VISUAL

MERCHANDISING
MODULE 5
 Meaning, Atmospherics & Merchandise
Presentation.
SESSION
OUTLINE Customer Service in Retail, Advantages
through Customer Service, & Customer
Loyalty Programs.
ATMOSPHERICS
 ATMOSPHERICS

 Atmospherics refers to the physical characteristics associated with the store that includes interior and exterior
elements, as well as layout planning and display.

 Atmospherics plays a major role in attracting customers to the store, improving the quality-of-service
experience, creating a brand positioning for the outlet, and improving customer retention rates.

 Atmospherics planning is increasingly gaining relevance for all kinds of retail setups like planned shopping
centres and lifestyle stores. Where exterior atmospherics refers to the aspects like store front, display windows,
surrounding businesses, look of the shopping center etc, while interior atmospherics refers to aspects like
lighting, color and dressing room facilities that enhance the display and provides customer with information.

 Atmospherics plays an important role in creating a brand positioning for the outlet, attracting new customers,
facilitating better organisation of the store and its merchandise and enriching the shopping experience.
 ATMOSPHERICS
 The role of Atmospherics in Retail Strategy is mainly to:

1. Enhance the image of the retail outlet and attract new customers,
2. Create a definite Unique Selling Proposition (USP),
3. Facilitate easy store movement and access to merchandise,
4. Ensure optimum utilization of retail space,
5. Reduce product search time for the customer,
6. Reinforce the marketing communication of the outlet and influence the service quality experience.
 ATMOSPHERICS
 The physical surroundings, in service settings such as retail outlets, are vital signs to service quality
expectations. Some of these are:

1. The choice of fixtures, decor and signage can greatly alter consumer perceptions of a store.
2. Signs indicate services offered and often hang above or behind the service counters. Effectively placed
signs can help to reinforce customers in their role in service encounters.
3. Uniforms, or similar attires for employees, help alleviate customer anxiety as they feel embarrassed to
ask if somebody works there. It also reassures customers that the service employee is a professional.
4. Inexpensive and cheap fixtures may indicate that the retailer cuts corners, while overly expensive fixtures
may indicate that the retailer is making large profits and over-pricing products. Hence, quality of fixtures
is a symbolic cue to the consumers.
 ATMOSPHERICS

5. In-store elements such as colour, lighting, and music may have a bigger effect on purchase decisions than
other marketing inputs such as advertising or point-of-purchase displays.
6. Background music enhances customer perception of the store's atmosphere and influences the amount of
time a customer spends in a store. An added benefit is that employees perform better when there is
background music, which increases job satisfaction.
7. All these settings contribute to an integral part of the service quality experience for the customer.
 ATMOSPHERICS

 Environment should be constructed to encourage or discourage approach behaviours. To support this

statement, three immediate effects of retail unit environment stimuli have been identified, which are:

1. Pleasure-Displeasure entails whether shoppers have perceived the environment as enjoyable or not
enjoyable. For example, playing classical music in Hindi should enhance shoppers' enjoyment in specific
kind of service settings in North India, whereas same music might diminish shopping experience in
Punjab retail units

2. Arousal assesses the extent to which environment stimulates the shoppers in particular environment.
Playing slow instrumental music may result in subdued activity level from customers in service settings
such as restaurant relative to no music or fast music. Therefore, nature of music in specific retail
environment can decrease or increase in arousal.

3. Dominance concerns whether customer feels dominant (in control) or submissive feels (under control) in
the service environment. This is a feeling that could be related to environmental aspects like the height of
the ceiling that makes one feel small (in control). Individuals associate the color red with active,
assertive, and rebellious moods whereas they associate blue with sedate tranquility and a suppression of
feelings. The nature of mood that needs to be portrayed therefore lies in the right choice of colour.
 KEY COMPONENTS OF
RETAIL ATMOSPHERICS
 The following are the four key components of retail atmospherics:

1. External atmospherics
2. Internal atmospherics
3. Store layout
4. Visual merchandising
 EXTERNAL
ATMOSPHERICS
 Exterior atmospherics refers to all aspects of physical environment found outside the store which includes
store entrances, main board, marquee, windows and lighting etc. Storefront of every retail store exhibits a
specific image such as traditional, up market or discount store to the shopper. In competitive markets, retailers
can use the storefront as a strong differentiating factor and attract and target new customers. The major
influencing aspects of external atmospherics are discusses as below:

1. Retail Store Entrance: In India, most of the traditional retail stores enjoy open entrance with no
provision for entrance doors and. security guards while in some leading markets retailer or owners of the
stores even stand outside and' invite passing by shoppers to visit their store and communicate the
availability of specific merchandise. New age planned shopping centers and retail stores ensure
accessibility to all customers, including those using wheelchairs and also provide for security of the store
when it is closed. Most of the independent retailers prefer open entrances even in central district markets
which are open market areas, in order to place a part of their merchandise outside the store. The most
common store entrance alternatives used these days are shutter-covered, modular fabrication,
prefabricated structure and in prototype storefront.
 EXTERNAL
ATMOSPHERICS
2. Display Windows: Display windows are very common features among retailers dealing in garments and gifts items. This
feature is even very prevalent among small towns' retailers. For example, Titan watches provides valuable inputs to Time
Zone (First organised chain of retail stores in India) franchisers to install impressive moveable windows to display their
merchandise, which not only communicate with the prospective shopper, but all attracts new customers to the store as well.

3. Marquee or Sign Board: A marquee includes painted or neon light, printed or script, and store name alone or mixed with
trademark and other important information. Pizza Hut, McDonald, Barista, and Bombay Selection owns widely
acknowledged marquee. In India, most of the independent retailers use tin board and get it painted to place it outside the
storefront. The quality of marquee influences the image of the store perceived by the customers.

4. Parking Facilities: Parking facilities play an important role in the success of a retail firm. The importance of parking
facility is of great significance in urban shopping center where number of car owners is increasing day by day and want to
drive to shopping centers Limited or no parking facility in traditional centers is attributed to less than, one per cent
ownership of automobiles in India. At the same time, Indian consumers prefer to purchase from the nearby shopping center
which can be approachable by walk or public transportation. Therefore, this aspect was remained neglected for long.
 INTERNAL
ATMOSPHERICS
 Interior atmospherics refers to all aspects of physical environment found inside the store. Point-of-purchase interaction and
retail unit decoration influences the customer and in turn sales of the retail unit. Store physical environments have influence
on shopping behaviour through mediating emotional states. The retail unit environment contains various stimuli that might
be perceived by the customer's senses and each stimulus offers many options with regard to shopping behaviour. For
example, store music varies by volume, tempo, pitch and texture and by the specific songs played. In addition, various
individual stimuli can be combined to create unique atmospheres. To project an upscale image, a retail owner/manager
choose folk music, modest colours, elegant perfumes, cool temperatures, inadequately displayed merchandise, and low
lighting. Two key aspects of internal atmospherics are

1. Retail Store Image: Retail Store Image is one of the most powerful components of retail positioning strategy and one
of the most powerful tools in attracting, influencing, and, satisfying consumers. Retailer or manager is expected to
design or redesign a store, with an objective of influencing customer's buying decisions and shopping behaviors.
For example, McDonald uses bright lights in their stores as it keeps customers in high spirits and ensures a high
activity level. On the other hand, Ruby Tuesday maintains a dull lighting, which ensures a subdued customer activity
level and makes sure that most of them remain confined to their table.

2. Music: Music is one of the key environmental variables that can impact shoppers. Environmental factors like music
affect the time spent in the store, propensity to shop and satisfaction with the shopping experience.
 INTERNAL
ATMOSPHERICS
2. Display Windows: Display windows are very common features among retailers dealing in garments and gifts items. This
feature is even very prevalent among small towns' retailers. For example, Titan watches provides valuable inputs to Time
Zone (First organised chain of retail stores in India) franchisers to install impressive moveable windows to display their
merchandise, which not only communicate with the prospective shopper, but all attracts new customers to the

3. Marquee or Sign Board: A marquee includes painted or neon light, printed or script, and store name alone or mixed with
trademark and other important information. Pizza Hut, McDonald, Barista, and Bombay Selection owns widely
acknowledged marquee. In India, most of the independent retailers use tin board and get it painted to place it outside the
storefront. The quality of marquee influences the image of the store perceived by the customers.

4. Parking Facilities: Parking facilities play an important role in the success of a retail firm. The importance of parking
facility is of great significance in urban shopping center where number of car owners is increasing day by day and want to
drive to shopping centers Limited or no parking facility in traditional centers is attributed to less than, one per cent
ownership of automobiles in India. At the same time, Indian consumers prefer to purchase from the nearby shopping center
which can be approachable by walk or public transportation. Therefore, this aspect was remained neglected for long.
 STORE LAYOUT

Store layout refers to the interior retail store arrangement of departments or groupings of merchandise. It involves decision about
allocation of floor space, product groupings and nature of traffic Flow. Nature of traffic flow can take the form of straight or Grid
traffic flow, Free-form flow (curving) or racetrack flow. Some retailers also operate a storied layout to meet their specific
requirements.
 VISUAL
MERCHANDISING
 Visual merchandising is defined as presentation of products in order to sell them. Good displays shout to the world that the
retailer cares about his image and merchandise and, most importantly, about entertaining, informing and educating his
customers. Frequent changes encourage the customer visiting his normal section to also wander about and discover
additional novelties.

 Visual merchandising includes various aspects like, store floor plan, store windows, signs, merchandise display, space design,
fixtures and hardwares, and the elements that come with it which may be too many to mention. Visual Merchandising has
been around since the dawn of civilization, since humans started selling merchandise to a customer. Visual Merchandising
has become more sophisticated and more encompassing than arranging merchandise for easy access to customers. Visual
Merchandising elements are put into practice from designing the floor plan of the store to the beautiful mannequins that grace
the store floor.
 VISUAL
MERCHANDISING
When buying store fixtures and display merchandise for a retail store, a number of factors must be considered to be able to make
the best possible choice. Some of the key factors are discussed below:

 Product Line: Characteristics of merchandise need to be considered while deciding the fixtures to be used for display.
Wooden racks or shelves can be effectively used for apparel or packaged FMCG products. However, mirrored showcases are
preferred for jewelry or gift items sine they ensure better safety and presentation.

 Customer Profile: Retailers have to take into consideration the profile and expectations of its target segment. Stores, which
primarily cater to functional rather than hedonic needs, do not require very fancy fixtures. Hence, they can reduce intensive
investments in fixtures and pass on the benefits to the customer. Examples of such stores are kirana shops, chemist store, and
other neighbourhood stores. Many smaller eating joints and dhabas use inferior quality or low-cost furniture and fixtures.
This is done keeping in mind the socio-economic profile of its customers and also the fact that customers do not expect
dhabas to provide fancy and expensive decor. Stores targeting the high-end customers invest a lot in fancy and unique fixture
design and arrangement to generate an exciting and inviting store environment, thereby attracting customers and building its
store image.
 VISUAL
MERCHANDISING
 Level of Competition: Level of competition is a significant factor in determining the kind of fixtures to be used by a retailer
since it provides him with a unique selling proposition. For instance, most of the eating joints and garment stores in urban
centers of India were using very limited display options. However, the advent of international players such as McDonald's,
KFC, Marks and Spencer, Benetton, Levis etc. the more up-market retailers are pushed to refurbish their display and interiors
to keep pace with competition and continue to attract customers.

With a theme of the display determined and the location for it planned, the retailer needs to examine the components of the
display. The various components of the display are as follows:

 Wall Displays: refers to slatwall panels and fixtures, gridwall panels and displays, slotted wall standards, face-outs,
handrails, and shelving.

 Floor Fixtures: gridwall panels and accessories, garment racks, display cases and counters, metal shelving gondolas, floor
and cube merchandisers. A dump display is merchandise displayed by being dumped or heaped in a pile, usually in a bin or
on a table. Dump display can be used as Bulk Dump Display and Dump Table Display,
 VISUAL
MERCHANDISING
 Display Products: like mannequins and body forms, clear acrylic displays, countertop and jewelry displays.

 Supplies & Equipment: include hangers and steamers, tagging supplies and labelers, packaging and shopping bags.

 Promotional Items: like window signs and banners, sign holders and sign cards, sale tags and tickets. These items should be
used to enhance the product for sale or help in furthering the story or theme

 Lighting Fixtures: include track lighting and accessories including rope lights. It is important to use proper lighting to make
the product "pop" in the display. Incandescent spots are very effective here. Lighting needs to come from more than one
direction for a balanced presentation.

 Signage: should be professional, never handwritten, and regardless of the size. Bin tags, bin labels, peg tags, shelf labels,
planogram tags. Shelf tags aid in the proper placement of product and frequently include price information for customers in
lieu of price marking the individual items.
CUSTOMER SERVICE
 CUSTOMER SERVICE
Customer Service in Retail – A Differentiator

 The lifeblood of retail businesses has always been sales. But it is customer service that turns those casual purchasers into
loyal customers.

 Things like well-trained salespeople, responsive communication, effective use of technology, showing empathy for customer
needs and providing personalized experiences are just a few retail customer service examples your company can do to ensure
positive outcomes.

 People go back to retailers because they receive a personalized experience.

 The products may have been what got them in the door the first time but keeping them happy and coming back with repeat
business is all about providing a positive and consistent customer-centric experience.

 In a world of retail commoditization, you can make customer service your competitive advantage
 CUSTOMER SERVICE
What is retail customer service?

 Retail customer service is like any other customer service: it is the act of providing customers with assistance, answering
their questions and helping them solve problems. However, there are some factors specific to this industry that make it
important to learn and hone retail customer service skills. Doing so will lead to happier, more loyal customers.

 It is about providing seamless experiences that tell the customer that you not only care about making the sale, but you also
care about them being satisfied with their purchase. Customers value their time – if they need to seek support either before or
after the sale, they want it to be easy, efficient, and without a lot of hassle.
 CUSTOMER SERVICE
Importance of Customer Service in Retail

1. Revenue increases with good customer service

2. Happy customers build a better reputation
3. Retention correlates to customer satisfaction
4. Churn decreases with more customer care
5. Customer lifetime value improves with better customer service
6. Employee happiness correlates to customer happiness
7. Company culture strengthens with improved customer sentiment
8. Brand awareness soars with positive customer experiences
9. Marketing spend lessens with more customer advocates
10. Valued customer service unites goals and processes
11. Business longevity relies on satisfied customers
 CUSTOMER LOYALTY
Evolution of Consumer Loyalty
 The origin of tapping into the potential of consumer loyalty started in the retail business. Such retail loyalty programs
mainly focused on providing discounts to incentivize the next purchase. This transactional loyalty was effective initially.

 Over the years there were two main changes. The success boosted the demand of loyalty platforms in different industries and
customers demanded a complete user experience rather than simple discounts. These rewards programs for businesses had to
evolve to cater to the needs of their customers.

 The best loyalty programs allow businesses to engage customers on multiple levels and provide the same user experience. A
loyalty program software should provide a 360-degree loyalty engine which rewards the customer.

 Transactional loyalty is an integral part of the program but that is just the tip of the iceberg. We will explore other types of
loyalties that businesses should look to gain from customers.
 CUSTOMER LOYALTY
 Transactional Loyalty
Gaining transactional loyalty is the easiest of the six different types of loyalties from a customer. It works on offers and
discounts. A customer loyalty program will provide discounts to get repeat customers. It is a powerful tool, but it comes at a cost.
The good news is that discounts offered by loyalty programs are good towards the next purchase. That is a powerful way to
bring a customer back.
Used correctly, transactional loyalty can provide great results. Every loyalty program must include this aspect in their offering,
but it should never be the only focus. Over the years there were two main changes. The success boosted the demand of loyalty
platforms in different industries and customers demanded a complete user experience rather than simple discounts. These
rewards programs for businesses had to evolve to cater to the needs of their customers.

Social Loyalty
The next step to engage repeat customers is through social media channels. A customer loyalty program simply awards points to
customers for sharing specific posts on their social media platforms. The social sharing can be in form a share, retweet or tagging
few of their contacts so the post can go viral. There are endless possibilities. This can be customized with certain time frames to
keep the points that have to be awarded in check. Largely this provides another way for a brand to keep customers engaged. This
could also be a way for brands to get some additional marketing done for themselves through the customer’s loyalties that
businesses should look to gain from customers.
 CUSTOMER LOYALTY
 Engagement Loyalty
Building on the social loyalty, we come to engagement loyalty. In this case the customer rewards program offers points if people
subscribe to newsletters, watching a YouTube video or download case studies etc. You can also reward customers for engaging
with your business.
This ensures your marketing material is reaching your repeat customers and is being consumed by them. This improves rate of
conversion of these marketing campaigns.

Emotional Loyalty
As the words suggest this type of loyalty engenders after a customer reward program can form an emotional connection with the
repeat customer. It can start simply by awarding points on their birthday or anniversaries. A letter from the CEO to VIP
customers is a great way to retain their loyalty.
Emotional loyalty goes beyond discounts. Some of the best emotional loyalty initiatives customer loyalty program software can
provide deeper connects the customers that discounts can simply not do. Emotional loyalty helps you customize the offers and
campaigns with which you can form a deeper connect with your customers. Emotional Loyalty if utilized properly can be
powerful mechanism to ensure consumer loyalty.
 CUSTOMER LOYALTY
 Behavioural Loyalty
Behavioral loyalty is about getting customers to do activities that you want them to do. For example, get 500 bonus points if you
make 3 purchases in one month.
Behavioral loyalty can be a key tool in the best loyalty rewards programs. Data science and machine learning algorithms provide
insights in the buying behavior of the repeat customers. By analyzing such data your marketing can focus on modifying their
behavior.
Another example of behavioral loyalty is to offering double points for people who buy on the weekend before Memorial Day.
The chance of earning double points will influence them to buy sooner. Behavioral loyalty is a key tool influence customer
behavior.

Advocacy Loyalty
Like social sharing your customer reward program can award points for referrals. Statistics say people are 7X more likely to
purchase from a brand when referred by a friend. The brand ends up acquiring a new customer without spending the high
amounts required for customer acquisition.
A repeat customer is more than happy to refer your brand. Rewarding this action with bonus points is the least a brand can do for
them. Afterall, customer advocacy is a mini customer acquisition engine on its own.
 TYPES OF CUSTOMER
LOYALTY PROGRAMS
 Point Programs
The point programs are the most common programs around the commerce world, as they the simplest ones. They are based on
one simple principle: Spend more to get more. Every time a customer makes a purchase in-store or on a website, they get a
certain amount of points depending on the size of their purchase. These points are translated into some type of reward. Whether
it is a discount or a special customer treatment, customers seems to work toward collecting a certain amount of points to redeem
their reward.

Spend-Based Loyalty Programs

In spend programs, customer get loyalty credits for the amount they spend at a business. This program is very easy to
understand, create and maintain. It is also proven to be an effective way to increase transaction amounts and reduce churn rate.

 Tiered Programs
One way to find the right balance between attainable and desirable rewards is to implement a tiered loyalty reward system,
which rewards initial loyalty and encourages more purchases. In a nutshell, the tier program is based on levels of loyalty.
Customers get points whenever they purchase something. The more points they receive, the higher loyalty level they will reach.
And the higher the level, the more rewards they will get.
 TYPES OF CUSTOMER
LOYALTY PROGRAMS
 Paid Programs – VIP member club
Customers pay a monthly or annual fee to join the VIP member club with access to special services, discounts or unique
opportunities. The paid program should include benefits that are exclusive to members or other wise it will lose its value.

Value – based Programs

If you structure a loyalty program that is aligned to your customers’ values, they are more likely to become brand ambassadors.
The million-dollar question here is: How do you reward your customers without rewarding them? First, it is very important to
define your values. Let’s imagine that you run an online pet store and you know that your audience values animal welfare. One
thing you may do it, is to start a loyalty program, similar to the point system, where customers’ purchases translate into currency.
Then, every time a customer makes a 50€ purchase, you would donate 5€ to an animal rescue organization.
The reward when choosing the value-based program is to connect with customers on a deeper level by creating a strong and
ethical relationship with them.

 Partnered Program
Strategic partnership for customer loyalty can be super effective regarding customer retention, as you offer them more
opportunities. At the same time, it can help the growth of your business by building new business relationships (partnerships).
While providing your customers with value that is relevant to them and goes beyond what your company can exclusively offer
them, you are showing them that you truly understand and care about their needs.
 TYPES OF CUSTOMER
LOYALTY PROGRAMS
 Game Program
Who doesn’t love games?
A good idea is to turn your loyalty program into a game application to encourage repeat purchases, increase customer loyalty,
entertain customers and help strengthen your brand’s image in a more entertainment way.

 Hybrid Loyalty Programs

A hybrid loyalty program is a combination of more than one type of loyalty systems. You may merge 2 different systems such as
the tier and the game program, where customers reach new levels of loyalty every time they complete a new level in your game.
The participation in the game should of course entail a purchase.