Experiencing the Retail Environment

Successful concept shops require a financial investment and specific goals from the retailer and the product marketer to create profitable store-within-a-store environments. While larger chain stores have been slow to jump on the concept shop trend, often because of chainwide regulations, product marketers across a variety of categories are pushing the trend as they see the benefits and as many retailers are demanding these in-store programs from them. "We're seeing this approach across all channels and all kinds of consumer products," says Maureen Marrone, director of visual merchandising at Hunter Douglas Inc., the Upper Saddle River, N.J.-based window coverings company. "There are a lot of advantages for both marketers and retailers and very few disadvantages if both partners do their part. It should be a total win-win situation." The use of concept shops is growing, particularly in department stores and specialty stores. But they're also expanding into convenience stores and supermarkets, indicating more potential across the retail spectrum. Creating a branded in-store environment helps create a unique look. In fact, many of the product marketers interviewed for this article agreed that a concept shop can help make a store the first stop for shoppers. The results can be so worthwhile, they say, that some retailers are even contacting brand marketers to initiate such programs."It has been our experience that a thoughtful and brand-rich environment for the concept-shop design helps retailers be drawn to the overall experience of the brand," explains Bevan Bloemendaal, creative director at The Timberland Co., Stratham, N.H. Timberland has installed its Global Apparel Program in a number of department, specialty and sporting goods stores. The results indicate why marketers and retailers are giving this concept a closer look today. "We have experienced a 20% to 30% lift in sales from installing the entire holistic environment versus utilizing components separately," Bloemendaal says.Pros and ConsImproved sales are a key reason for the growth of concept shops, but Hunter Douglas' Marrone also points to a variety of other benefits garnered from her company's Window Fashions Gallery program."The manufacturer is able to showcase products in an upscale, professional manner and has more control over how the products are shown," Marrone says. "Meanwhile, the retailer receives a store look that is upscale and professional. The salespeople benefit because the design makes the products easier to sell, with everything they need at their fingertips to serve the customers. The learning curve for new salespeople is drastically reduced as well, with features and benefits spelled out and products presented in their best light. And the consumer benefits because this system is so much easier to shop. All the products are there, and they're explained well to ensure the right one is purchased." The downside to creating a concept shop is the commitment required. A substantial investment is necessary to design, produce and install displays. The selling program must be developed and then supported extensively with training, appropriate manpower and ongoing service from the marketers' side. The retailer, in turn, must invest valuable real estate (and sometimes funds) plus labor and the store's reputation to devote itself to a brand. Both partners have to work hard to ensure that the additional investment is returned in incremental sales gains. While product marketers agree that concept shops are easier to sell into independent stores and regional chains, which are often looking to strengthen their own brand images by emphasizing familiar product brands, a number of companies with concept shops indicated that they don't hold out much hope of extending these programs into warehouse retailers."Our concept shop would carry over very well to other retail situations," says Robin Potts, a merchandising specialist at Epson America Inc. who was involved with the Long Beach, Calif.-based company's concept shop installation in a New York retail store. "But we really don't think it's realistic to consider doing that because of chain restraints. In most stores, we'd have to pay huge money for the kind of space we received in this instance." Hunter Douglas' Marrone agrees in regards to her company's concept shop prospects. "It's a possibility that we could extend our Fashions Gallery to the chains, and they would receive the same level of support and have the same relationship as our independent stores," she says. "But it's less likely, because they are very tied into their own fixture criteria."One frustrating aspect of convincing independent retailers to invest in a concept shop is that the very best ones, who understand the category and see the potential, are often skeptical that the program can add enough incremental sales to provide a sufficient payback. Similarly, the retailers who could benefit the most (those with poor merchandising practices) usually aren't committed to individual categories and wouldn't execute the concept shop well. That means the best candidates are those middle-ground stores that see the potential and need help in reaching their customers effectively.Successful stores that have been enticed into adding concept shop programs make convincing arguments for others, notes Mike Kempster, executive vice president at Weber-Stephen Products Co., Palatine, Ill., which developed the Grill Zone program for TruServ's True Value co-op member stores. "We had some heavy-user stores that didn't even have to increase their assortment to take the program. They just needed the fixtures. They saw immediate sales growth of 30%," he says. "That's significant, because when we see that type of return from stores that are already doing well with the category, we know it will do well in other stores." In fact, Kempster notes, several stores that had been doing poorly with the category also took the program and saw their sales go off the charts. "But that isn't really a real-world result," he explains, "because so few retailers doing that poorly in the category want to invest in a program."Kempster expects such store-within-a-store concepts to continue to have a strong presence in independent hardware stores as well as appliance stores and other channels. However, he doesn't hold out hope for the national chains. "They guard their planograms very jealously and have specific assortments they want," he explains. "We can suggest ideas to them, but they won't allow a vendor to get that involved." But some vendors are finding ways to work with warehouse retailers. One is Charlotte, N.C.-based Husqvarna, which was approached by the Lowe's home center chain to create a special section for its high-end chain saw, leaf blowers and other outdoor equipment. The key to that program was Lowe's commitment to servicing minor repairs on-site with a hired mechanic and working with an independent service organization to handle larger repairs. "They had to replicate the service that our independent dealers provide for the program to work for us," says Sam Catalano, national accounts manager for Lowe's at Husqvarna. That kind of commitment is one indication of how warehouse stores are using new strategies to look for strong differentiators to make themselves stand out against competitors. As more concept shops develop, and the ability to customize them to varying sizes and configurations continues, larger chains may see the benefits -- and feel the pressure. Indeed, the Quincy, Mass.-based supermarket chain Stop & Shop has taken the idea so far that it is working with other retailers to create a series of stores-within-stores in its supermarkets. Recently, the chain announced that Office Depot and Toys "R" Us would create office-supply and toy departments, respectively, in a number of Stop & Shop stores. Those agreements follow the chain's successful synergy with Dunkin' Donuts concept shops in 100 stores and with Boston Market in several other stores. "We're always looking for great brands to work with and stores that are recognized by our customers as doing a good job," says spokeswoman Megan Pratt. As stores become their own brands, it seems apparent that those brands can be adapted for use by other stores that understand the benefit of stocking brands the customers seek. Perhaps concept shops are only beginning to explore the wide range of formats that can prove successful in different categories and channels of marketing.

Experiencing the Retail Environment

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