand for used clothes and other textiles. The market is segmented,
providing for men, women and children of all ages and offering a range of lines, from casual to
semi-formal, work, and school uniform, and traditional wear, cultural casual and bridal wear.

3. Footwear
Uganda’s footwear industry is dominated by new and used shoes leaving little space for the local
producers. The Ugandan Bata Shoe Company used to produce locally but seem to have diversified
to more cost effective production methods. The local craft shoes industry also produces mainly for
the local casual footwear and women shoes.
4. Beauty and Cosmetics
In Uganda, there is as much emphasis on beauty as there is on health, if not more. Uganda has
emerged as a huge market for both local and international cosmetic brands in the past two decades.
Few local companies; Avis, Movit, Nivea and Samona possess a majority of the local market share.
International brands of the highest order like L’Oréal, Dark & Lovely, Revlon, Ultra Sheen also
extremely popular among females.

5. Electronics
According to recent surveys, Uganda’s consumer electronics market is expected to grow by an
annualized increasing rate. To some extent, this expected surge can be attributed to the overall
shift in trends and consumer preferences from a clustered group of small retailers to large,
exclusive retail outlets also well reflected in Uganda’s consumer electronics sector.

For instance, while Luwum Street in Kampala has historically been the hub of all trade and retail
activity in the electronics market for audio/video devices like DVD players, televisions, video
cameras and flat screens, a number of market players like Samsung, LG, Sony, Panasonic and
other brands have, over time, established exclusive display centers which offer complete customer
satisfaction in genuineness and quality as well as convenience of shopping.

5. Home Furnishings
The emphasis on home furnishings retail in Uganda has grown tremendously in recent years. With
an improvement in living standards and better awareness, excess demand for quality bed linens,
curtains, cushion covers, towels among others has spurred the growth of these product lines.
Uganda’s wood industry, too, is developing and captures 70% of the country’s total market for
furniture. The market is divided into home use and contract markets, constituting supplies to hotels,
restaurants, offices and public facilities.

6. Hardware and Building Supplies

An overall increase in residential building investment, commercial buildings, household
discretionary income, and growth in the number of households have supported the hardware and
building supplies retailing industry over the past years. Households undertaking DIY (Do It
Yourself) home improvement renovations and repairs have also boosted the industry's
performance. An undersupply of affordable housing and rising house prices have deterred many
home owners from moving, instead choosing to improve their existing homes through DIY
renovations. This has contributed to industry revenue growth over the past years.

7. Fresh Grocery Retail industry

Ugandan fresh grocery sales and supplies have increased along with the consumer interest in eating
and living well. With a growing middle class population in Uganda, the perception of losing weight
is always followed by more fresh foods and even using such foods as medicine. Most fresh grocery
products are sold in temporary structure wet markets, stalls and others on the streets. Fresh grocery
stalls are continuously being fixed on supermarkets and retail shops.

Uganda is known to be an agricultural country but there is a total disconnect between the
agricultural officers, economists, local governments, health officers, nutritionists, sociologists,
policy makers and urban planners to adequately plan for this sector which sometimes makes the
industry violent and neglected.

8. The Craft Retail Market

Tourism brochures often describe Uganda as “the Pearl of Africa.” Visitors think they will find a
unique craft market teeming with entrepreneurs. The Craft Market mainly on Buganda Road and
National Theatres ells goods from fashion to home products, decorations, traditional tools, antiques
and curios to leather goods. However, more than 40% of the craft products are imported from
neighboring Kenya, Tanzania, DRC Congo and West Africa. Most craft businesses are ran on a
small scale and the infrastructure housing most retail craft businesses are in frugal temporary
structures despite the craft industry being a key component and supporting sector of the tourism
industry in Uganda which generates a lotto the national GDP.

9. Stationery and Office Supplies

This industry mostly found on Nkrumah Road and Nasser Road in Kampala comprises businesses
engaged in Stationery, school supplies, and office supplies; Office equipment, furniture, and
supplies; and Office equipment, furniture, and supplies in combination with selling new computers
and consumables. There is growing decline of sales in the retail market of stationery products
which has been ushered by digitalization of the economy and the rise of electronic communication
forms such as e-mail and electronic invitation, websites, which have drained demand for traditional
paper products. With electronic communication quickly becoming the most popular medium for
interaction, stationery products are increasingly becoming obsolete. In the coming years, stationery
product retailers will contend with intensifying competition from substitute forms of
communication.

10. Auto Parts Retailers

The auto parts retailers are concentrated at Kisekka Market business centre, Ben Kiwanuka Street,
Nabugabo Road, Industrial Area, Katwe and Ndeeba in Kampala and is comprised of two kinds of
markets: those that sell replacement automotive parts and accessories to "do-it-yourself" customers
and to commercial "do-it-for-me" clients; and those that sell a wide assortment of new and used
vehicles over the networks of national franchised dealerships. The Auto Parts Stores industry is
expected to grow slowly over the coming years.

10. Online Shopping

Ugandans are not very active in online shopping. The transaction amount is still very low as
compared to the entire retail industry. Online sales only accounts for less than 0.5% of the total
retail sales in Uganda with olx, hellofood and other few companies are trying to penetrate the
market.

11. Wholesale Distribution Industry

Major wholesalers and distributors are mainly based in Kikuubo. Business Centre in Kampala and
others in industrial area and suburbs. Companies in this sector mainly distribute durable and
nondurable goods. For most distributors, demand is closely linked to local economic activity and
the industry is highly fragmented. The major segments of Uganda’s wholesale sector are
distribution of nondurable goods (about 70% of industry revenue) and durable goods (about 30%).
Leading categories of nondurable goods are groceries, personal care products, cosmetics and
drugs. The largest durable goods categories are electrical goods and electronics, professional and
commercial equipment, machinery, auto parts and stationery.

Retail Formats by Regional Concentration

The contemporary retail sector in Uganda is well reflected in Kampala and its suburbs in the form
of sprawling shopping centers, malls and complexes. Ushering the shopping revolution, local and
foreign large scale real estate investments in these cities have remained crucial in developing the
required infrastructure and buildings for such shopping areas. Kampala’s recently developed
Garden City Mall, for instance, stands tall and broad above a number of small to medium sized
malls.

However, further real estate investments in these retail-concentrated cities remain the need of the
hour and new shopping complexes need to be built to meet consumers‟ insatiable demand, with
wide parking spaces, clear paths for pedestrians, wide corridors, maintenance contracts,
completely facilitated shops, central air conditioning and numerous other amenities.

Commercial Real Estate in Uganda

Despite Uganda’s rapidly expanding population and noticeably improving infrastructure, the
demand for commercial real estate in the country remained nearly unaddressed in previous years.
However, the sector now assumes growing importance with increased liberalization in the country
combined with the economic growth. With a torrent of international brands establishing footholds
in Uganda in recent years and tremendous business opportunities for local & foreign players, the
demand for commercial space in the country is rapidly on the rise.

Kampala’s Real Estate and Retail Potential

Administrative Major Localities

Divisions
Central Division Kampala Nakivubo
Wandegeya Kololo
Town Kamwokya
Rubaga Mengo Town Kasubi Town
Nankulabye
Town Nateete Town
Nakawa Nakwa Town Ntinda Town
Bugolobi Mbuya
Makindye Kibuye Town Kabalagala Town
Kansanga Town Nsambya Town
Kawempe Kawempe Town Mpererwe Town
Kalerwe Town Bwaise Town
Conclusion
As it appears, the overall services and infrastructure developments across metropolitan cities in
Uganda have already picked pace to facilitate such booming sectors of tomorrow. The surging city
of Kampala, for instance, is home to over 1.5 million people with a daily demand of at least 1
million motorized trips for work, shopping and recreation. The Government of Uganda and the
private sector, therefore, has undertaken numerous transport projects like the Pioneer Bus, RVR
railway train, Taxis, Northern Bypass and Entebbe Express Highway to ease the pressure on roads
and consumers‟ access to basic services. If the city is later to become home to a network of large,
modern malls and shopping complexes, such developments in transport and infrastructure will
remain crucial to facilitate access. It appears that foreign flows have, more recently, shifted focus
from classic sectors like power to more vibrant ones like food, textiles and electronics. It is in the
light of such developments; therefore, that one can envision Uganda as the hub of all commercial
activity, retail in particular.

The retail sector has played a phenomenal role throughout the world in increasing productivity of
consumer goods and services. It is also the second largest industry in US in terms of numbers of
employees and establishments. There is no denying the fact that most of the developed economies
are very much relying on their retail sector as a locomotive of growth.