Remodel Your Store to Make a Difference

Researchers at Monash University note that prior studies have shown improvements in customer spending when a store is remodeled, but that in many stores, those improvements lose strength rather quickly.
     The researchers hypothesized that the gains from a store remodel will be more robust when the differences between the old and new store design are greater. To test the hypothesis, the researchers selected two stores operated by the same retailer. Both stores underwent remodeling so that the two ended up looking essentially the same. But one of those stores had damaged flooring, worn out furniture, inadequate lighting, and old color schemes before the remodel. The other store had started out being much more up-to-date.
     Consistent with the researchers’ predictions, sales post-remodel climbed 12% in the store that was outdated pre-remodel, but climbed only 1% in the store in which the pre- and post-remodel differences were smaller. However, this finding could have been due to shoppers not wanting to frequent an ugly store pre-remodel. To address that possibility, the researchers selected two more stores in the chain which were not remodeled, one of those stores up-to-date and the other not.
     A comparison of results showed that a remodel produced positive sales gains, but the gains were more long-lasting when the store had begun in poor condition. Customer survey data showed that the robust sales gains were accompanied by improvements in store satisfaction and loyalty. Indeed, detailed analysis of the sales data explained the increased profits as due in part to more frequent store visits as well as more purchases per visit in the stores with larger pre- to post-remodel differences.

      Still, it was not just that the same old shoppers were spending more. A remodel attracts new customers, too. In another study at Monash University, it was found that for both new and existing customers, a remodeling increased sales revenues, but over the subsequent year, the frequency of repeat store visits and spends was greater for the new than for the existing customers in the remodeled stores. Maybe these new customers had walked through the store before without purchasing or had the store described to them by others. Aside from that, they’d have little way of appreciating the difference between the pre- and post-remodel design.
     The upshot is that a remodel can boost revenues beyond the short-term, especially in a store or area of a store that is currently outdated.

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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