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Retail Business, Store Fixtures & Display Tips

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Top 3 Visual Merchandising Challenges

· Display Tips, Visual Merchandising

It is no secret that visual merchandising is playing an increasingly prominent role in the consumer experience. To succeed in today’s hyper-competitive market, retailers need to succeed not only in selling their customers products but also in selling them in-store experiences. Visuals are inevitably a huge component of that in-store experience, and retailers today need to ensure their visual merchandising strategy is on point.

“In an era in which consumers can buy literally anything online, the customer experience within the four walls has also become that much more important to drive traffic and, ultimately, transactions,” Marc Price explained in Forbes. “Product presentation, for instance, can go a long way to stimulate purchase behavior.”

Visual merchandising, however, can present challenges for stores. Let’s take a look at the top three visual merchandising challenges faced by brands and how they can be addressed.

Limited Display Space

Small stores often struggle to find the space for effective visual merchandising. The key here is not to overstock your store. For example, French brand Sézane – which has its main retail store tucked away in a tiny Parisian apartment – is able to execute a beautiful visual merchandising strategy in a small space simply by keeping merchandising on the floor to a minimum and balancing it out with a compelling but minimalist design.

Lack of Flexibility

In small retail spaces especially, there can be limited flexibility to rearrange items and implement an innovative visual merchandising strategy. But, really, you don’t need to reinvent the wheel for effective visual merchandising. As long as you’ve got a design in place that appeals to your customers, you’re good to go.

Budget Constraints

Smaller retailers often don’t have the same budget as major players when it comes to developing and executing a visual merchandising strategy. But the good news is you don’t need a huge budget to be successful at visual merchandising. Knowledge about your target consumer and tailored displays that will pique their interest will go much further toward retail success than dropping huge sums to create elaborate in-store displays.

“This budding emphasis on experience provides a distinct advantage to smaller, more agile brands,” Price explained. “Many of the best performing consumer companies today have tapped into an experiential offering that is both personalized and local with respect to the merchandising and product mix.”

The bottom line? Even smaller retail stores without loads of space and a small budget can develop and execute successful visual merchandising strategies. The key is to get creative about how to overcome common challenges.

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Trends in Visual Merchandising

· Display Tips, Retail Store Merchandising, Visual Merchandising

From store layout to signage to lighting to window displays, it is no secret in the retail industry that visual merchandising is key to getting customers into a store and enticing them to make a purchase. Wondering about the latest trends in visual merchandising in 2018? Let’s take a look.

Dynamic Lighting

If you want to sell more, all you need to do is turn on the lights. Did you know that one-fourth of consumers make an unplanned purchase because of lighting? Dynamic lighting involves leveraging light color, intensity, and direction to draw consumers’ attention to a specific product, which can, in turn, boost sales. As a rule of thumb, bright lights that exude an upbeat, positive vibe tend to drive purchasing.

Interactive Merchandising

Forget about trying on a product. By leveraging a range of new technologies, including virtual reality, coding technology, and motion sensors, brands are making shopping much more interactive and digital using just screens. For example, Mac, a cosmetics store, now allows customers to try out different makeup looks with the “Virtual Try-on Mirror.” In addition, many stores now boast touchscreens that allow customers to customize and order products in-store

Minimalist Displays

In today’s world, consumers are constantly bombarded with distractions, from billboards to ads on their cellphones. That’s why a minimalist store is such a powerful visual merchandising strategy. Adopting a minimalist aesthetic incorporating clean lines, neutral colors, sharp edges, and bright and airy spaces can help you push away all that sensory clutter clogging up consumers’ brains and refocus their attention squarely on your products.

The bottom line? Even making just small tweaks to your visual merchandising strategy can yield big results, helping you maximize the visibility of your store and drive sales. For the full impact, be sure to keep in mind the latest 2018 trends in visual merchandising.

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Why UK Retailers Can’t Make Ends Meet

· Retail Business

Brick-and-mortar retailers in the UK are struggling. A number of prominent British retailers have gone under in the past year, and many more big-name high-street stores, including Debenhams, House of Fraser, Marks & Spencer, and Topshop and are struggling to make it, citing challenging economic conditions. So, why can’t UK retailers make ends meet? Let’s break it down.

The Online Competition Is Fierce

It’s no secret that consumers are increasingly going online to make their purchases, and this trend is only increasing. In the UK, online shopping now accounts for roughly 20 percent of all consumer spending, and non-food online sales increased by an impressive 7.5 percent last year. The shift to online shopping has certainly directly diverted sales from brick-and-mortar stores, but it has also had more complex effects. For example, with more and more people shopping online, fewer and fewer people are out on high streets, meaning that retailers’ chances of luring in a passerby consumer have also decreased. Ultimately, this has put downward pressure on sales.

Costs Are Rising

Costs for British retailers are steadily increasing, largely as a result of Brexit. The value of the pound has weakened considerably in the aftermath of the referendum, which has significantly driven up the cost of sourcing in goods from abroad. Moreover, the UK’s impending exit from the EU has also caused labor shortages, particularly in unskilled sectors of the economy, which has driven up labor costs for some retailers as fewer workers are coming from mainland Europe, which has historically provided the country with a steady influx of workers.

Consumers Have Come Down with “Consumption Fatigue”

“Brits appear to have reached ‘peak stuff.’ Young people are now more likely to be renters rather than buyers, meaning they’ve no yearning to fill a bottom drawer with household goods they may have to lug between short-term lets,” retail experts Sarah Butler, Zoe Wood, and Phillip Inman observed in the Guardian. “Spending on household goods and clothing continues to fall, while restaurants, hotels, pubs, and bars are still on the up.” In other words, consumers (and young consumers particularly) are spending less on actual products and more on experiences – like going out to restaurants, buying drinks at the pub, and going to the movies. In fact, Barclaycard data for 2017 indicated a 10 percent increase in entertainment spending. As consumers’ priorities shifts from goods to experiences, retailers are struggling to keep up.

The bottom line? The world of retail is going through some major shifts. As it adjusts, some stores will inevitably flounder, though it doesn’t look too likely that the entire industry will come crashing down anytime soon.

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Visual Intelligence and Predictive Merchandising

· Retail Business, Retail Store Merchandising

In today’s retail world, personalization is a key element of the shopping experience. Customers are confronted with an endless array of opportunities to make a purchase – whether they’re strolling through the mall, scrolling through ecommerce ads on social media, or looking at merchandise on their favorite store’s website. To differentiate themselves from the competition, retailers need to be thinking about how to personalize the shopping process and tailor it to specific consumers’ shopping patterns.

That’s where predictive merchandising comes into play. Predictive merchandising basically makes use of data science techniques to help retailers more accurately ascertain what products a consumer is most likely to buy. It utilizes what are known as online tracking tags. These tags basically record crucial information at each point in the shopping process. They show, for example, what items a consumer has looked at, what items they put in their shopping cart and ultimately abandoned, and what items they purchased.

If you have ever seen an ad on Facebook or gotten an email about a product you put in your online shopping cart but ended up not purchasing, that is a prime example of predictive merchandising in action. Predictive merchandising ultimately results in better recommendations to customers. The technology can help retailers figure out which products are best for the first sale, cross-selling, and upselling to a particular consumer or segment of consumers.

Given the importance of visual content in driving purchases, the nexus of predictive merchandising and visual intelligence is becoming increasingly important.

“The current and most significant catalyst for inspiration and purchase – social media – creates new opportunities for retailers by leveraging images to understand individual interests and build stronger engagement,” AI and commerce expert Oliver Tan explained in Inc. “AI-powered visual intelligence opens doors by making it possible for retailers to gain the necessary insight from an image and provide consumers the ability to purchase directly from those images with features like ‘Shop Now.’”

Therefore, image-based data analysis is now a critical part of the equation when it comes to leveraging the power of predictive merchandising.

The bottom line? AI technology is shaking up the world of retail, and visual intelligence and predictive merchandising are only going to get more important from here.

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How Convenience Stores Are Weathering the Retail Storm

· Retail Business

It is no secret that the retail sector is struggling. From malls to supermarkets, retailers are struggling to retain their market share as consumers continue to look online and the market becomes increasingly saturated. But there is one specific breed of retailers that are thriving in today’s world: convenience stores.

The Association of Convenience Stores began surveying local convenience stores back in the UK back in 2012. Every year since then, the sector has grown. Convenience stores are thriving in the U.S., too. For example, Wawa, a 54-year-old family convenience store chain, is now a $10 billion empire with an ambitious expansion plan currently in the works.

Why are convenience stores so successful? Part of the reason is their agility. Big supermarkets tend not to react quickly to evolving consumer demand. They tend to be data driven, and collecting data, analyzing it, and making the appropriate changes in inventory takes time. Conversely, convenience stores have much more flexibility to accommodate the changing needs of their customer base.

“They are very good and adaptable at keeping their costs down,” Chris Noice, ACS head of communications, recently said of convenience stores. “A small independent will react to his customer more by feel – if they see something is needed, they’ll do it.”

The bottom line? The retail market might be struggling, but convenience stores are thriving – and it doesn’t look like that will change anytime soon.

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Retail Troubles Hit U.S. Labor Force

· Retail Business

Difficult times in the U.S. retail sector are hurting the workforce’s wallet. A string of store closings and insolvencies, including the bankruptcies of major retailers like Toys “R” Us, have translated into lost paychecks for thousands of workers across the country.

As of early May, 64,000 retail jobs have been lost so far in 2018; that puts retail at the top of the list in terms of job losses by sector. An estimated 33,000 people lost retail jobs when Toys “R” Us went bankrupt and shuttered the doors to its 735 stores nationwide, the largest job loss in the retail sector since 2015. All in all, an estimated 2,460 stores have closed this year, following on an estimated 9,241 store closures in 2017.

The changing nature of the retail world, with less and less brick-and-mortar stores needing fewer cashiers and sales people, could have big ramifications for the labor market. “Retail continues to lead sectors in terms of where the most job cuts are, which has been going on three years,” Andy Challenger, VP at Challenger, Gray and Christmas, a global outplacement firm, told CBS News in an interview. “There’s been a multi-year change for the retail industry as we continue to shift away from brick-and-mortar stores to e-commerce and online sales. In closing brick-and-mortar stores, the skills of cashiers and sales people are not transferable to the warehouse.”

Nevertheless, it isn’t all doom and gloom: The rise of ecommerce is creating new jobs, particularly as companies increase their backroom operations, invest in shipping, and create new handling and logistics centers to keep up with ecommerce demand. The question is how the labor market will shift to accommodate the

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UK Retail Sales ‘Fall off a Cliff’

· Retail Business

Retail sales in the UK suffered in April, largely due to harsh early spring weather and an early Easter weekend; this is according to figures released in early May by the British Retail Consortium (BRC). Like-for-like retail fell 4.2 percent year over year in April –  the largest drop since 2005.

“April’s figures show retail sales growth falling off a cliff,” Paul Martin, Head of Retail for KPMG, told the Financial Times. “That said, the three-month average is more helpful to assess, but this, too, points to sales only growing modestly – these are indeed testing times for retailers!”

Growth in consumer spending for 2018 has yet to materialize. This can be partly attributed to recent hits to household income, which faced new pressures in April from the mandated increase in minimum pension contributions, as well as another round of austerity measures. Moreover, the Bank of England’s choice to raise interest rates in late 2017 has also dented consumer confidence, reportedly negatively impacting consumer spending.

So, is the dip in sales just an anomaly, or is it indicative of larger problems? Analysts expect that UK retail sales will continue to suffer. “The reality is that, with only a gradual return to solid growth in real incomes expected, the market environment is likely to remain extremely challenging for most retailers,” Helen Dickinson, Chief Executive at the BRC, explained.

The bottom line? Retail in the UK is likely to face considerable challenges in at least the mid-term.

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U.S. Retail Imports Grow Despite Threat of Tariffs

· Retail, Retail Business

Although the Trump Administration’s threat of tariffs looms, U.S. retail imports are growing. According to recent National Retail Federation and Hackett Associates analyses, imports at major ports across the United States are anticipated to grow over the summer.

“Despite the threats and risks to trade, we continue to see solid expansion and our models are projecting this to continue throughout the year,” Ben Hackett, a founder of Hackett Associates, explained. “This is driven by a high level of confidence as the economy remains strong and unemployment is at its lowest level in nearly two decades.”

The ports covered by the report handled 1.54 million TEUs (or a twenty-foot equivalent unit, a common cargo capacity measurement) in March. April was estimated at 1.72 TEUs, while May is forecasted to be 1.82 million. That metric is anticipated to jump up to 1.9 million in July and August, which would set a new record for number of TEUs imported in a single month. All in all, the first half of 2018 is expected to see close to a six percent increase in TEU imports, a more than five percent increase from imports in the first half of 2017.

But some analysts contest there is more driving this than just an increase is confidence. Part of the increase can be attributed a stockpiling effect, with retailers scrambling to stockpile goods now that may be harder to get in the future if the tariffs are imposed.

“With proposed tariffs yet to be officially imposed, retailers are stocking up on merchandise that could soon cost considerably more,” explained Jonathan Gold, the NRF Vice President for Supply Chain and Customs Policy, adding that if the tariffs do take effect, they could have deleterious consequences. “If tariffs do take effect, there’s no quick or easy way to switch where these products come from. American families will simply be stuck paying higher prices and hundreds of thousands of U.S. jobs could be lost.”

If the tariffs do ultimately take effect, the NRF estimates that the U.S. GDP could fall by a staggering $3 billion, costing the country nearly 135,000 jobs.

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Many Stores Now Embrace Plus-Sized Mannequins

· Mannequins, Retail Business

Several prominent retail stores, including Nordstrom and Target, have increased the number of plus sized mannequins in their stores. Target, for example, will now display a range of mannequins from sizes 4 to 22, while all Nordstrom mannequins will come in both a size 2 and a size 12.

The move is part of a broader trend in the retail industry to take a more inclusive approach to plus sizes. Stores are increasing their plus-size offerings and also displaying plus-size clothing next to standard sizes, a departure from the old practice of tucking away plus-size clothing in a separate department in the back of the store. Nordstrom recently announced plans to add larger sizes from over 100 brands in its stores, including luxury brands like Gucci, which have not previously made plus-sized clothing. Outdoor apparel chain REI also increased its plus-size offerings by an impressive 50 percent last year. Moreover, many retails are featuring plus-size models on their websites.

“We need to show a diverse size range of models in all our materials, and where we can call out extended size ranges, we do. We want to create visibility to those brands on the website and in stores, and this is about trying to make sure our message comes through consistently on all touch points,” said Tricia Smith, EVP of women’s apparel at Nordstrom. “This is a new representation for us, and the more it shows up, the more the customers will have confidence in our brands and in shopping with us.”

A more inclusive approach to plus sizing may prove integral to winning business. According to U.S. Department of Health statistics, seven out of 10 Americans were overweight or obese in 2014. The median waist size for women ages 20 and over in the country is approximately 38 inches, which equates to a size 16. Plus sizing starts at size 14, meaning at least half of all women classify as plus size.

With rising competition from online retailers like Amazon, some analysts say that the retail sector needs to be able to tap into the wallets of all consumers in order to compete, regardless of their body types. Plus-size fashion is worth an estimated $22 billion and is growing at a rate of roughly six percent annually, which is double the growth rate of the overall apparel industry. Those that can win over the plus-size consumer may have a competitive edge in the increasingly competitive retail world.

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Why You Shouldn’t Believe Reports of “The Death of Retail”

· Retail, Retail Business

The news these days is filled with headlines about major stores going bust and malls shutting their doors as consumers clamor to make their purchases online using their smartphones as opposed to shopping in stores. Just a few weeks ago, Senator Marco Rubio made a desperate appeal to help the millions of workers displaced by a seemingly ever-increasing number of mall closures. But is the retail sector really dying? And is it having an adverse impact on employment?

The short answer to that question is a resounding “no” according to many sector experts. Even the stock market seems to have faith in the sector. In fact, the S&P 1500 Textiles and Apparel Industry Index, a list of retailers that includes prominent brands like Steve Madden, Perry Ellis, and Michael Kors, has been outperforming the market as a whole for about a year now.

“Take the ominous reports of retail’s demise with a grain of salt. Yes, e-commerce has displaced many retail jobs, causing some very visible damage, such as empty malls. But other retail categories appear to have picked up the slack,” Neil Dutta explained in Bloomberg in early April.

Moreover, it seems that millions of workers aren’t exactly being displaced by recent stores closures. Retail employment as a percentage of private sector employment has been steadily declining since the 1980s, so it isn’t accurate to suggest the phenomena is new or the result of increased e-commerce.

The bottom line? Sure, the world of retail is rapidly changing as more consumers head online – and some retailers are certainly struggling to keep up and get customers into their stores. But the sector certainly isn’t dying; it remains alive, and according to the market, it is doing pretty well.

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