There’s a merchandising clue in the story of Goldilocks and the Three Bears. You know the story: Goldilocks goes for a walk in the forest, happens upon the home of the Bear family, and knocks on the door. Finding no one home, she walks in and discovers three bowls of porridge on the table: one was too hot to eat, one was too cold, and one was “just right,” so that’s the bowl she ate. She then tries out the chairs and the beds, finding the same comfort range: too hard, too soft, and “just right.”
Your customers resemble Goldilocks, in that they want a shopping experience that’s “just right”: not too crowded with either merchandise or people.
The amount of crowding in your store directly affects customers’ perception of your business as well as their price expectations and willingness to buy from you.
Nita L. Paden, in her 1993 doctoral dissertation for the University of North Texas, explains the concept: “In retail stores, crowding may be related to density in terms of numbers of people, or may be in response to other, more controllable, tangible elements in the store setting such as density of fixturing and merchandise arrangement ... retail crowding results in a state of psychological stress.” [https://bit.ly/2EnVHde] A University of Southern Mississippi honors thesis by J.J. Holston points out that aisles and displays that are too crowded or too sparse have a direct effect on shoppers’ perceptions of the price and quality of merchandise. [https://bit.ly/2Xf0Ewi]
Some retailers make “sparseness” part of their merchandising plan. The wide aisles and uncrowded product displays of Neiman Marcus, Morris & Sons, and Vera Wang give an impression of elegance and sophistication. Nordstrom’s broad traffic lanes and accommodating display areas seem to justify their premium pricing, even when identical products can be found for less money elsewhere: The same Levi 501 men’s regular fit jeans that Nordstrom sells for $118 can be purchased at JC Penney or Wal-Mart for $39. But Nordstrom shoppers willingly pay the higher price.
Conversely, shops that have narrow aisles and brimming shelves seem to scream “discounter.” Paden’s interviews suggested that “most people associate crowded stores with unpleasant shopping experiences. Some people interviewed said they refused to enter a store that looked crowded or congested. It would seem, then, that crowded stores would evoke negative images in the minds of the consumer.”
Either way, whenever a store’s prices don’t align with a customer’s expectations, they become frustrated with the shopping experience.
Does the merchandising in your shop justify the prices you charge? Do your customers perceive you as an elite seller of antiques and collectibles, or as a glorified junk merchant? Let’s examine a couple of relevant “crowding” issues: spatial and social, and then identify some elements that we can control (and those we can’t).
Spatial crowding relates to the density of the merchandise in product displays. A shopper’s sense of crowding varies from one product to another: a densely displayed glassware section causes more discomfort than a densely displayed clothing section. Ideally, non-textile items on shelves should be spaced wide, but not deep or high. In other words, in a line with nothing on top and nothing behind.
One can infer from the research that there is a correlation between the amount of space allowed for a product and the implied value of the product.
An analogy can be found in a modern office environment: office cubicles house workers that are lower on a corporate “food chain”; as one moves up the chain, offices become increasingly large relative to the value (importance) of the executive in the office.
From a retail merchandising perspective, it makes sense to allow more display space for more valuable merchandise; perhaps double or triple the amount of space an item requires. Doing so sets apart distinctive items and visually supports higher pricing.
Social crowding relates to how comfortably shoppers can move around your store. Ceiling height and other architectural elements like walls and windows cannot typically be changed. Controllable traffic flow elements are fixture and display placement and height; customers should be able to see over fixtures to the back of the store.
Traffic aisle width should accommodate at least two people standing side-by-side (with whatever they are carrying) and allow free movement around corners to adjacent aisles. Other elements that contribute to a store’s feeling of openness are lighting and color.
Dealers often point out that they can’t sell products that aren’t on display, and that maintaining high display density results in higher sales. That may be true, but sales alone are not an adequate measure of retail performance. In my opinion, the best overall measure of performance is profitability.
Space and profitability
As Boomers downsize and pass away, antique and vintage merchandise floods the market, driving prices down. New dealers continually enter the business, increasing competition. Most of the competition is at the low-end of the price spectrum. The best way for established dealers to separate themselves from the pack is to become an “elite” antiques dealer, and to do that one’s store must be merchandised in a manner that supports that image.
Here’s my take-away from the “retail density” research: you can control customers’ impression of your store through your merchandising, and their impression has a direct impact on the prices you can charge and the profits you earn. For example, say you average 40 customers a day who spend an average of $35, and your average margin (margin, not markup) is 44 percent.
Increase your margin
Look what happens to your profitability over the course of a year with 10 percent fewer customers, a 15 percent rise in average price, and a modest 5 percent raise in margin:
Current: 40 customers x $35 avg. sale x 44% margin = $616 per day.
Elite: 36 customers x $40 avg. sale x 49% margin = $705 per day, for an annual increase of around $5,000 (depending on how many days you’re open).
Serious profits begin to accrue as your business grows; the formula for retail profitability is (number of sales x average spend x margin).
Increases in customer count alone won’t turn you into an elite dealer; you need to also get higher prices and margins.
As the research points out, you can achieve higher prices and margins through re-merchandising your store and upgrading your image.
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