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Business Observer Friday, Jun. 21, 2013 5 years ago

Designed to sell

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Creating a lifestyle brand requires designing a unique customer experience, Tom Henken and Juan Romero agree. Understanding the customer's psychology of shopping is what their architecture firm does best.
by: Traci McMillan Correspondent

In 2007, ABC Fine Wine & Spirits needed a facelift. Market research demonstrated that more women were making alcohol-purchasing decisions, and ABC's executives wanted to target the market. They also wanted to craft their product mix to reflect the shifting demographic. That meant moving away from handles of liquor and cheap cases of beer to focus on fine wines, specialty batch liquors and craft beers.

That's why they paired up with api(+).

The Tampa-based architecture and design firm transformed ABC's office-like environment into a more inviting space to appeal to its new demographic. Starting with a prototype store in Ocala, api(+)'s design is now implemented in 55 of ABC's 144 stores, and the investment has paid off. Since the remodel, ABC has enjoyed a 39% growth in same-store sales, according to company statistics.

The first step in design is to understand customers and their shopping psychology, say api(+)'s cofounders, Juan Romero and Tom Henken. The duo, who started the boutique business in 1990, have built a wide-ranging portfolio of design work for Fortune 500 and international companies including Wal-Mart, Whole Foods, and K-Mart, along with a number of local retailers, shopping centers and restaurants. They have kept a focus on trends in the retail industry and maintained priority No. 1: designing stores to increase sales.

Api(+) starts its work with a traditional SWOT analysis — understanding strengths, weaknesses, opportunities and threats for the client. “We are a three-dimensional branding company that spends a lot of time understanding the brand that we are working with, emphasizing the positives, minimizing the negatives and looking for opportunity to extend out even beyond their knowledge of who they are,” says Romero, president and chief executive officer of api(+).

With ABC, api(+) found that the liquor store had a broad variety of products, including wines, cigars and spirits, but it was difficult to see the assortment. All of the displays were at the same level, and it was tough to distinguish a product category in any section of the store. Customers were overwhelmed by hundreds of bottles stacked in monotonous rows. “You couldn't see the forest through the trees,” says Henken, api(+)'s vice president and director of design. “'Unseen, untold, unsold' was their Achilles' heel.”

ABC's previous design was a function of how the business operated, rather than how the customer shopped, according to Henken. The long linear aisles made it easy for the business to see where inventory needed to be restocked. Focusing design on operations is a common mistake, he says. “Sometimes in order to increase sales you need to do things differently.”

Api(+) drafted a design to more effectively display ABC's assortment and draw attention to its new product mix. Working on interior architecture, signage, coloration and traffic flow of the space, the designers aimed to make the stores more inviting to women and higher price-point buyers. “We designed everything to emphasize what they already had,” Henken says.

Savvy retailers know that traffic flow helps dictate buyer decision-making, Henken says. That's why grocery stores place the milk, bread and eggs at the back of the store — to draw customers through merchandise. “More than 75% of buying decisions are made in-store. Drawing through that merchandise is a key element of what the psychology of shopping is all about,” Henken says.

The firm implemented a racetrack design for ABC's stores, circling customers around the merchandise with straightforward, large signs to effectively categorize departments from a step inside the door. Although the customer may not be shopping for a nice bottle of wine, if the display makes an impression, the store will be top of mind when the customer eventually looks to purchase a more expensive bottle.

Most consumers are multitasking while shopping, Henken says. “We're in an age where double-income families is the norm and kids' schedules are packed with activities....They don't have time to read signs. They need to understand when they walk in the door where the product is that they're interested in.”

In addition, retailers “need to make clear statements about what it is that you want customers to understand about your brand and how it is that you want them to shop your store,” Henken says. This can be accomplished through visual cues provided by the environment, including in-store communication, architecture, scale of space, colors and materials that speak to certain levels of sophistication.

For example, if a company wants to be known for low prices, they can't be scared to flaunt large signs with prices. “You'll never hear a customer say, 'Wow, they're proud about their price,' but it bleeds into their subconscious that their price is low,” Henken says.

Specialty Stores
With more stores diversifying and focusing on certain aspects of retail, communicating brand is especially important, Henken says. “With the advent of big boxes like Costco and Wal-Mart, the world's largest retailer, certain groups are focusing on a particular segment of a grocery store,” such as farmers' market concepts or gourmet foods. Multichannel shopping, or going to more than one place to fill a family's cupboards and refrigerators, is gaining popularity. Many consumers are “pairing trips to Costco with a trip to Trader Joes or Fresh Market, cutting out traditional grocery stores,” he says.
Specialty stores need to effectively display their brand from the outside to draw people in the door. Api(+) has worked closely with Fit2Run, a Manatee-based chain completely focused on runners. Fit2Run has a unique approach to selling shoes, using a personalized “gait analysis” to determine the best fit for each customer. To emphasize this service, api(+) designed stores to include an indoor running track and placed a treadmill with the gait analysis video equipment in the front window. It hung merchandise as high as possible on the perimeter walls, so from the outside, someone could easily see that the store was all about running, Romero says.

The Internet “has turned retail on its ears,” Romero says. Social media now plays a huge part in a retailer's success. Winning a customer is no longer about sales and price, it's about creating an experience or telling a story, Romero points out. “People want to build their lifestyle around a brand. They don't just see it as a product, they see it as a lifestyle that they want to be identified with.”

The move to the Internet has other implications for the business as well. Brick-and-mortar businesses are trying to sell online, while Internet businesses are trying to build brick-and-mortar retail, Henken adds. Amazon's recent announcement that it will begin delivering food direct from supermarkets is likely to make a big impact on retail, he says.

But the Internet has also boosted api(+)'s business. In 2007, the firm was bringing in nearly double its current revenue when the domestic economy took a hit. “The local projects we were involved in all came to a halt,” Henken says. Luckily, right around the same time, international business started to pick up, facilitated by online traffic to the firm's website. A group in Beijing discovered the firm through image searches of different retail designs.

The design team also depends heavily on repeat business and referrals. The CEO of the firm's first client, Kash N' Karry Food Stores, Ron Flotto, ended up a CEO of Hong Kong-based Dairy Farm International. Flotto had api(+) design a number of the international retailer's 4,600 locations.

Despite its accumulation of bigger-name retailers, the firm isn't interested in dropping its local business. Currently at $3.8 million in revenue, the firm offers services ranging from leasing strategy to large development design. In the last year, the firm has experienced up to 20% revenue growth, Romero says.

Small single-location businesses require a different approach than the large retailers, according to the team. “The worst thing you can do in our business is select a style without discussing budget, operations, maitenence and competitive positioning,” Romero says. A mom-and-pop restaurant may not have the money to update style in five years, an industry standard for redesigns. To avoid investing too much in a style that may be dated within a decade, Romero and Henken suggest designs that can be inexpensively updated, such as replaceable hanging graphics, rather than built-in architecture.

Despite their constant push to follow trends in retail, the two are always looking for ways to make their designs stand out. “The business of design is a creative business,” Romero says. “Originality is rare, but we are always after originality.”

When designing MetWest, a multi-use development across the street from Tampa's International Plaza that includes Kona Grill and Texas De Brazil, Romero persuaded developers to embrace uniqueness. “Let's reinterpret Florida. Let's look at something tropical that doesn't say Mediterranean or Key West,” he says.

Sometimes contrast is the key to making something interesting, Romero believes. “If everyone looks like a trout, maybe you want to look like a shark instead of another trout.”

Before...

After...

ABC Fine Wine & Spirits hired api(+) to give its stores interiors a new look. To better cater to its target market, api(+) targeted these aspects:

Architecture of Interior
ABC wanted to be known as “the destination for celebrations.” Api(+) thought the stores looked more like an office than a place to celebrate with lay-in ceilings, florescent lights, and crowded product sections.
To help products stand out, api(+) created new features like a vault for fine wines, a glass room showcasing cigars and a designated built-in sampling area. The firm used rustic wood and stone for flooring and walls, hoping to give the store a more visual appeal.

Coloration
Api(+) changed the “muted and somewhat manly” colors to bold and fresh colors that were more appealing to women, without alienating male customers, Henken says.

Signage
Moving away from haphazardly placed signage, api(+) color-blocked each department with big signs. “You can pretty much shop the whole store from five feet inside the door,” Henken says.
Wanting to make information as easy as possible to locate, the firm created a consistent way of messaging so the customer would know where to look no matter what aisle they were in. “When buying wine, a consumer needs information or confidence to buy when it's over $7 or $10 a bottle,” says Henken.

Traffic Flow
Api(+) implemented a racetrack floor plan that would bring the customer through key zones of merchandise. In the center, they placed party items, further driving ABC's position as the destination for celebrations.

End Caps
The racetrack model allowed the firm to quadruple the store's end caps, or displays at the end of aisles. Additional end caps triggered emphasis on new products and special promotions.

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