Strategic Partners

In a slowly improving economic climate, retailers are looking for innovative answers. And, as strategic initiatives begin to open up again, they’re turning to an old resource for new services.

To develop our annual picture of the design firm business, we’ve brought both sides of the business to the table. Joining us this year to discuss the health of the industry, 2011-style, are four members of the VMSD Editorial Advisory Board’s design consultancy component: David Hogrefe of Fitch (Columbus, Ohio), Tara O’Neil of Perennial (Toronto), Todd Rowland of Little (Charlotte, N.C.) and Brian Shafley of Chute Gerdeman (Columbus, Ohio). And, to get the retail perspective, we were joined by representatives of two of the country’s largest organizations: Ken Pray, director of store design for The Kroger Co., and Jim Sloss, vp, design/SPACE, for Macy’s Inc.

What did they tell us? That retailers and brands are trying to zero in on the way consumers behave and how they’re motivated by their shopping environments. The buzzword of the day is “customer-centric.” And, as those habits and needs are being turned into store design elements, design firms find themselves morphing into strategic and research resources valued as much for their experience and insights as for their design capabilities.

VMSD: How has this economy changed the design firm business?

Brian Shafley: The projects are more strategic in nature, not so bricks-and-mortar-related. And we’re dealing a lot more with top retailing executives.

David Hogrefe: We’ve been working with several brands on retail activation projects. And there have been more opportunities to think about how to really, truly engage consumers in new and interesting ways.

Tara O’Neil: There does seem to be a growing appreciation for our insights about strategy. I don’t know if it’s because retailers realize there really is a return on investment for it, but we’re having to sell a little less hard on why strategy’s important.

So it seems you’re no longer being looked at strictly for your design and architecture capabilities but also for your knowledge of the retail business?

Shafley: Definitely. We not only understand the selling environment but we also have an acute understanding of shopping behavior, what motivates people to buy, how demographics affect shopping, and also how to integrate all these various tools – brand communications, digital technology, visual merchandising, etc.
 

Hogrefe: I think we’re all paying a lot more attention to consumers, too, and their shifting needs and their expectations, which continue to grow every year exponentially. How do you make the shopping experience fun, lively, interesting and convenient? The strategies are driven by involving the consumers in the process of the design and the solution and paying a lot more attention to what they say and want. We’ve been preaching consumer-centricity for years and I think it’s really hit its stride in the last year.

Are retailers seeing the changing relationship in the same way?

Jim Sloss: Yes. Our focus these days is on growing same-store sales, launching new initiatives, refocusing on branding elements. And with that workload, we’re turning to our consultants for some of those services. We’re also asking them to do research, to help us fill what knowledge we have and maybe give us a different perspective on what our assumptions were.
 

Ken Pray: Over the past four years, we have become entirely customer-centric. We’re not making a fashion statement. We can no longer try to please just ourselves, as supermarket executives and designers. We have to connect the design with our customers. We have to make sure there’s a return on investment when we make any physical change in the store. There has to be something we can point to that actually moves the dial – that our customers really like – and that we can back up with research data.

Are you enlisting design firms to perform any of this research?

Pray: Yes, to a certain degree. I think the reason to go outside to design services and consultants is to bring us some ideas, some concepts, because we’ve got to get outside of our own walls.

Are you handing the design firm a fairly specific brief? Or are you saying, “This is what we don’t want, this is what hasn’t worked, now you guide us through the wilderness”?

Pray: We try to be very careful not to give the design firm solutions. We don’t hand designers a color palette and say “design with this in mind.” We think that’s where their expertise should be. But there are qualitative concepts about space that we hear our customers talking about all the time: It should be welcoming, warm, non-cluttered, inviting. It should make them happy to be in the space. That will form the design parameters and become the guidelines.

Sloss: We have plenty of knowledge and research on customers’ preferences, but we’re looking for a fresh outlook. If there’s any tendency we have, it’s to revert to our old standard ways or convince ourselves that we tried that before and it wouldn’t work now. Outside design firms have experience with other retailers or other situations and can provide a compelling, convincing message. Sometimes, the message is a validation of what we’ve done; sometimes, it will take us away from where our old habits have always led us.

Shafley: Because we work in a lot of different categories, and a lot of different retail channels and segments, we can pull together ideas from those different corners in new and fresh ways. That’s one thing we always go to market with: this ability to have a fresh angle on a problem the retailer has been experiencing.

Retailers, prior experience is not always the key to solving problems, is it?

Pray: Experience is a great thing, but it’s also a liability. It can help us see clearly where we’ve been, but what we really need to understand is, more aspirationally, where are we going? What are the things we don’t know yet?

Hogrefe: And we can bring both kinds of thinking into the equation. A lot of times, we challenge our clients by asking, “Why do you do it that way?” The answer is often, “Because we’ve always done it that way.” If you look at certain industries within retail, and you look at photographs from 25 years ago and photographs today, there’s often not a lot of change.

Design firms, does that affect how you deal with your clients?

Todd Rowland: Definitely. Most consultancies now bring a pretty robust team of experience from more than just design and interiors. We also examine the client organization, seeing how various departments interact with one another. We overhear things, get a sense of their culture, hear how store planning talks to marketing, what marketing’s niches are, where some of the rubs are in terms of getting things initiated.

“More than just design and interiors.” In fact, we’ve talked very little about designing stores. Are all of these ancillary services being developed because there just aren’t many new stores being built? Is that not coming back?

Shafley: We’re seeing signs of a pick-up in activity. But most of our clients and prospective clients are looking at it as more of an integrated process, multi-channel strategies and bringing technology into the stores, part of a larger effort to reposition their business. And you can’t do that without changing the stores themselves. So I do think there is new-store development happening, though it’s not at the absolute numbers it used to be.

Hogrefe: A lot of retailers are testing new format concepts and different sizes, playing with size and shapes and geographical locations.

Pray: All of that is true. But I think the overall store design is more of a backdrop for merchandising elements that connect with our customers and make their experience relevant. The rest is kind of background anyway and I’m not sure anyone gets excited about that.