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Transcript of Greenland_Case03
steve greenland and Bernadette van lunenBurg Swinburne University of Technology
Its all in the design: How IKEA makes you buy with clever store design
introduction This case study reflects on one of the most significant challenges facing modern-day retailersonline versus high street distribution and the viability of physical outlets. Here we examine the importance of place in the marketing mix, covering aspects such as channel strategy, store design objectives, and the critical role that outlets play in communicating with customers. Shopping behaviour has undergone a dramatic evolution over the past decade with many retailers struggling to keep up with the rapidly evolving, contemporary consumer (IBM 2011). Future success will go to those best able to adapt their delivery modes and communication strategies to this modern shopper. The case study looks at the Swedish furniture giant IKEA, which is not only surviving difficult economic times but is rapidly expanding its retail presence in the Asia-Pacific (APAC) region. A cornerstone of IKEAs success has been an innovative multichannel distribution and communication strategy.n
Trends in retail distribution and shopping habitsA poor global economic climate has had a massive impact upon consumer spending, resulting in mounting retailer insolvency. Australia is no exception, with downward-spiralling consumer confidence being further eroded by rising interest rates and a looming carbon tax. High street retailing with its significant operating costs has witnessed numerous casualties that include Clive Peeters (electrical), Colorado (clothing) and Just Jeans, as well as REDgroup Retail, the parent company of leading bookstore chains in both Australia and New Zealand (for example, Johnston 2011; Speedy 2011). The total proportion of online versus high street sales is currently still relatively small. However, despite the economic downturn, the online amount is growing rapidly (Bell 2011). Shopper segments that previously had not considered purchasing online goods have begun to appreciate the convenience and cost benefits offered by this shopping mode (Zehner, Bradley & Sanders 2011). A new breed of shopper has emerged; one that uses high street outlets to inform purchase decisions and then the internet to track down the best value. The expanding range of distribution channels and evolving shopper habits mean that retailers wishing to remain competitive must review their reliance on traditional store channels. Those that neglect to do this and bemoan the evolving marketplace will no doubt struggle further. The successful retailers of the future will embrace these changes and clearly demonstrate that the high expenditure involved with high street retailing is justified and has the maximum positive impact on customers.
IKEA distribution channelsIKEA is an example of a retailer that has gone with the flow and moulded itself to the changing world.Today, it operates a highly effective multichannel distribution and communication strategy that successfully blends the physical outlet with a paper catalogue, as well as online shopping. In 2010, 198 million copies of the catalogue were printed in 56 editions and 27 languages; globally, IKEA stores welcomed 590 million visitors (IKEA 2011a), with Singapores two stores alone seeing more than seven million visitors (Tay 2011). IKEA shoppers in many regions and markets also enjoy online shopping options. In Australia in 2011, IKEA offered online shopping to consumers in South Australia and Western Australia, but not in other states (IKEA 2011b). IKEAs distribution channels also reinforce the retailers key communication messages relating to its contemporary Scandinavian design and quality, value, as well as corporate social responsibility and sustainability. This strategy fuelled the rapid growth in IKEAs business, which tripled between 1999 and 2009. IKEA has also expanded rapidly in the APAC region and is now present in China, Japan, Taiwan, Singapore, Malaysia, Hong Kong and Australia. Given the success of the cost-effective online channel, one might imagine that the long-term future of IKEA stores may be in doubt. However, the opposite is in fact true: the number of outlets in China is predicted to double to 18 by 2015 For IKEA the physical (Fangfang 2010), and a further six stores are on the agenda in Australia its largest outlet remains core to its (news.com.au 2010). Indeed, in September 2011 IKEA openedClearly, for outlet in the Southern Hemisphere in Springvale, Melbourne. IKEA the physical outlet remains core to its future expansion plans. future expansion plans.
case 3 Steve Greenland and Bernadette van Lunenburg
Atmospherics and store designStore design is generally something to which consumers pay little attention. Shoppers often only consider it when there is a problem or some level of discomfort is experienced, perhaps due to overcrowding, poor climate control, long queues or difficulty in finding a product. This is because the impact of retail design is more frequently subliminal in nature. Its effects are experienced in terms of basic emotional responses that shoppers find difficult to verbalise, and that translate into simple approach or avoidance behaviours. Put simply, we automatically tend towards, spend more time in and are more likely to interact with others in environments that we find more pleasing, while we avoid those that are less so. (See Greenland & McGoldrick 2005 for further insights.) While consumers are unaware of the impact of store design, retailers have become expert at using it to shape shopper attitudes and behaviour. Philip Kotler (1973) coined the term atmospherics to describe the impact of retail design. Atmospherics can be considered as the tailoring of the retail/ service environment to enhance the likelihood of desired effects or outcomes for users (Greenland & McGoldrick 1994). The concept of atmospherics reveals that retail designs can be created with specific objectives in mind, and considering these helps in appreciating the role of the physical outlet. Table 3.1 presents ten key generic communication and marketing objectives for store design, many of which seek to enhance approach behaviour. (These are in addition to health and safety and other compliance considerations.)
Top ten generic store design objectives1 Communicate the corporate image and differentiate it from competitors images 2 Complement other channels of distribution 3 Complement other channels of communicationfor example, media campaign support 4 Stand out on the high streetvisually attracting new and existing customers 5 Communicate the range of services and products on offer 6 Facilitate efficient and friendly service delivery 7 Control customer movement to maximise impulse purchase opportunities 8 Create appeal for specific customer segments/target groups 9 Provide a comfortable shopping environment and favourable customer experiences 10 Increase customer interaction with the retailer and build the relationship
While the concept of atmospherics may be clear, creating designs that achieve specific objectives is often difficult. This is because the environmentbehaviour relationship is highly complex and our understanding of how certain features affect behaviour is incomplete. Furthermore, achieving some
achieve specific objectives is often difficult.
Creating designs that
objectives may oppose the fulfilment of others. For example, designing stores that maximise the duration of a shoppers visit may actually end up irritating shoppers and result in avoidance behaviour. Numerous studies have examined the impact of various design dimensions upon customers and staff. A summary of these effects is presented in Table 3.2.
Potential atmospheric customer effectsSenSory cue ViSuAl AtmoSphericS dimenSion colour potentiAl reSponSe/impAct Affects mood and emotional states Health/physiological reaction Image reinforcement Temperature perception Spatial demarcation and direction of instore traffic User satisfaction Attention (breaking through the attention gate) Approach behaviour (attraction to goods handling) Task performance Image perception Direction of instore movement Visual privacy Metamerism (colour) varies under different lighting Psychology and mood (connecting the outside world) Direction of instore movement Symbolic association/psychological connotations Interaction with others and reaction to space limitations Ergonomics and productivity Efficient flow of instore traffic Mood/emotional response Avoidance behaviour/stress (crowding) Clearly demarcated zones/dominance and territoriality Identity reinforcement/standardised formats Personal space (visual and aural privacy, performance) Speed of movement Emotional response Image reinforcement Perceived length of shopping trip Arousal, task performance Acoustic privacy
natural light/ windows pattern and shape spatial arrangement
case 3 Steve Greenland and Bernadette van Lunenburg
temperature comforthard and soft zones contrasting fabrics
Performance, interaction with others Speed of movement/time spent in area Tactile quality associations/evaluation/arousal Aggression/irritation/fatigue Performance Mood/behaviour/arousal Quality associations and image reinforcement Learning and memory recall Arousal, approach behaviour
pollutants/air quality negative ions Scents and odours
Source: Based on S. Greenland & P. J. McGoldrick. (2005). Evaluating the design of retail financi