Perhaps the best-known researcher on this topic is Paco Underhill, author of Why We Buy: The Science of Shopping. The book was first published back in 1999, but one lesson that is even more relevant today is that to understand customers and optimize profits, we need to start with data.
Layout design is a topic we will continuously revisit on our blog, but today we are focusing on how to increase the profitability of existing store displays and fixtures. This discussion applies to you whether you want to sell more products or justify charging a higher fee for shelf space.
Using the right data
Video is the best data to use when trying to understand customers and gain real-world insight into your store’s traffic flow. By leveraging video analytics with your existing surveillance cameras, you can turn your security system into a source of contextual data. Meaning, data that helps you better understand the context of an event or customer in your retail space.
Keep in mind, I’m not talking about identifying customers and looking up their Facebook profile to know what brands they like. Our approach is to think of each person in your store like a cookie on the internet: we assign a unique id to in-store events and treat all interactions as equal.
In the same way that Google Analytics can tell you what pages visitors frequent (but not what their name is), video can tell you how people are moving through your store. This knowledge alone is enough to make a significant impact on the decision making process.
Costco knows it’s all about location, location, location
For a retailer that doesn’t have any pretty window displays or interior decorating to entice customers, Costco is sitting quite comfortably at the 19th spot on the Fortune 500 list. This multi-billion dollar company knows that optimizing store design and layout is key.
Every product and stand has been strategically placed along what they call “the Race Track”. This layout is designed to expose shoppers to every product category as they make their way through the store. While looking for trigger items across the warehouse, such as toilet paper and detergent, shoppers are more likely to discover treasure items and make impulse purchases.
Costco employs a team of 120 to work on the store layout, but as I will explain in the next section, you don’t need such a big investment in headcount to increase the ROI of your store displays.
Measure the value of each store display and fixture
The first step is to understand what areas in your store are the most valuable. Regardless of how skilled you are at visual merchandising, if your display isn’t in the right location it won’t be as effective as it could be. If you haven’t measured the value of your in-store displays you could be leaving money on the table or, in the case of most store owners, on the shelf.
The value of an area can be measured in two ways:
- Exposure: customer traffic flow can be tracked with video over a period of time to help you determine which areas get the most traffic and, therefore, the most exposure.
- Engagement: a customer is considered engaged by a display when they take the time to stop and examine it. Tracking how many customers stop in front of a display and how long they stay helps us determine their level of engagement.
With the Solink platform, you can also get a greater detail of shopper interactions with a particular display by accessing video at the time of engagement.
The important elements or areas to track are:
- Store fixtures
- End cap displays (at the end of an aisle)
- Stand-alone product displays or signs
- Areas around the cash registers
- Customer paths
Put the data to work
Once you’ve collected the data around your customers’ shopping patterns, you can start seeing interesting opportunities. Below are a few examples of how you can use the data to increase your store’s profitability:
Increase the cost of shelf space on your best displays
If you have 3 end cap displays and your data shows that one of them receives 20% more traffic, shelf space on that display should be valued at 20% higher than the rest. It is easier to convince suppliers to pay more when you have the hard data to back up the price difference.
Get rid of bottlenecks and improve store layouts
You might not have realized that a certain aisle or intersection is obstructing access to other areas of the store or that a section is consistently overcrowded until you look at the customer traffic flows. The customer’s path through the store should have a natural flow in which navigating between sections is frictionless. Otherwise, customers will spend less time shopping, visit fewer sections of the store or get frustrated and leave altogether.
Sell more units of a particular product
A product placed in an area that receives more traffic naturally has a higher chance of selling. Knowing where those areas are in your store allows you to strategically place bestsellers, new or seasonal products that you want to sell faster.
Perform in-store A/B tests
You can test the effectiveness of a new display or fixture before you roll it out across all locations. By measuring the level of engagement and exposure of the new display, you can compare the results to existing or previous ones.
Ecommerce stores do have an advantage over brick and mortar when it comes to the availability and accessibility of customer data. But with advancements in video and in-store analytics software, it has never been easier for retailers to make data-driven decisions. The key to retail analytics is using the data to answer specific business challenges, such as store layout design, while delivering more value to customers.
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