Store Design: Quantifying the bottom line results

New York -- Retailers who take a holistic approach to measuring the benefits of new store designs are most successful in accurately quantifying the bottom-line results, according to new research from EWI Worldwide and A.R.E. (the Association for Retail Environments).



Nearly 90% of retailers surveyed by A.R.E. are expecting to redesign stores in the next two to five years. In considering what those stores will look like, and what the investment and expected ROI will be, EWI and A.R.E. suggest that the old formula for calculating ROI — (gains from investment minus cost of investment) divided by cost of investment — is only partly helpful.



The study shows that the most compelling reasons for redesign are subjective: gaining a competitive edge by differentiating from other retailers; appealing more to current customers; providing a better customer experience through all channels including the store; and providing a better customer journey through in-store navigation.



“Those goals have long been considered important, but impossible to measure in the same way that sales per square foot can be calculated,” said Angela Schrubbe, EWI’s market intelligence strategist. “Nor has it been considered possible to isolate store design from other factors contributing to a store’s success.”



Because all of these factors are prompted by customer demand rather than retailer intuition, acting on them is imperative, researchers found.



The good news: The data shows that measurements designed to test results for traditional, objective goals also can be used to measure progress toward new, subjective goals. This data can then be combined with nontraditional metrics to help retailers evaluate and target their store designs.



The researchers call this “holistic approach” to measuring ROI an “ironclad framework for success.”



“Guiding and measuring uncharted changes in how stores work and look will be vital to the industry in the next few years,” said Janis Healy, EWI’s VP of retail strategy. “The Millennial generation is fundamentally different from retailers’ traditional Boomer shopper. Understanding their expectations and designing stores to appeal to them is not optional.”