RETAIL NOTES
By Jeff Grant
Retail Articles
Leasing Your Retail Displays and Fixtures
Thinking of buying fixtures for your new or existing retail store? Are you afraid to do so because of budget concerns, not to mention justifying the cost during these tough economic times?
You’re not alone. Many first-time or expanding retailers are reluctant to invest substantially in store fixtures, so they settle for used, damaged or third-rate items. And unless they’re adept at dressing them up, their stores probably will have a third-rate look. That’s not what customers want to see as part of their shopping experience.
A better solution for many retailers is leasing – and not just your fixtures either! Just about any other retailing need can be leased, such as POS equipment, in-store surveillance and security systems, computer hardware, software, installations and consultation.
A vast number of American businesses lease at least one of their equipment acquisitions, and nearly all say they would lease again. Large and small retailers, multinational corporations, government agencies, religious and non-profit organizations are among the contented lessees worldwide.
Leasing provides many advantages over buying, including significant tax savings. Did you know that when shown as an operating expense, leased items can be 100% tax deductible? If you bought the same items by borrowing or on credit, you only can take depreciation over the useful life of the equipment. So if you’re looking for a tax break sooner rather than later, leasing may be the way to go.
You can also get your lease approved faster than any other method except buying by cash. Many leases can be approved within two days, vs. several days to weeks for borrowing and credit. Your interest rate will most certainly be fixed, so you’ll always know where the lease stands vs. borrowing or credit, where the rates can fluctuate depending on market conditions.
Down payments for leases typically require just one or two upfront payments, which are applied to your balance. If you’re borrowing or leasing on credit, you’ll usually need to come up with a down payment of 10% to 20% of the total amount. And you probably won’t need to provide a financial statement for lease transactions of less than $150,000. When borrowing or leasing on credit, you’ll usually need to show financials regardless of the amount requested.
And don’t forget, you can either buy or renegotiate the continued lease of the equipment when the lease is up. It all depends on the lease structure. In this tight economy, lessors are more open to negotiating with you so they can keep inventory moving through the pipeline. So put on your bargaining hat before you enter into any leasing agreement.
Retailers can lease equipment in a variety of ways, including finance or capital leases and sales leasebacks. Take a look at this table to get an idea of what might work best for your business. Be sure to consult with your financial advisor to determine the most tax-beneficial lease for your company. And discuss any potential lease with your legal advisor before you sign on the dotted line.
If you’re still a bit nervous about leasing, consider trying it out on just a few items. If it’s a positive experience, crunch the numbers on leasing additional equipment or services. You’ll probably find that leasing is always worth considering vs. buying. And to repeat a cliché that applies to our current economy, you need all the competitive advantages you can get. Leasing just might be that advantage.
Progressive Grocery Shelving
Recently I was asked to provide my thoughts on the future of supermarket shelving for for Progressive Grocer Magazine. A topic I’m very familiar with as both a designer and the head food shopper in my household. Here are my thoughts:
Who are some of your supermarket customers?
My client’s are not large supermarkets. We tend to develop relationships with smaller food purveyors in more of a boutique format.
Over the years these have included wine shops, convenience stores, candy shops, corner markets and health food shops. Budgets are typically tight, shelving is important but no less critical then the other design elements including lighting, traffic patterns, graphics and overall merchandising.
What do you consider the most significant recent innovations in supermarket shelving systems and what do you see as the future of supermarket shelving systems?
Shelving design changes at a snails pace and many of the designs I see today were being used by my Grandfather and my father years ago. It’s simply the past becoming the future. That being said it’s technology that will be the current litmus test for shelving. Customers are rapidly becoming more conscious of just what they are putting in their stomach. Nutrional information will be just as
important as price. Innovative ways to cook food will be of interest to prospective shoppers. Information about genetically engineered food will be required by the government The end result will be that the progressive grocer will look for ways to incorporate information technologies in to their shelving systems. Small digital signs, videos, automatic e mailings of information with the scan of a store card, will all trump reading the label on the food can.
What competitive advantages are achieved by cutting edge shelving systems?
The technology issues when combined with great product, competitive prices, excellent service and great store design will provide both large and small merchants with an advantage that will draw customers and increase loyalty. Those that don’t embrace at least some elements of that technology will fall behind. Certainly some of the boutique operations can retain a “General Store” vibe that will be appreciated by some, however, for the large scale grocer they won’t have that option.
What are your most popular supermarket shelving systems and how do you account for this popularity?
Current shelving trends seem to be following one of two formats. Either the use of standard steel shelves with pegboard backs or wooden shelving units with traditional theming details including crown molding, built in lighting and specialty detailing. In many stores the two types of shelving units are being combined based on the product being sold and the overall theming of the store. The standard steel units are popular because they work well and are very inexpensive.
We live in a digital world. We can shop from home and have our groceries delivered. Wood shelving displays are becoming more popular because customers want to feel comfortable in their shopping experience. Why buy coffee for twice as much at Starbucks then what we can pay at the local gas station. To some degree, because of the decor. Wood detailing, great graphics, warm colors, all tend to enhance the shoppers experience.
Retail Design and its Influences
When setting up a retail store or boutique, you need to think beyond “where everything will fit”. The merchandising of your stores products will have a significant influence on what your customers will buy. If everyone who entered your store found exactly what they came for, bought it, and left, your sales woulld suffer. It’s up to you to entice people to shop longer and buy more than what they originally came for.
2) Arrange your other brands with this concept in mind. If your boutique features a popular name brand of shoes, then customers should have to weave through all the other shoe displays to get to them. If you have aisles, put the most popular name brands in the center of the aisles. You don’t want customers to easily avoid your other products by grabbing what they need from the end of the aisle.
4) Don’t make your lighting layout too bright or too dim. The same goes with your music selections. Obtrusive lights or music does not encourage your customer to relax and shop. Do utilize a few tricks to keep your customers in the store. For instance displaying samples is a good way to make sure that people spend time on your cosmetics aisles. You can even use scented air filters, incense, candles and air fresheners to induce relaxation.
5) Make sure that your shoppers are comfortable and that everything is easy to access. Don’t crowd your displays. Clothing racks, garment racks, shelves and other displays should not be placed close together. No one wants to be looking through a clothing rack for their size and be backed up to another customer. Narrow aisles discourage people from browsing and taking the time to find the items that they’re interested in. Sometimes less is more.
One final suggestion. Have some friends shop your store and ask there opionon of it’s “shopability”. Was it easy to find things? Did they get bored quickly? Was the merchandise fun, intesting, compelling, priced right? Was it a great shopping experience? If not, make changes and if you’re not sure how, get some expert help.