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Q: How much do brick and mortar retailers spend on store design? ( Answered 4 out of 5 stars,   0 Comments )
Question  
Subject: How much do brick and mortar retailers spend on store design?
Category: Business and Money
Asked by: jtsymonds-ga
List Price: $25.00
Posted: 16 Jun 2005 14:05 PDT
Expires: 16 Jul 2005 14:05 PDT
Question ID: 533993
How much do brick and mortar retailers spend on store design as a
percentage of revenues?  How often do they redesign stores and what is
the cost of the redesigns.  Examples are helpful.
Answer  
Subject: Re: How much do brick and mortar retailers spend on store design?
Answered By: politicalguru-ga on 16 Jul 2005 09:25 PDT
Rated:4 out of 5 stars
 
Dear JT Symonds, 

According to a 2001 survey conducted by the " National Association of
Store Fixture Manufacturers (NASFM)" and Display & Design Ideas (DDI)
Magazine, retailers spend in average about 10% of the annual total on
the areas of design, redesign and renovation: "On average, the budgets
in these areas are within 10 percent of last year's totals, with
retailers planning to spend $22 million on store renovation and $28
million on expansion, as opposed to $24 million and $30 million in
2001, respectively" (SOURCE:  GlobalShop press release, October 29,
2001, "Retailers Plan to Keep Spending On New Design Ideas" Retail
Industry @ About.com
<http://retailindustry.about.com/library/bl/q4/bl_ddi102901.htm>).

It is also interesting to note that "A whopping 85 percent of
respondents said they are conducting fixture specifications for
renovations in-house, with only 15 percent using the services of an
outside design firm." (ibid)

There are, of course, varieties here. For example, "retailers in
alternative sites must rethink basic store design concepts. [...]
Inside the stores at unconventional centers Interior store design at
alternative locations differs from conventional store design for many
reasons. For example, the demographics of potential shoppers passing
by alternative site stores may vary from those in conventional malls,
thus requiring different design concepts." (SOURCE: Michael Fickes,
"Trains, Planes and Roller Coasters", Retail Traffic, Jun 1, 1999,
<http://retailtrafficmag.com/mag/retail_trains_planes_roller/>). That
may mean, different modes of spending in such places like
entertainment parks, train stations, airports, etc.

Another variety is cultural and geographical differences: "Retailers
overseas tend to spend more money on store design than US retailers,
said McQuilkin, adding that he attributes much of that to the rise of
US discounters, led by Wal-Mart. ?Value consumers discredit you for
spending too much on store design,? he said, ?but in many overseas
markets, store design is part of the brand experience. Shoppers
overseas tend to think more fashion than value.?" (SOURCE: "Set up
Shop", 2005 Global Report
<http://www.redcoatpublishing.com/features/f_01_05_globalstrategies.asp>).

Also, when the economy fares better, there is more spending. Take for
example this survey:
VM+SD Special Reports, "Results from the VM+SD Retail Lighting Survey
Energy Codes and the emergence of LEDs loom large", (2005-06-15),
Visual Store
<http://www.visualstore.com/index.php/channel/43/id/9092> 

Look also at this good year in the UK: 
"UK retailers spent £3.2bn on store design last year, according to
Mintel, the consumer research group."
Mark Dickens, "Short change for the grey pound" Financial Times,
November 23 2004 08:11,
<http://news.ft.com/cms/s/d4b54214-3c35-11d9-8b17-00000e2511c8,dwp_uuid=1a9bf902-20c7-11d8-81c6-0820abe49a01.html>

And a more detailed analysis: "Last year, UK retailers spent an
estimated £1.7 billion on shop fittings and interiors, out of an
estimated total of £3.2 billion spent on store designs and refits.
This total spend represents around 1.3% of retail sales in the year.

In 2003, although there was plenty of new store design activity, there
were signs that some retailers were attempting to achieve refits with
less expenditure. This was related to the shortening expectation for
the lifespan of shopfits and a dampening of confidence among
retailers." (SOURCE: Michael Warren
"Surveys", Published on: 11/27/2004 2:18:42 PM,
<http://www.bmra.org.uk/mrbusiness/print.asp?ezine=119>).

Related information
Retailers' Operating Expenses Near $700 Billion,
<http://retailindustry.about.com/library/weekly/aa001203a.htm>

I hope this answers your question. Please contact me if you need any
clarification on this answer before you rate it. My search terms were:
"retailers" spending "store design", "retailers spent" "store design",
"retailers spend" "store design", "store renovation" spending
retailers, "store renovations" spending retailers, "store
rennovations" spending retailers, "store redesign" spending retailers,
"store design" spending retailers
jtsymonds-ga rated this answer:4 out of 5 stars
A very good, well researched answer.  The key metric is the 1.3% of
sales figure.  If cable companies would only treat their user
interfaces as store design and provide the same money toward making it
a better experience.........

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