Modern Retail Design: More Than Just Decor

Why Should Retailers Care?

An initial 2014 study performed by retail marketing and research firm Dalziel & Pow, a staggering 41% of consumers would shop at one supermarket over another simply based on the ambiance and atmosphere, and that trend has only increased since the study was conducted. Consumers are now overlooking former top factors such as price and quality of goods for the first time in nearly two decades. This shift in consumer trends means that retailers must give their best effort to retail design, something they have not had to worry about in years. As retail has changed over the past few decades, thousands of new stores across America have been built, ever-growing with larger footprints and more elaborate designs. The importance of store layout and design for today’s struggling retail climate illustrates why certain features are chosen over others. Stores with a more pleasant shopping experience are showing consumer behaviors that validate why these features in store layout and design are successful and lead to increased profitability. Upper management of America’s top supermarket chains have to question whether or not their brand image can survive if innovative actions are not taken soon. In order to stay relevant in the ever-changing retail industry, retailers must offer a welcoming environment for consumers, focused on the presentation of products and a superior customer service experience in order to maintain and increase profitability.

In a study conducted by a prominent researcher of consumer science, Thomas Van Rompay stated “in the context of store and service design, color is one of the most influential ambient variables." As a result of this study, many retailers began to focus more on the science of colors and what emotions they create for the consumer. However, many of these retailers are not building new stores. Most national retailers in America went on a suburban sprawl investment in the late 1990s and early 2000s, resulting in few areas to expand their market share and innovate. Today, these same stores have begun to fall into decline and obsolescence with the fast-growing trend of online shopping. Enter the redesign phase–as a result, stores began to transition from tall, white walls and enclosed ceilings to more gray and earth tones and differentiated depths in order to make shopping feel less sterile and more welcoming.

[Front End - ShopRite Supermarkets, Phillipsburg, New Jersey (August 2019)]

Albertsons Companies: The Premium Fresh & Healthy Project

Photo of an Albertsons-owned supermarket, ACME Markets, that piloted the 'Premium, Fresh & Healthy' format for the company in 2006 (October 2014)

Albertsons, one of America’s largest retail conglomerates, operating more than 2,000 stores in 35 states under roughly twenty brand names (other than their own), was a pioneer in the redesign era of retail in the early 2000s. With their market share, owning dozens of banners across the United States, renovating stores to appeal to the consumer was a great feat to take on. However, the company found a hook that truly works. Dubbed ‘Premium, Fresh & Healthy’ (PF&H) by the company, Albertsons formed a unique shopping experience that propelled them ahead of the competition. Albertsons’ marketing and design teams looked at the subject more like a science rather than a task, and believed that “… if you went to several grocery stores, [...] you wouldn't be able to differentiate between the different stores." Seeking to prove this hypothesis wrong, the company piloted the new concept at a pre-existing Albertsons in Las Vegas, Nevada. This prototype for the PF&H concept included warm colors, lighting focusing on the product rather than the ceiling, and appealing department branding.

Key Factors in Thoughtful, Modern Retail Design

Barn and Windmill Elements - Food Bazaar, North Bergen, New Jersey (July 2019)

While previous retail design of the 20th century consisted of big, tall white walls, and large words or murals that take your eye up, retail design of the 21st Century is focused on something much different. Supermarkets are becoming more unique as time goes on, and retailers are spending more time and capital on elaborate designs. With this trend comes a term retail marketing firms like to call ‘hyper-localization', where they design every single store from the ground up, specifically for that particular store's local market to support a welcoming atmosphere, and convey the message that the store truly cares about the community it serves. In order to apply the term ‘hyper-localization’ to a specific region, retail marketing firms work in conjunction with the brand in order to create something that fits both the store’s budget, and the local market. For example, the incorporation of a 3-D decor element of a semi-trailer truck in the dairy department of a supermarket in a blue-collar community shows how this can be achieved without becoming too expensive or complex for a store’s budget to handle.

While visual stimuli is very important to a retail environment, it is also important to note that there are general perceptions of environments drawn from the colors utilized in an indoor setting. Van Rompay’s consumer study noted that the “most salient color dimension deals with color warmth." As a result of this study, many commercial interior design firms recognized that these earth tones make the consumer feel welcome in the environment and extend their shopping time. In order for the consumer to have an increased chance of making impulse purchases on-a-whim purchases made usually from store displays and other marketing attractions retailers use bright colors such as fire truck red and safety yellow to create a sense of urgency and attraction for the consumer to purchase the displayed items during their visit. By incorporating these color themes, a retail environment can maximize their sales floor in order to produce more impulse purchases, which increases their sales as a result.

How is Technology Changing The Norms for Shelves and Store Layouts?

Digital Price Tags - Amazon Fresh, Warrington, Pennsylvania (December 2021)

There is much more that meets the eye in supermarket design than just the simple environment; there must be a keen focus on the product and product placement. In 2016, Coop Italia, a leader of supermarkets in the Eurozone, opened what they call a “supermarket of the future,” with a strong emphasis on design and the ‘fresh wing', which comprises a deli, bakery, butcher, and produce. These departments are lined in warm earth tones and modern industrial fixtures to convey longevity and style. The store also has an emphasis on interactive tech--there are more than 100 interactive displays in the store. Additionally, there are more than 20,000 digital price tags that display pricing, nutritional facts, and other relevant information about the item. The goal is to help consumers feel more welcome and important in the retail environment, particularly with the touches of interactive displays and extensive information for the products that would not normally be available, even via employee interaction. While these solutions are costly, they have proven beneficial for retailers and help them stay relevant and enjoy increased profitability as the customers return again and again.

While many view the search for the ‘supermarket of the future’ as a technological paradise, it is important to remember what key components produce the greatest impact for merchandising over time. On shelf layouts, there are four key components: Exposure, Intensity, Space, and Aspect Ratio. “Exposure” refers to whether or not it is along a high-traffic area of the store. “Intensity” determines both the light exposure and the fixture it is placed on. “Space” refers to how large the product appears on the shelf in terms of facings; a high-volume product should have dozens of facings. “Aspect Ratio” is where the product should appear on the shelf, whether it be top, bottom, left, or right. In the past, many retailers abandoned these concepts in order streamline restocking and maintenance costs. These tried-and-true concepts, however, are still vital to a retail environment, as proven by researchers in Japan.

Prominent consumer psychology researchers Ohta and Higuchi learned about different grocery store layouts and designs in their native country of Japan, which is a global leader in retail innovation and interior design. The researchers noticed a pattern: more than 90% of store layouts used a well-named ‘standard layout', while the minority used other variations on store layouts. Ohta and Higuchi also learned that there is a pattern of categorizing and using certain fixtures to better implement the standard layout.

To further implement a ‘standard layout', Ohta and Higuchi discussed that the “...circulation of consumers around a store is integral to finding the proper layout, shelf heights, etc.” Their thought is that there is no true ‘standard layout', but rather one that is dependent on which product categories a location profits the most from, in terms of both volume and sales by “quantifying exposure… locating hot-warm-cold spots on each rack along a pathway." For instance, most American supermarkets place all refrigerated dairy towards the back of the store rather than the front, as it is considered one of the high-volume areas in the store that produce impulse purchases en route to the dairy department.

The Purpose of Growing Retail Spaces in America: Format Blurring

Enhanced Service Departments - Weis Markets, Perkasie, Pennsylvania

In the past decade, supermarkets across the United States have expanded and increased their product and service selection to better compete with both competitors and online retail. A national average of 31,119 items are carried in a typical United States supermarket, a figure that has increased every year since 2000. The study by FMI compared average items carried by a selection of supermarkets in different regions of the United States. Results of the study indicate that consumers increasingly expect more than just the typical offerings of a traditional supermarket, most likely because of the expanded selection of goods available online. In order to accommodate increased offerings, retailers have expanded their average footprint of roughly 48,000 square feet. Since online orders take time to deliver, many consumers turn to their local supermarkets in search of these items. In order to compete with online shopping, retailers must integrate these unique products into traditional grocery categories; this will undoubtedly continue to shape the supermarket of the future.

Retailers are able to track consumer paths throughout the store based on the products they are purchasing at a given time. This is integral to pleasing the consumer by making products easy to find, and providing a recognizable layout that does not differ much from the competitors. The end result is increased sales and brand recognition due to the peace of mind the consumers feel from being provided with a layout that is easy to navigate.

Within the 31,119 items that a typical U.S. supermarket carries today, an increasing percentage of the products are becoming non-food items. Most national retailers are testing new hybrid formats, a result of Wal-Mart’s success with the Supercenter format in the late 90s that combined clothing, general merchandise, grocery, and fresh foods into their most profitable stores. As a result of Wal-Mart’s success with what many in the retail industry call “format blurring,” a new era of supermarkets focused on becoming a one-stop shop was born. Supermarkets (national and regional) started to incorporate diverse product categories into their stores, with high emphasis on general merchandise, seasonal, health and beauty, expanded fresh offerings through prepared foods and service bakeries, full-service pharmacies, and pet supplies.

The Oldest Supermarket in America: A&P

Exterior shot - Abandoned Super A&P Food Market, Hackettstown, New Jersey (June 2020)

A&P (a former leader in the grocery industry that failed due to later stagnant corporate management) was on a store improvement and experience blitz in the early 2000s. Building more than 50 stores annually at the time, the company focused primarily on the store design. However, maintaining and improving the brand image was important as well. Cheryl Palmer, the new head of marketing at A&P at the time, told the story of ‘Peppy the Pepper’ to Brandweek’s Gerry Khermouch: “We've got this young man…who dresses up in a green pepper outfit and works in the produce department as Peppy the Pepper, talking about how he's nutritional and wouldn't you like to be a pepper too, making up his own lyrics … If you could engage half your associates to behave like that on their own, think of the experience! Think of the brand essence that gets developed around that!" These unique experiences translate into how the brand looks over all. Four years later, in 2004, A&P introduced its first Fresh Market concept, which propelled the company into a decade’s worth of success thanks to Palmer’s leadership and creativity.

However, this story was not to end in success. A&P closed its last store in 2015 due to an inability to fully maintain their practices of stellar service and a welcoming atmosphere. It is clear that there is an even higher importance on the store experience now. As of late, studies are being conducted to see which factors of a supermarket are the defining factor on whether or not a consumer will continue to shop there. “In other words, for these shoppers, high-arousing stimuli add to the richness and …value." The results were clear: store experience topped value for the first time in over two decades.

Is the Decline of Retail Based on Outdated, Poorly-Serviced Stores?

Front End - Redner's Markets, Quakertown, Pennsylvania (January 2020)

In 2007, Tom Ertler, director of WD Partners, which focuses on improving the consumer experience, went as far as to say “People don't remember how to use the pantry. Dining room lights are out all over America." Since Ertler’s work with the Albertsons ‘Premium, Fresh & Healthy’ project, there is more of a trend towards providing many fresh food categories that embrace several diverse eating habits, ranging from organic to plant-based. However, all of this expansion is a lot for the same number of employees to handle, leading to problems throughout the store if not managed properly.

The lack of proper science of retail design in most brick-and-mortar stores today can be linked to the decline of retail in America overall. Many blame online marketplaces such as Amazon for this decline; however, the same study performed by Dalziel & Pow shows that consumer interest in shopping in-person has not waned, but is actually increasing due to the diversification of the retail environment. The key to maintaining relevance in retail is to focus on what’s important to consumers: atmosphere and store experience. Constant innovation of the consumer experience and adaptation to consumer needs is key to maintaining relevance and fostering an ever-expanding customer base. Give customers what they want and exceed their expectations, and they will keep coming back.

Exterior shot - Lidl, Easton, Pennsylvania (May 2019)

Frequent shoppers of Lidl, a newcomer to the United States supermarket scene, had a lot to say about Lidl’s front-end issues on a busy morning. Lidl prides itself on being a one-stop shop, offering not only groceries, but also a wide array of general merchandise, clothing, and health and beauty items. Customers claimed that Lidl had all but one checkout lane closed, and the self-checkouts were also closed due to COVID-19 restrictions the company had in place at the time, likely due to short-staffing. This led to long lines and expanded wait times for the singular checkout that was available (clearly eroding the consumer experience). The frustration that was felt is replicated across supermarkets all across America. Most supermarkets have been short-staffed, so it is important to build a stronger front-end as well as a more efficient stocking team to handle the vast categories of products most chains have now had to implement to stay relevant in the changing retail climate.

The Fresh Department Wing - Wegmans Food Markets, Warrington, Pennsylvania (December 2018)

Layout and design is beneficial to profitability in a retail environment by including a welcoming, pleasing environment for consumers, with the focus on the presentation of products, leading to a professional service experience. The service experience a consumer receives is very important in the retail industry-- it can make or break a consumer’s experience. In order for a good consumer experience to occur, a high focus on product presentation and an organized layout is key. To further provide an organized layout, a welcoming, well-designed atmosphere is needed. The need for proper science of retail design in most brick-and-mortar stores today can be linked to the decline of retail in America overall. Due to this decline of retail in America, many blame online marketplaces such as giants like Amazon. However, the same study performed by Dalziel & Pow shows that consumers’ interest in shopping in-person is not declining, it is actually increasing due to the diversification of retail. The only way to stop the decline of retail is to focus on what is truly important to consumers: atmosphere and store experience.

Lucas M. Finzi, Editor-in-Chief

My name is Lucas M. Finzi and I am the Editor-in-Chief of Grocery Voice. As a proud part of the retail industry, I specialize in analyzing stores and their processes. I have had tremendous experience in the retail industry- from the bottom ranks as a cashier - to a Store Manager and I am looking to grow my skills much further in this great industry. I am proud to be a part of this great project known as Grocery Voice and look forward to sharing more of my research and insights about modern retail and retail management.