The right store layout might be more important than ever for brick-and-mortar businesses wishing to stay competitive with their online counterparts, a new study suggests. Traditional retailers are inherently more appealing to customers who need to see or try on a product before they buy it, and business owners should seek to maximize this advantage, the study says.
Continue Reading Below
“For many products, consumers typically remain uncertain about a product’s fit until physically inspecting it,” said Yunchuan (Frank) Liu, co-author of the study and business professor at the University of Illinois. “And since the consumer has to travel to the store and compare the products, that is to the local retailer’s advantage, because that’s something that online retailers can’t do.”
Liu and Zheyin (Jane) Gu, a professor of marketing at the State University of New York, Albany, explained that retailers can make the most of this “consumer fit” advantage by exploring different store layout options.
According to the study, the optimal layout of a store can sometimes be one that makes the shopping experience as easy as possible for consumers. Other times, it can be a layout that makes it more difficult for shoppers that works best.
“For basic goods like toothbrushes, the fit probability is really high, because to most consumers, a toothbrush is a toothbrush,” Liu said. “In that case, the retailer should group all toothbrushes together in the same location, forcing manufacturers to compete on price.”
While this strategy might work for products that customers aren’t too picky about, Liu and Gu’s research shows that products with a lower fit probability, such as furniture, require a different store layout.
Continue Reading Below
The study shows that, in the case of furniture, it’s better for retailers to create a store layout that is inconvenient for consumers, but that forces manufacturers to compete for prime locations in the store.
“If you got to Bloomingdale’s, you’ll notice that they sell furniture by brands,” Liu said. “If you go to this room, it has everything from one manufacturer. If you want to look at another set of tables and chairs, you have to go to another room.”
Such a store layout forces manufacturers to compete for the best floor space within the store, something that toothbrush retailers can’t do. Such retailers must instead force manufacturers to compete for the lowest prices by grouping similar products together.
Creating this price competition among manufacturers is a good strategy for retailers in the digital age, who are often undersold by their online counterparts, according to the study.
“Retailers probably do not want to play the pricing game with online retailers,” Liu said. “They have certain inherent advantages in their store, in that the consumer has to find the right ‘fit’ for certain products. That’s the frontier on which they have the advantage.”