A time for innovation

A time for innovation
With budgets stripped, retail calls for a new, creative approach toward design and visual merchandising

By Alison Embrey Medina, Executive Editor
March 01, 2009

This article is the final installment of a two-part series titled “Weathering the Storm.” The first piece centered on retailers’ abilities to economize the store during a downturn, while this article zeroes in on the opportunity for design innovation.

“The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew.”
—Abraham Lincoln, December 1862

In tough times, it is more important than ever for retailers to stand out among their competition. The next six months will be completely different from the previous six months. But on a positive note, a recession can often be synonymous with new opportunity. Retailers can embrace the recessionary climate as an occasion to reinvent what is broken in their store design schemes, invest in flagship locations and keep their brand fresh through visual improvements. These moves not only give customers a reason to get out and shop now, but also to loyally return to their favorite stores once the economic cloud lifts.

In the coming months, innovation and creativity will be the driving forces that propel retail design forward. While store closures, liquidations and bankruptcy filings dominate the headlines today, the innovation begun now will create the opportunistic success stories we read about in months and years to come.

Starting small
The first, most basic step to approaching innovation is to determine how to get the most bang for your buck in the store environment. Obviously, price is a draw for consumers these days, but how does a retailer keep their interest once they enter the store? Randy Sattler, principal and chief creative officer of Schiller Park, Ill.-based RGLA Solutions Inc., says the three keys to innovation in this economic climate revolve around 1) creating change and newness, 2) making stores more productive and 3) establishing an emotional connection with the brand to relay a message of value. Along those lines, RGLA has launched a REFRESH campaign, which helps retailers focus their design dollars on achieving the highest customer engagement.

But when a full retrofit is not a financial option, what are the key points of interest in the store that will benefit most from scarce investment dollars? Sattler recommends keeping the brand fresh through creating visual impact areas, keeping the graphics package current, updating existing fixtures with new enhancements, refocusing product to create changes in traffic flow and focusing on color—all simple adaptations that don’t require significant capital investment. “Look at your paint colors and consider putting a fresh color on the wall. This creates freshness for your customers, and gives retailers the ability to redecorate without reinventing the way they showcase their stores,” Sattler explains.

An integrated approach
If there was ever a time for the silos between marketing, merchandising and in-store visual presentation to become integrated—now is the time, suggests Kevin Roche, principal of Seattle-based Callison. He argues that store planning and visual are essential in retail, but that many retail organizations do not necessarily have the organizational structure to support the move toward a design-driven company. “If you use this broad brush of creative thinking to drive innovation or differentiation—whether you are Wal-Mart or Neiman’s—you are going to fare better,” Roche explains. “Any company that has remained at the top of the heap has had design as a differentiator—a real, insightful, clear positioning. Those are the ones who are weathering this the best.”

Roche suggests that if a company is going to be highly promotional during the downturn, it should take an integrated approach. “With limited budgets, it’s even more invitation to focus on, from conception to implementation, how marketing and advertising outside the building are connected with merchandising ideas that drive traffic,” he says. “Then when customers go to the store, they actually can creatively find this item, category or promotion. There’s more connectivity there, in a more direct and powerful way, than perhaps was needed before.”

On the expense side, retailers quite possibly have already made all the cuts they can make. Where companies are really restrained is capital, and they are going to have to spend their capital so carefully that it is going to become a higher priority for senior management to be involved in making capital-based decisions, says Ken Nisch, chairman of Southfield, Mich.-based JGA. “What could be more capital-intensive than building stores?” Nisch suggests. “I see a lot of scrutiny on real estate, concept, marketing—not so much visual merchandising or aesthetics, but more on ‘why is this a good business decision?’ When you push what we do (retail design) to the top of the company, you get change and innovation.”

New uses for old things
A step-by-step—or floor-by-floor—investment in flagship locations might be the optimal choice when budget restrictions prohibit full-scale rollouts of prototypes throughout the chain. “It sets the tone for the rest of the company,” says William Herbst, senior vice president, construction, design, planning and visual for New York-based Saks Fifth Avenue. “It shows that we are investing in the flagship, but that’s not to say that we’re not adding pieces of the concept to our out-of-town stores.”

Saks recently unveiled a remodeled fifth-floor contemporary level at its New York flagship, which features cement and wood flooring, stripped-back windows, exposed heating units and an overall industrial chic vibe. Rather than redoing the entire lighting plan, the team added fluorescent lighting to the wickets over the rolling merchandising racks, allowing the product to shine. Herbst adds that instead of covering the walls with art pieces everywhere, his team opted for a more subtle, subdued look. “Let’s be restrained when we use things,” he adds. “Let’s pare back. We have a couple of white walls—but we want it that way.”

Herbst stresses the importance of the visual makeover in retail right now, even if a few adjustments are all a company can afford to do. “You can’t spend the money—and I don’t care who you are—on major capital investments right now,” he reiterates. “Visual is where you can do it. Slap a coat of paint on the wall, move the mannequins around, paint the mannequins a different color, add new prop elements.”

In fact, when Saks filled the new contemporary level with Ralph Pucci’s latest mannequin line, the previous mannequins (which were about four years old) were painted black and white, and moved down to the newly rebranded fourth-floor “Wear” level (previously called “Bridge”). The old fourth-floor mannequins were then repurposed to the ninth floor. “We’re reusing and moving things around,” Herbst explains. “We see it every day, but the customer sees a fresh new look.”

Thinking differently has propelled Saks’ visual team into a state of raw creativity. The new fifth floor features a beaded chandelier created from a previous project’s leftover beads, an antique display table found in Belgium and fantastic steel walls created by a local Brooklyn welder. “We’re going to be a lot more creative and look at things differently than we did in the past 10 years, because dollars have to be stretched,” Herbst says. “Things that we think are commonplace really aren’t.”

The road ahead
For the good news, Nisch says that retailers are beginning to look beyond this year toward the opportunities beyond. “Clearly people are not going to be building a lot of stores in 2009, and probably won’t be until third or fourth quarter of 2010,” Nisch states. “But if you wind the clock back on the thinking and development cycle—the ability to prototype and test things—now is the time when retailers are beginning to start making plans for that 2010 relaunch.”

Nisch says JGA has seen a fairly robust pipeline of companies preparing for the coming opportunities in the next 12 to 18 months. This leads to much more thorough preparation in terms of prototyping, mockups, sourcing and value engineering on the front end, Nisch explains. “It seems like we’re on the back end of the initial paralysis—to a great extent, those [retailers] who are going to be gone are gone,” he says.

Following Abraham Lincoln’s words, do not hesitate in the coming year to think anew and act anew. While the future is still unclear, the need for adaptive, connective retail spaces will certainly be a necessity. “I wish we had a looking glass,” Sattler notes. “Right now, retailers are focused on their budgets—or lack thereof. Design will be crucial. We might have to be more simple in our strategies than perhaps a couple years ago, but design absolutely will be crucial.”