It looks like consumer frugality is settling in for a long stay. For most shoppers, the new thriftiness is a cautious choice in the face of an insecure future. There is money to spend, but there is a new social consciousness around the idea of value. Value has less to do with price and more to do with intangible benefits, such as time-saving, problem-solving, convenience, consistency, creativity and confidence building.

In such an atmosphere, retailers would do well to redefine and reintroduce themselves. The key is a new and deeper understanding of brand and customer.

When it comes to retail brands, it is always difficult for businesses to get away from logo-centric thinking and question the company components that may or may not resonate with consumers. But devoting time to introspection now, while the economy is in limbo, could help find the crucial differentiation, credibility and greater relevance needed to win. Once found, these elements can be introduced into the brand experience, usually without the need for big capital-intensive physical transformations.

For example, although the extreme value category is seeing gains now, once the recovery takes hold, how will stores retain the trial customers driven through their doors by the recession? Dollar General knew that to go forward it needed to stand for something other than a cluttered, random, “cheapest” experience. By subjecting itself to a peeling back process, Dollar General revealed its original roots as an “honest and casual” brand. And after listening to its customers, the retailer discovered it needed to add a new dimension: fresh.

The subsequently refreshed brand is introducing itself through its almost 8,500 stores, supported by a conservative budget. The store plan is more shoppable and the brand benefits are clear; the regular customers are reassured that their favorite store didn’t change too radically and the new customers are encouraged by the experience. Even for the extreme value category, it’s a far better strategy to add value than pound the price drum.

It has always been difficult to create appropriate goods and services without shopper insight. Lack of it often leads to broadened assortments beyond a retail brand’s legitimacy. While stuck in the current economic limbo, companies can use the time to learn more about the new customer. It’s a given that today’s consumers escape traditional demographic conventions. Attitudes and values are a better predictor of shopper behavior than age and income. Decoding them requires a more sophisticated, retail analytics-driven approach to shopper research. These tools allow retailers to map the decision processes of each of their segments and identify both the connections and the gaps. Those with the highest to engage the shopper can be redesigned to be more effective.

This is where the idea of brand “touchpoints” comes into play. In the past, customers were “touched” by companies through the store, an associate or the telephone. It was easy to imbue those moments with a cohesive and consistent brand style. In a Web 2.0 world, the touchpoints seem almost infinite, from web pages to tweets. In the analog world they include new store concepts such as those planned, oddly enough, by Microsoft, which feels that people need something tangible in a digital world. And store formats designed to enter denser locations, such as Safeway’s urban lifestyle grocery in Washington D.C. From eBay to Hermes, pop up stores continue to be favored as way to surprise and interrupt consumer expectations. All offer the chance to put a new twist on brand so that people approach it in a different context, and see how it fits in their new framework.

Armed with endless touchpoint possibilities, how does a company choose? Three words retailers will be hearing more in the future are “prioritize,” “optimize” and “orchestrate.” Prioritize in regards to touchpoints, optimize in terms of ROI and orchestrate the elements of the brand experience—from flagships to digital sales receipts.

Hallmark, the specialty card and gift retailer, offers its products through its own stores as well as as supermarkets, drugstores and mass merchants. Its tradition of innovation has taken it into many digital territories, from television to in-store kiosks, online offerings and greeting card software. With so many touchpoints, each with its own potential for return, the challenge is to determine which of the many actions the company could take to please its customers, according to what priority.

Again, breaking down the big picture requires a repeatable analytics driven approach to brand impression management in order to guide thinking about the design of every touchpoint, so that all are aligned and orchestrated according to a brand that’s been refreshed and redefined according to shopper needs.

The new frugality is not solely about price. Quality, price and reason will share top consideration in the customer’s mind. For them, transactions will revolve more and more around ideas, information and relationships. As retail brands adapt to this new customer culture, they will redefine their ideas, values and positioning to stay in the game. In an age of frugality, thrift—the wise use of resources—is a cherished cultural value. It can also become a winning retail strategy.

DAYTON, OHIO— Retail brand consultancy, Interbrand Design Forum teamed with Michaels, the world’s largest arts and crafts specialty retailer, to develop a new store prototype that transforms categories by creating a store-within-a-store experience in departments like jewelry-making, custom framing and scrapbooking.

By gathering consumer insights, the team identified a need for the store to have more personality and provide inspiration and fun throughout, but with an eye on the return on investment.

“The key was to balance in-store innovations with operations to find the financially productive opportunities that allow the retail brand experience to shine through,” said Scott Jeffrey, chief creative officer, Interbrand Design Forum.

To do this, Interbrand Design Forum used its StoreBoard™ methodology to look at how space and capital could be allocated for maximum brand and financial return. This exercise freed up more space to celebrate the significant categories, and jumpstarted the process of improving organization of the store and its merchandise.

The team developed “the art of inspiration” as the design filter which led to a new layout, wayfinding program and adjacency plan that clearly showcase Michaels’ expertise.

“We wanted to communicate creativity by using the products within the store to highlight key departments and tell the story,” said Jeffrey. “This approach provides intuitive navigation and gives the store a distinctive branded personality.”

The difference is dramatically apparent from the moment a customer steps into the store. The store is an open, modern design with wider aisles, warm colors, brighter lighting, ‘inspiration kiosks’ for project ideas and work spaces for customers to lay out an idea or design before purchasing.

An entry focal creates a gathering place for seasonal and trend items. Pulled from multiple departments, the display immediately inspires the shopper. From this vantage point the consumer has a clear view of the entire store and can quickly locate her destination.

The store’s sightlines were improved by removing the top stock shelf from the fixtures. That overstock merchandise is now accommodated above the perimeter fixtures with a system that keeps the boxes out of sight.

By optimizing the use of space, Michaels was able to expand and celebrate five key departments:

* Located in the center of the store, the scrapbooking department is highlighted by a soffit featuring a graphic that emulates a paper lantern. Work space within the department allows customers room to lay out their page ideas before buying. A wood floor and additional oversized paper lanterns hanging from the ceiling delineate the department and add visual interest to the store.
* The new jewelry department offers more than 5,600 different styles of beads, which are clearly sorted. A large furniture-inspired fixture showcases the open stock beads that are new to Michaels’ offering. Typically staffed, the feature doubles as a greeter station, with its placement just inside the door. Textured carpet adds warmth and serves the functional purpose of catching any dropped beads.
* The new kids department highlights The Knack℠, Michaels’ program for children, showcasing project idea displays that offer shopping convenience for parents. The department celebrates The Knack’s branded colors and the fixtures are tiered to provide good sightlines of the entire offer. Arranged by age group, each display features a finished sample project, a free project sheet with step-by-step instructions and all the products needed to complete the project.
* The art supply area has been redefined and improved to meet the needs of artists at any level, with an expanded and easy-to-shop presentation of canvas and brush options.
* Custom framing is a key destination in the store. It is called out with a large frame feature that hangs from the ceiling. A center island encourages a hands-on design experience as the customer works alongside a dedicated custom framing staff member. The merchandise is organized by style and the new design offers increased opportunity to provide ideas and expose the shopper to options.

Organization was critical to these departments, so Interbrand Design Forum conducted research to understand consumer’s decision hierarchy. These insights helped establish category and shelving principles which led to the optimum way to group and display the merchandise and influenced the shelf and product level graphics.

“We have broken the mold of what customers expect from a craft store with this new design,” said Stuart Aitken, Michaels Chief Marketing Officer. “Our customers have told us they want freshness and inspiration from our stores, and those qualities shine through from the moment the customer walks in the front door.”

“Crafting is all about fun, and what I love about this store is that it is energetic,” said Jeffrey. “It looks like creativity is packed into the space. This makes it a more engaging place to shop, and for the employees it creates a better place to work, providing more opportunities to inspire customers.”

The first prototype opened in Hurst, Texas in early October 2008. The store pictured in West Chester, Ohio (near Cincinnati), was one of 24 stores Michaels opened utilizing the new design in 2008.

About Interbrand Design Forum
Since 1978, we have been creating retail brand experiences for companies around the world. Interbrand Design Forum’s talent for game-changing innovation led us to create a business model that integrates analytics-based strategy — the first and only company with such a comprehensive offering. In 2008, we added Interbrand to our Design Forum name to reflect our place in the world’s largest branding consultancy. We have been part of Interbrand since 2002, which makes us part of a network of 1,200 associates in almost 40 offices around the globe. For more information, please contact Beth Ling (937) 312-8803 or visit www.interbranddesignforum.com.

About Michaels
Michaels Stores, Inc. is the world’s largest specialty retailer of arts, crafts, framing, floral, wall décor, and seasonal merchandise for the hobbyist and do-it-yourself home decorator. The company currently owns and operates over 1000 Michaels stores in 49 states and Canada and 161 Aaron Brothers stores.
Close this Document