Impact of Store Layout on Customers

Impact of Store Layout on Customers Chapter 1: Introduction In todays world market, dynamic new era come with tough competition. In each and every sector competition is increasing. To cope up with the competition, it is necessary for everyone to make strategy for their positioning and differentiation. In business to business market, it is easy to retain earnings. But in retail sector it is very difficult because retailers have n-number of customers and to satisfy all of them is not possible, but only customer satisfaction can retain the customer and so the profit. Individuals, having different need and wants may not satisfy with one solution. Purchasing behavior is changing with time. People dont have much time to spend on shopping. In that case one stop shopping can be helpful to them. And because of that reason retailers have to be careful in choosing the collection, place, layout of the store. Store layout is a significant factor driving consumer response in retailing. Store layout has its own way to influence customers shopping. It is characterized by increasing competition and more sophisticated, customers have gigantic expectations related to their consumption experiences (Griffith, 2005). Atmosphere in retail market changing drastically. Competition increased and which lead to a sophisticated and demanding consumer segment that are well educated and with high expectations for their each and every purchase. They are expecting retail shopping experience with non retail services. Now days, consumers want everything customized e.g. Product collection, staffs involvement, easy accessibility of the store, all these factors influence the buying decision of the customers (Dabholkar et al., 1996) This chapter will provide a brief background about store layout and its impact on purchasing behavior at convenience stores in London, UK. It will discuss the research problem of the study, the goals and objectives of the study, rationale of the study, research methodology, limitations and overview of the study. 1.1 Overview Core concepts and terminologies help in to better understanding of the problems. Hence it is necessary to define them. All the readers may not aware about the specific terminology. Essence of the research lies there only where every normal person can understand it without the help of professional. Store layout, consumer purchasing behavior and convenience stores are defined within the context of marketing and retailing. Store layout is ease of user movement through the store to provide maximum exposure of goods and attractive display (Marketing Glossary, 2007). This includes doors, merchandise placement, shelf orientation, music, check-out counters, interior decorating, staff attitude, lighting and location of the loading facilities (Levy et al., 1995). Consumer purchasing behavior is the process by which individuals search for, select, purchase, use, and dispose of goods and services to satisfy their needs and wants. This process is influenced by the social and cultural environment (Consumer buying behavior, 2007). Convenience store is a small retail self-service store selling a limited line of fast moving food and non-food items, usually with extended hours of operation (Glencoe Online, 2004). 1.2 Backgrounds to the Study History of the convenience store state that, root of this industry found from early in 20th century. It came out form the many types of retail establishments in existence at that time. Convenience stores grew rapidly after the Second World War alongside the idea of the American dream. More families had more cars and lived in more suburbs, further away from shopping centers and large grocery stores. So, more convenience stores came into existence (The origin of the convenience store, 2007). ACNielsen (2006) reports that in todays time pressured world, convenience becomes increasingly important to consumers of Great Britain. Shopper habits are constantly evolving, along with developments in retail offerings. In recent years, the convenience store industry stands as an economic powerhouse, a vibrant channel of retail trade, and an anchor business for the neighborhoods. Many factors affect the store patronage decision, e.g. location, service levels, pricing policies, merchandise assortment, store environment and store image. However, very little research has been conducted on the actual determinants of a good store layout (Todays Convenience Stores, 2001). The increase in dual income families and longer working hours are making general shopping a more stressful activity for many families because of time pressure and lack of response by retailers (Avlott and Mitchell, 1999). Therefore, this exploratory research hopes to investigate if more consumers in small convenience stores are experiencing problems with different merchandise displays, narrow flow space, absence of price tags on products and absence of direction arrows and signs showing where the merchandise is being displayed. 1.3. Research Problem In spite of many commercial and educational researches there are much confusion about the purchasing behavior and perceptions of the consumers. Todays customers are more sensitive and demanding than ever. They want fast, friendly service on their terms every time they come to a store (Andersen, 1997). If they do not get fast and friendly service, they will abandon that establishment in search of another one which offers fast, convenient and better services. Based on the views of Shaffer and Greenwald (1996), a well defined, attractive and friendly store layout will attract potential customers to the store and, at the same time, discourage those who are not interested in the merchandise from entering the store. As a result, the study investigates the impact of store layout on consumer purchasing behavior and intends to present suggestions to improve the quality of service delivery in London, UK. 1.4. Research Objectives Main objective of the study is to examine the impact of store layout on customers and variables that affect the purchasing pattern of the customers. Once a topic has been identified and narrowed to the right size, the research question can be formulated to meet the objectives of the research (Saunders et al, 2007). The present research plan and its finding will answer the following questions. The following objectives are drawn from the overall aim of the study: To establish the fundamental uniqueness of layout of convenience stores; To ascertain problems arise by customers during the shopping at the convenience stores. To examine customers satisfaction and level of service they are getting from convenience stores in London, UK. To make recommendations to improve store layout in independent convenience stores in London, UK. . 1.5. Rationale of the Research This study will help in to the development of the convenience stores in London, UK by providing detail knowledge of the of the need and wants of the customers. The study is also intended to measure and assess the products display and collection in stores, customer handling capacity, service levels, pricing policies, store environment and store image, staff attitude and training, impulse purchasing pressure, and the impact of store layout and problems associated with products display. The real value of this study, however, lies in the hope that the retailers commitment to providing efficient and improved customer service will eventually allow both the retailers and consumers to successfully uncover the mechanics of good store layout. The consumers of convenience stores in London will benefit by providing the required information on store layout to the researcher. 1.6. Research Limitations The study was limited to a review of literature pertaining to store appearance, products display and other attributes of a good store layout. Due to time and cost constraints, the study was confined to only convenience stores in London, UK. The research was done in London area and, therefore, the results of the study cannot be generalized to all convenience stores in UK. 1.7 Outlines of Chapters The report on this study is made up of five chapters. These chapters cover the following areas and details of the chapters are as follows: Chapter 1: Introduction This chapter introduces the study and provides an overview of the research problem, the research objectives, the rationale behind the study and the research methodology and limitations thereof. Chapter 2: Literature Review -The literature review gives an overview of store layout theory. It also discusses consumer buying behaviors and perceptions and what retailers can do to help their customers to better overcome this phenomenon. The chapter will examine various concepts or characteristics relating to store layout which include: crowd density, staff attitude and training, store layout, impulse purchasing pressure, location, product assortment, music, and lighting. Chapter 3: Research Methodology The research methodology chapter shows how the data has been collected and gathered. It provides insight into the sampling methods used, the questionnaire, and various other techniques used to analyze the results. It also contains a review of the validity and reliability of the research investigation, indicating areas where errors might have occurred. Chapter 4: Analysis and Results The purpose of this chapter is to present the statistical analysis of the data obtained through the questionnaires. The data has been processed into meaningful results that the reader is able to interpret and understand. Chapter 5: Summary, Conclusions and Recommendations This final chapter of the dissertation contains the conclusions that are drawn from the findings in chapter four and also from chapter two. Recommendations and suggestions for further research in the field are made. Brief background of the store layout and its impact on purchasing behavior at convenience stores in London is discussed in this chapter. Research methodology, research, problem of the study, the goals and objectives of the study, rationale of the study, limitations and overview of the study is also discussed. The next chapter will review the literature in more detail and cover the theme of the important aspects pertaining to this study. Chapter 2: Theory Frame work Literature Review 2.1 Theory Framework 2.1.1 Overview This chapter looks at the dynamics of consumer behavior and the consumer market. Consumer buying behavior- includes the buying behavior of final consumers individuals and households that buy goods and services for their own consumption. All of these final consumers mutually create the consumer market. The world consumer market consists of about 5.5 billion people, but the billion people living in North America, Western Europe and Japan make up 70 per cent of the worlds spending power. Even within these rich customer markets, customers vary immensely in age, income, education level and tastes. They also buy an unbelievable variety of goods and services. How these varied customers make their choices among various products squeeze a charming collection of factors. The buying behavior of final consumers -individuals and households who buy goods and services for personal consumption. 2.1.2 Stimulus response model The innermost question for marketers is; how do consumers respond to various marketing stimuli that the company should use? The company that really identify with how customers will act in response to different product features, prices and advertising plead has a great benefit to its competitors. Hence, companies and educational institutions have researched seriously the connection between marketing stimuli and consumer response. The starting point is the stimulus-response model shown in figure 1. It indicates that marketing and other stimuli goes in to consumers black box and produce certain responses. 4Ps create marketing stimuli 1-Product, 2- Price, 3-Place and 4-Promotion. Other stimuli comprise important forces and measures in the buyers surroundings; monetary, technological, political and cultural. All these stimuli go into the buyers black box, where they are curved into a set of visible buyer responses product choice, brand choice, dealer choice, purchase timing and purchase amount. To understand how the stimuli changed in to response of the consumers inside the consumers black box in two parts. 1. The buyers distinctiveness influence how he or she perceives and reacts to the stimuli. 2. The buyers decision process itself affects the buyers behavior. Lets look at buyers characteristics as they affect buying decision and then examines the buyer decision process. It is difficult to know what exactly is in the black box and exactly predict consumer behavior, but the above model can help us to understand consumer behavior and help the researchers in creating the right questionnaire for the influencing factor. 2.1.3 Characteristics affecting consumer behavior Consumer buying process is subjective strongly by cultural, social, personal and psychological characteristics, as shown in Fig-2. Marketers can not control all the factors but they should have to take all of them in to consideration. Cultural Factors-Cultural factors applythe broadest and deepest influence on consumer behavior. The marketer needs to understand the role played by the buyers culture, subculture and social class. Culture Itis the mainly basic source of a persons wants and behavior. Human behavior is largely cultured, rising up in a society. A child learns fundamental values, sensitivity, wants and behaviors from the family and other important institutions health. Sometimes we take these values for granted, but they are noel cultural universals (Kotler, 2003). Subculture A group of people with common value structure based on familiar life practice and situations. Each culture has smaller subcultures or groups of persons with shared value structure based on common life experiences and situations. Subcultures include nationalities, religions, racial groups and geographic regions. Many subcultures create positive significant market segments and marketers often aimed at products and marketing programs customized to their needs (Kotler, 2003). Social Class Relatively permanent and ordered divisions in a society whose members share similar values, interests and behaviors. Almost each and every society has some structure of social group formation. Social classes are societys relatively stable and prepared division whose members share similar values, interests and behaviors. The British scale with six social classes is widely used, although all big countries have their own system. In these social classes social class is not determined by a single factor, such as income, but is calculated as an amalgamation of occupation, income, education, wealth and other variables(Kotler, 2003). 2.1.4 The buying decision process Companies have to research on consumer buying process to understand the answers of the questions about what, where and how of the consumers. But to learn it is not easy task and the answers lies with customers only. To take it out these answerers is a work of great deal. We will examine the stages that buyers pass through to reach a buying decision. We will use the model in Fig 3, which indicates the customer as passing through five stages: 1-need recognition, 2- information search, 3-evaluation of alternatives, 4-purchase decision and 5-post purchase behavior. It can be seen that the buying process starts long before actual purchase and continues long after (Kotler, 2003). This gives confidence the marketer to focus on the complete buying process rather than just the purchase decision. This model involves that customers pass through all five stages with all purchase. But in everyday purchases, customers often skip or reverse some of these stages. To illustrate this model, we return to Anna Flores and try to understand how she became interested in buying a camera and the stages she went through to make the final choice. Need Recognition This is the first stage of the buyer decision process in which the consumer recognizes a problem or need. The buying process starts with need recognition the buyer identify a problem or need. The buyer senses a difference between his or her actual state and some preferred condition. The need can be generate by internal stimuli when one of the persons usual needs hunger, thirst, and sex raises to a level high enough to become a drive. (Kotler, 2003). Information Search: The stage of the buyer decision process in which the consumer is aroused to search for more information; the consumer may simply heightened attention or may go into active information search. A stimulate consumer may or may not search for more information. If the consumers drive is strong and a satisfying product is near at hand, the consumer is likely to buy it then. If not, the customer may simply store the need in memory or take on an information search related to the need. (Kotler, 2003). Evaluation of Alternatives: The stage of the buyer decision process in which the consumer uses information to evaluate alternative brands in the choice set is called alternatives evaluation. We have seen above that how the customer uses information to arrive at a set of final brand choices and how does the consumer choose among the alternative brands? It is necessary for marketers to know about alternative evaluation that is, how the consumer processes information to arrive at brand choices. Unluckily, customers do not use a simple and single assessment process in all buying circumstances (Kotler, 2003). Purchase Decision: The stage of the buyer decision process in which the consumer actually buys the product is called purchase decision. In the previous, evaluation stage, the consumer position brands and forms purchase intentions. Generally, the consumers purchase decision will be to buy the most preferred brand, but two factors come between the purchase intension and the purchase decision. The first factor is the approach of others. And Purchase intention is also influenced by unexpected situational factors. The consumer may form a purchase intention based on factors such as estimated family income, estimated price and estimated benefits from the product. The marketer must understand the factors that provoke approach of hazard in customers and must give information which support in buying decision and that will reduce the perceived risk. (Kotler, 2003). Post purchase Behavior This stage of the buyer decision, process in which customers take further action after purchase based on their satisfaction. The marketers work does not end when the product is purchased. After buying the product, the consumer will be satisfied or dissatisfied and will engage in post purchase behavior of interest to the marketer. What decide whether the purchaser is satisfied or dissatisfied with a purchase? The answer lies in the association of the consumers expectations and the products superficial performance. If the product falls dumpy of potential, the customer is disappointed, if it meets expectations, the consumer is satisfied; if it exceeds expectations, and the consumer is delighted and consumer deligtness is the necessity of the success in todays competition. Understanding the customers desires and buying process is the basis of successful marketing. By understanding how buyers go throughout need recognition, information search, and evaluation of alte rnatives, the purchase decision and post purchase behavior, the marketer can choose many evidence as to how to meet the buyers needs. By understanding the various participants in the buying process and the strongest influence on their purchasing behavior, the marketer can develop an effective programmed to bear an eye-catching offer to the target market. (Kotler, 2003). 2.2 Review of Literature This chapter gives inclusive idea about the characteristics of store layout and its impact on consumers purchasing pattern at convenience store. As suggested by Paulins and Geistfeld (2003), most convenience stores are poorly perceived with respect to in-store displays and external appearance. The outside store appearance affects consumersà ¢Ã¢â€š ¬Ã… ¸ choice of a store. Hence it is mandatory for stores to focus on their external appearance. It can influence the stores performance in terms of turnover. The objective of the literature review is not just survey of the information available but it is for the better understanding of the research. It can influence the research on many stage of its development and it can help researcher in determining the key factor which has impact on store layout. Factors which are affecting the stores turnover can be summaries as follows. 2. 2.1 Store Appearance and Image Half of the work can be done by just positive attitude which is true not for the human being but for the all the business. Same is applicable for the stores. It gives sustainable competitive advantage over the competitors. It gives idea about the positioning of the store. And for the positioning what strategy should be adopt by the retailers. It also helps in to differentiating the store (Birtwistle and Shearer, 2001). A desirable retail mix can influence the consumers and store appearance has played major role in retailing. The inspiring store image is desirable for the consumers (Devlin et al., 2003). Estelami and Bergstein (2006) are also of the same opinion that consumers typically form an overall impression of a retail store through various information processing mechanisms, such as advertising, viral marketing, or personal experience. The determinants of a good store layout are rare. There are six major dimensions that should be considered when determining a good store appearance, are as follow: Personal communication Guiding principle Physical manifestation Location Problem solving and The convenience of a store The physical appearance of a store has the greatest impact on the overall service quality, higher customer retention and higher future consumption, respectively (Siu and Cheung, 2001). Thang and Tan (2003) further state that characteristic of store image and exterior affect consumersà ¢Ã¢â€š ¬Ã… ¸ inclination for the stores. The motivations that pertain to store attributes include products, store ambiance, in-store service, convenience, status, endorsement, amenities and post-sales service. Consumers preference is based on their post-visit ranking of the stores. Hence, the quality of in-store services is likely to have a strong impact on consumers purchasing pattern and, if not liked or unsuited with the standards or the attitude required by the target consumers, might restrain appeal. Below is a diagram with mechanism of a good store appearance. As shown in Fig 4, the stimuli that pertain to store attributes include products, store atmosphere, in-store service, accessibility, reputation, promotion, facilities and transaction service. The A S-O-R Model of consumer retail purchase pattern emphases on the most important factors to succeed with store appearance and image. In becoming a customer oriented business, management needs to be well-known with all the elements of the model (Thang and Tan, 2003). Memery et al. (2005) Note that store appearance is obtained through practice only. 2.2.2 Store Traffic Flow and Crowd Density The store layout is the basis for procedure. Therefore, conducting a traffic flow analysis is a vital action to take when the object is to develop store performance. This instrument is helpful when development of a reorganization of the current collection. The analysis is also useful when the motive is to fine tune after a remodel. By ascertaining customers shopping behavior, a retailer can inspect the strengths and weaknesses of the layout. The analysis is simple to carry out and can be done on a huge or little scale, surrounding of the whole store or one department. The results will be clear and make decisions simple to arrive. The main goals of carry out a traffic flow analysis is to decide traditions to make shopping and managing the store in a simple way by using layout and merchandising techniques to develop sales, improve the stores exterior and make shopping more pleasurable (Quinn and Stewart, 2007). Shopping is one of the most exciting activities in life. As the taste and the preference of shoppers change constantly, retail facilities have evolved in response. It is universally accepted that in-store traffic flow plays an important role in the success of a retail facility (Hui et al., 2007). Dion (2004: 250) states that crowding is not simply a matter of density in a given space. Crowding appears to arise through the juxtaposition of density with certain social and personal circumstances which sensitize the individual to the potential constraints of limited space. The sensitivity of such limitation leads to a familiar inequality between the total of space required, or measured to be sufficient, by the person, and the total of space accessible to them. Emberson et al. (2006) are of the opinion that recent projects, such as professional consumer reaction, have raised the profile of in-store merchandising as a possible solution. Store group collection policies, stock organize; staffing levels and the amount of customer traffic were identified by merchandisers as affecting their activities. Cottet et al. (2006) strongly suggest that practical importance of shopping is basically obtained through simple admission to products or information. The useful value depends on the way of utilization and need, primary to the shopping behavior. 2.2.3 Products Display Merchandise display, according to Zentes et al. (2007), is a term repeatedly used in the circumstance of in-house marketing. It refers to the way products are accessible in a retail outlet. While this appearance has been used with a focus on merchandise display (e.g. the choice of fixtures to be used and the method of product presentation), it communicate on the whole store design, store layout and other aspect of the store environment. Two basic objectives of in-store marketing are: 1. To design the store for simple in-house direction; and 2. To construct a positive store ambiance. Attractive displays by retailers can lead consumer to let go the time and attempt required to go further to more distant stores. This technique advises that consumers shop at the stores where they can get maximum satisfaction, considering both retail characteristics and shopping expenses. Pleasant shopping atmosphere positively affects the shopping time and the money that customers spend in a store as well as the emotion of shopping (Kim and Jin, 2001). Sinha and Banerjee (2004) contend that convenient stores consumer append more significance to merchandise display. These shoppers prefer to visit those stores that have depth and width of products. The importance of relationship/comfort level with the retailer is stressed with regard to grocery stores. Fig 5 Framework for examining store preferences in an evolving market. Source: Sinha and Banerjee (2004). The above framework is tested and it demonstrates that the basic drivers of the store loyalty can be deriving in 3 groups. Risk Reducers Choice Enhancers Shopping Experience Enhancer. Products displays have significant effect on retailing where self service is applicable. The displaying strategy helps to the consumers and most of the time it result in to increase in the sales. And higher sales mean higher the profit. Merchandising consists of the following elements: Correct strategic placement in the store; Eye-catching and appealing display; Appropriate point of sale support media (e.g. labels, signs); and Legal requirements satisfied. The purpose of the best product display collection requires information about feature such as: 1. Market value of the place available for particular product and 2. Market assessment for sustainability of the available products. 2.2.4 Product Assortment Efficient merchandising approach can collect large plunder in todays marketplace. Effective category management is essential for retailing. It is difficult that stores improve their service by enabling consumers with the products they demanded. Adopting a more strategic approach to merchandising can collect big rewards by increasing sales, increasing step and ultimately increasing turnover (Clark, 2003). Halepete et al. (2005) recognized that, in the past, when competitors were not much strong, a store could object a broad range of consumers. But retailing trends indicate that it is becoming significant to make happy consumers needs. Assortment management is one of the significant factors in merchandising. For a business to attain consumer loyalty, the steps in the below diagram need to be followed. This model can be utilized by retail outlets managers to get an idea about different factors that should be considered while merchandising. Importance on the each factor should be given based on area of the store. Information received from this model can help in to increasing the sales. Normally customer doesnt like to go home with empty hand if their first choice product is not available or out of stock, consumers go for the substitution with in the same product category, but for different size, color or brand. In spite of enormous hard work of suppliers and retailers in the fast-moving-consumer-goods (FMCG) channel to adopt the efficient consumer response practices, lots of have not realized expected benefits. Traditional retailers are not able to give price benefits, collection verity to the consumers and it is difficult for them to fulfill the each and every customers need. Because of that customers normally switch over to the other retailers where they can get the satisfaction. Whereas convenience stores have advantage of the consumer centric assortment which improve their performance. Some loyal customers can make store profit making unit. It is possible that not all the categories they have are profit making but out of that one or two may be cover the profit of all the categories. Category management will boost consumer loyalty to the retailer and to the brand, since the plan consumer will be able to without any difficulty find their preferred brands at a fair price in one outlet duri ng each shopping experience (Dupre and Gruen, 2004). 2.2.5 Store Floor Space Floor space should be utilized in such a way that it make easier shopping experience and make possible easy communication between staff, staff and consumers. The core requirements are enough space to move around the store, ease of access from outside the store and clear navigation and displays. Stores can make their branding by this way and make it memorable window displays etc. utilizing better point of sale, personal touches to encourage customer loyalty, graphics, highlighting prices and age ranges in busy areas (Cowles, 2002). In the above figure it is shows a number of huddle have appeared on consumers psychological associations. Major, four leading motivational prototype emerged which include fr