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).
The research, published in a special 16-page report in the January/February issue of A.R.E.’s Retail Environments magazine, analyzed data gleaned from retailers’ annual reports and press coverage combined with retail survey results.
“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.”
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.”
In addition to being published in the January/February issue of Retail Environments, the report will be available on Insights.RetailEnvironments.org and EWIWorldwide.com. A.R.E. is expanding its ROI Resource Center to include the report as well as a searchable database of all the referenced case studies.
“Advancing the retail environments industry is core to our mission,” said A.R.E. Executive Director Todd Dittman. “Accurately measuring the benefits of store design is an important factor in the industry’s success, and we have put considerable resources behind this effort, as has EWI Worldwide.”
To ensure retailers fully understand the approach and to provide the tools for them to put it to work, A.R.E. is sponsoring a major GlobalShop Conference session. The session, “The ROI Advantage–How To Get Your Store Design Project Approved,” will be moderated by A.R.E.’s Director of Membership Karen Schaffner. On the panel: Janis Healy, Angela Hoekstra Gearhart of Select Comfort, and Julie Swanson of Car Toys.
A.R.E.’s regional Shoptalk series also will be expanded to include a workshop on ROI and will visit eight cities in 2015: Miami, Los Angeles, San Francisco, New York, Montreal, Cincinnati, Seattle and Dallas.