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Dr.

Ron Lembke

RETAIL / SERVICE LAYOUTS


RETAIL/SERVICE LAYOUT

 Design maximizes product exposure to


customers, profitability per square foot
 Decision variables
 Store flow pattern
 Allocation of (shelf) space to products
 Types
 Grid design Video

 Free-flow design
RETAIL/SERVICE LAYOUT
GRID DESIGN

Grocery Store
Bread Meat
Milk

Check-
Office Carts
out
RETAIL/SERVICE LAYOUT
FREE-FLOW DESIGN

Apparel Store

Feature Trans.
Counter

Display
Table
RETAIL STORE
FLOW GUIDELINES

 “Prisoner” aisles make you enter store


in a particular route, and pass by
certain displays
 Often contain less profitable (for the
store) brands
 “Decompression Zone” people walk
past first rows of items before settling
into shopping mode.
RETAIL STORE
FLOW GUIDELINES

 Bakery, coffee shop,


restaurant spread aromas
by entrance to stimulate
taste buds
 Siren song of the Starbucks
(Safeway)
 Food samplers throughout
store do same
RETAIL STORE FLOW GUIDELINES
Milk Meat
 Frequently purchased
items at far sides of
stores so you have to go
through entire store
(produce or meat).
 Profitable sections like
produce placed where you
keep running into them
 Colorful, fresh produce Bread
affects opinions about
store Produce
PERIMETER ITEMS
 People follow perimeter pattern
 Sale items on end – everyone sees
 Half of a store’s profit comes from items on the
perimeter
 Breakfast cereal brings in the most dollars per square
foot
 Manufacturer incentives increase profitability of soft
drinks
 “Anchors” at ends of a section: milk and butter at
opposite ends of dairy case
RETAIL STORE FLOW GUIDELINES

 Major items in middle of


aisles so you have to walk
down into middle of aisle
(Cereal, peanut butter)
 ‘Power items’ on both sides of
aisle so you have to look at Peanut
both sides Butter

Cereal
RETAIL STORE
FLOW GUIDELINES

 End caps for high-


visibility sale items
 Large quantities of
inventory serve as
“psychic stock”
 If there is a lot of it, it
must be on sale
 Stimulates sales
©
1995
Corel
Corp.
CUSTOMER
FLOW
 Eliminate cross-
over aisles?
 less wasted floor
space,
 you have to look
at more items,
 the more time
you spend in the
store, the more
you buy.
 Who wants to
read signs?
SHELF SPACE

Shelves: 3.5x3.25 = 11.375 sq in. Store: 9*5.5 = 49.5 = 23% of store


SHELF SPACE PLANOGRAM

5 facings
 Computerized tool for
shelf-space

PERT

PERT
PERT

PERT

PERT
management
 Generated from
store’s scanner data
on sales

VO-5

VO-5

VO-5

SUAVE
SUAVE
VO-5
VO-5
 Often supplied by
manufacturer
 Example: P&G 2 ft.
SHELF PLACEMENT

 Companies prefer to be at eye-level or at child-


reaching level
 Close to leading brands or high-draw items:
snack foods next to the peanut butter or across
from the cereal:
 Lots of kids visit the area
SLOTTING FEES
 Manufacturer pays retailer to get a product into a store
 35,000 new grocery products per year
 Grocery stores often stock 30,000 items
 Impossible to evaluate all new products to choose the best new
ones
 Slotting fees guarantee grocer profits on a product, help
balance risk of trying unknown product.
 Grocery is a narrow margin business, slotting fees can
represent a significant revenue source.
SLOTTING FEES
 Senate Small Business Committee held hearings on
them in 2000.
 Industry refused to cooperate with GAO.
 Growers of produce (not just brand names) now
getting involved and complaining.
 Small businesses claim they can’t afford the big
payments big companies can make.
 Advocates say small companies can “put their money
where their mouths are” just like anyone else
SUMMARY

 Retail layout types: grid, free-flowing


 Customer flow and most-frequently purchased
items important considerations
 Human factors extremely important in retail
layouts
 Buyer psychology, stimulate taste and smell
 No backtracking,

 Shelf position, as well as placement within store