Retail design decisions should be made considering consumer behaviour and market trends to ensure success.

The way people shop is ever-changing and retailers looking to keep the competitive advantage, must keep up with market trends and constantly consider how their target market behaves to ensure that they give them the best shopping experience possible.

Retail and store design therefore cannot be separated from market research. It is no longer just about creating an aesthetically pleasing environment in which customers can shop until they drop, but it is becoming increasingly important to take into account their preferences and behaviour in the retail environment to drive and maximise success.

Also, with an increase in online shopping, it is becoming more important to attract shoppers back to centres and stores. According to Dr Dirk Prinsloo from Urban Studies, a number of store owners are today offering experiential shopping to create more interest.

The customer is king
At last year’s annual research conference of the South African Council of Shopping Centres (SACSC), Callie van der Merwe, chief executive officer of Design Partnership, highlighted that retail environments need to be constructed based on human behaviour and customer needs. He believes that successfully designed spaces marry science and art by understanding how people engage naturally within space and with objects.

“When it comes to store design inside and out, it is overwhelmingly evident just how inseparable consumer behaviour and design decisions have become,” says Van der Merwe. “Part of the solution is to spend time in the retail environment and to observe how people behave, tap into this and maximise good design in retail spaces. Design is not merely art. Creating something beautiful that is also functional, and succeeds in communicating a clear message to a core audience, on a very human level, is what design is about.”

Therefore design should come last, Van der Merwe points out. “The longer the delay to commence the design process, the better the outcome,” he says. “The key is to do research, unearth the facts and script the brief. Only then should one start designing.”

So what does the research show?

The way people shop affects retail design
With more and more people gaining access to technology, online shopping is due to have an effect on retail space developments and design. While it is currently not seen as a big threat to shopping centres in South Africa, a research study conducted by Dr Dirk Prinsloo from Urban Studies, on behalf of the SACSC, warns that it would be a mistake for local retailers to discount the importance of this trend.

“It’s no longer enough to merely have a website that complements your brick-and-mortar presence; retailers must start to develop interactive experiences which merge physical and digital channels,” notes the “Omni-channel retailing: Changes, trends and strategies” report.  

While some overseas retailers have announced store closures, partially due to the growth of e-commerce, which is expected to grow to an average sales share of 20% by 2020, others have commented that online shopping has actually strengthened their stores through effective omni-channel strategies where store design incorporates new technology.

“It is also important to note that online stores like Amazon are considering opening bricks and mortar stores. This is a further proof of the need for a well-planned omni-channel strategy even for the online stores,” says Prinsloo.

Multi-channel vs omni-channel
It is important though not to confuse a multi-channel retail strategy with an omni-channel one. While the first, according to the report, offers customers a choice of buying products through different media such as at the physical store, on a website, over a tablet or mobile device, omni-channel retailing refers to the simultaneous use of two or more channels. This can include using a mobile phone while in store or while seeing an advertisement on television or in a magazine.

Omni-channel retailing is an integrated strategy that combines online and offline to streamline customer interaction, instead of the two channels competing with each other.

Shoppers still prefer physical stores
With actual stores offering instant gratification, they still edge ahead as the first choice where local shoppers make their purchases and pick up their merchandise, states the report.

Majority will still prefer in-store shopping in the future
A total of 54% of online shoppers indicated that in-store shopping will still be their preferred method of shopping in the future, while 23% indicated that they already prefer online shopping. It is also expected that more will do research online before buying in-store.
Source: Urban Studies, 2014

A PwC survey also indicates that South African shoppers still rather shop at physical stores than online.

Business Day Live, however, quotes PwC SA’s retail and consumer head John Wilkinson saying that since the country’s population is so young, the adoption of a more socially connected, digital retailing space where customers not only purchase products but also receive a memorable experience, is imperative for retailers looking to maintain or gain a competitive advantage over competitors.

Instead of competing with physical stores, e-commerce should combine with the in-store experience to strengthen overall sales and brand. While retailers may fear that physical stores will become mere showrooms, the Urban Studies survey shows that far more shoppers do research online before visiting the store to make the purchase than the other way around. The report highlights that the modern shopper seems to be the happiest when presented with a full range of options, and retailers should make it as easy and enjoyable for the customer as possible.

How urbanisation influences retail development
Urbanisation is another major factor impacting retail development in South Africa and Africa. Another study published by Urban Studies in August 2014, entitled “Urbanisation and the impact on future shopping centre development in Africa and South Africa”, shows that South Africa is currently just more than 63% urbanised, with percentages varying greatly from province to province, from as low as 17% in Limpopo to 97% in Gauteng.

Currently, almost one million square metres of retail space are in different planning stages across the country. With the level of urbanisation expected to climb to between 68% and 70% by 2030, additional retail floor space of between 1,5 and 2 million square metres could be necessary by 2021/25.

With the urbanisation rate in other less developed African countries more than 3% per year, which is expecting to continue until 2025/2050, a lot more development is projected, with well over 900 000m² of shopping centre space already being planned in countries over the rest of the continent.

According to the Urban Studies report, local opportunities particularly exist in established township areas as well as informal housing settlements on the outskirts of these areas. The need is predicted to be for developing community type centres that will bring food, clothing and services to low income households, which in many cases will also play a catalytic role in establishing additional services and increasing employment.

The challenge, however, will be “to better understand the tempo, the impact and the new emerging customer base of the greater urbanised population, future urban growth and development”, according to the report.

Modernisation of industrial areas
The success of industrial property in South Africa is strongly linked to that of the retail sector, Growthpoint industrial property divisional director, Engelbert Binedell, was cited saying in a Property Wheel article earlier this year. “The failure of major retailer Ellerines has not only resulted in the failure of retail tenancies at shopping centres, but also the failure of tenancies at distribution centres,” Binedell said.

He is of the opinion that smart operating spaces with smaller floor areas, but larger volumes, will drive the local industrial property market during 2015.

Industrial areas are indeed seen being reinvented, either through redevelopments of existing nodes or new-build integrated zones, which often combines office space with warehousing, driven by companies looking for more efficient and cost-effective spaces close to major roads and off-ramps.

One such example is the Aerotropolis East development, one of the flagship projects of the City of Ekurhuleni. Set to become the first Aerotropolis in Africa, the development is proposed as a mix-use precinct founded on the “live, work, play” principle, which incorporates housing, business, industrial, recreational and other public activities. This principle provides the opportunity for people to meet most of their daily needs within their own community.

According to Airports Company South Africa (ACSA), the precinct is being constructed to the southeast of OR Tambo International Airport, along the Atlas Road corridor, with the first phase comprising about ten hectares of land.

While the main focus of Aerotropolis East will be aircraft maintenance and aviation, the development will also include commercial, residential, hotel and MICE (meetings, incentives, conference and exhibition) components. Development will be based on a long-term land use arrangement, which may follow the demand in the market. Township establishment is also imminent.

In addition to changing the face of industrial nodes, the rise of eco industrial parks is starting to gain momentum where developments aim to go off-grid in order to become greener and also less dependable on the country’s ailing energy infrastructure.

Full thanks and acknowledgement are given to Design Partnership, Urban Studies, Airports Company South Africa (ACSA), Business Day Live and Property Wheel.

In a nutshell:
–    Retail design and research go hand in hand.
–    Store design should consider consumer behaviour.
–    E-commerce should strengthen physical stores instead of competing with it.
–    Urbanisation will bring more opportunities for future retail development.
–    Local opportunities particularly exist in established township areas for community centres.
–    Industrial parks are changing: Smarter spaces, integrated zones, closer to major roads.
–    Eco industrial parks will also gain ground in the future.