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Store redesign a strategic investment

News, 07 January 2015

MELBOURNE: Retailers should stop thinking of store redesign as a necessity to be endured and instead view it as a strategic marketing investment that attracts new customers, research by Australian academics has said.

A study by Tracey Dagger and Peter Danaher from Melbourne's Monash University Department of Marketing looked at the experiences of two different retail stores before and after remodelling, using consumer surveys and retailer loyalty programs.

One was an equipment retailer and service provider which underwent a relatively modest redesign, taking one month to move things around internally and bring unused store areas into play while also adding a new entrance. The other was a large department store, which had a major overhaul taking eight months, with a sister store in a similar environment used as a control.

The most significant finding, Marketing reported, was that, after the remodelling, sales to new customers increased by up to 44% and sales to existing customers rose between 7% and 10%. Further, these effects lasted for at least a year following the remodel.

Higher sales to new customers were attributed to more new customers being drawn to the remodelled store, their higher spend per visit, and their subsequent increased visit frequency.

The number of new customers visiting the remodelled stores increased from 13% to 17%, and they also visited 16% more than before, compared with a 2% increase for existing customers.

New customers to the remodelled stores also increased their spending by 14%, whereas existing customers did so by half that (7%).

The impressions of new customers regarding such things as atmosphere and layout were much better than those of existing customers, but the study said there was no difference in short-term behavioural intention.

"The in-store experience continues to have high relevance – retailers must keep their appearance modern, fresh and in line with that of competitors," said Dagger. "The look, feel, and mood of a firm's retail or service environment are unique and crafted purposefully to contribute to the brand and ultimately, its profitability," she added.

Data sourced from Marketing; additional content by Warc staff