danny-wells

Beware of cluttered thinking on store layout!

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I’m not sure which consumer behavior experts were being referenced in your May editorial who concluded that “the messier and more confusing a shop looks, the better the value it projects”, but I would beg to differ with them.

With each economic downturn there are always those who will attempt to link a business’s poor performance with unsubstantiated observations. The thought that natural food shop owners should be cluttering up their stores to project a lower price image is a result of some cluttered thinking.

To pass across the pond to my British comrades a few observations from what is actually happening in US retail, let’s discuss two retail giants: Whole Foods Markets and Wal-Mart. When signs of the recession first hit, and shocked consumers immediately pulled in their purse strings, Whole Foods Markets experienced their first set of negative comps (year over year comparative sales of stores open at least one year) in over a decade.

In response, the Whole Foods team moved into high gear with a brilliant marketing plan turning their Whole Paycheck image into the Whole Deal image. During this time the stores reduced the stock of slower selling items and continued their clean, organized and clean-isle look. The shopping experience remained the same, only the marketing of value was added. Within a few short quarters Whole Foods Market was back to 8% comps and they continue to push their Whole Deal in a well-organized presentation.

Wal-Mart—the king of clutter, disorganization and one of the most dismal retail shopping experiences anywhere—has been suffering negative comps and declining sales during the same period.  If the theory that clutter and disorganization is good for sales, then Wal-Mart surely presents a strong case against this. The only low-end retailers experiencing an upswing in recessionary sales are the Dollar and 99cents stores. However, looking at the demographics of those shopping in these rummage-store looking outlets, you will note the majority are low-income, less-educated shoppers. Few if any are natural product consumers.

Two of the most successful American retailers in terms of sales per square foot are Costco and Trader Joes. Each of these companies makes conscientious efforts to reduce inventory to only the best sellers and as a result carry 50%-75% less merchandise per square foot than their average competitor. Their sales are a whopping two to three times greater per square foot than their competitors. There is nothing cluttered or disorganized about the presentation in any of the Costco or Trade Joe stores.

When you are in the business of selling a quality product, value is projected through education, clean, well-stocked shelves, and clutter-free isles. Natural food consumers want to shop in these types of stores rather than rummaging through a Dollar Store junk yard to find a bargain.

The moral: If you want to suffer continued sales declines then by all means clutter up your stores and follow Wal-Mart. However, If you are in the business of selling natural and organic products, and want to enjoy increasing sales during the recession, then follow Whole Foods, Costco and Trader Joes organized examples.

Then afterwards, drop a line to those consumer behavior experts and help them to unclutter their thinking.

Danny Wells, Natural Product Industry International Consultant

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