ROI of Store Design – Branding

Scroll down for links to parts 2 and 3 of this three part series on the Return on Investment (ROI) of Retail Design.

ROI in retail design is a hot topic these days (and always has been). Here’s the catch: I don’t really believe that “ROI of Store Design” exists as a standalone concept, not really in the strictest sense. Terms like this get thrown around so much people tend to forget the point (with ROI it’s to trace a myriad of causes to a myriad of results, figure out the ingredients in the secret sauce, and at the end of the day improve performance both short- and long-term). Much easier said than done. In reality, there are MANY factors working together in mysterious, yet wrangle-able, ways that all lead to net outcomes such as sales spikes, sales plateaus, consumer buzz, repeat customers, etc.

That said, the focus here will be on the ROI of smart, consistent branding as relates to a retailer, its store space, and its overall marketing message (of which store space is only an integral part). Next week the focus will be on planning and design and the following week on design integrity in roll-out.

A recent Association for Retail Environments article stated that 76% of retailers perform at least some measurement of ROI of store design but at the same time points out that there is no consistent method for doing so. I would agree with this, our clients measure return differently but almost all of them measure return.

Why isn’t there a simple equation all retailers can plug into? Because nothing exists in a vacuum in retail, therefore you cannot isolate one individual thing (ie: a logo, a material choice, a merchandising display) without attributing all the other supporting factors. It’s like saying your cheese sales aren’t what they should be while ignoring the fact that your wine sales have gone off the charts – is there a correlation? Hell yes. Can you measure one thing and remove the synergies? Hell no.

So, how is branding a real, effective strategy to increase sales? And how do you measure the ROI? Well, it’s sales lift. But it’s not just sales lift.

Branding is the cornerstone to defining a retail culture that (hopefully) connects you to your customer in ways both overt and mysterious. It’s your opportunity to breathe life and integrity into your shop. It’s your opportunity to make a commitment to your customer that tells them, again and again, who you are at your core. And then if you are REALLY smart you will listen well to who THEY TELL YOU YOU ARE and evolve to that. Brand should be a living thing – something that is born one way, yet grows and changes over time, learning from its successes and mistakes.

On the design side, visualizing your brand and extending it to the real world via application within your retail space, including verbalizing it in your messaging, elevates and magnifies the customer’s perception of your brand to that of experience. They remember how they felt as they walked through your space, the fonts, colors, fixtures, materials, even smells, flow together to interact with your customer in a way that (you can only hope) impresses them both immediately (spending more time, purchasing more) and in the long term (they want to relive that experience again and again). And it’s the long term return that’s the real goal of branding, creating brand advocates who not only return to your store again and again but convert (via all the different kinds of buzz) their friends, neighbors, and acquaintances into return customers as well.

How does branding get measured by ROI? The answer is the same for nearly everything in the store – it can’t, not really. All you can do is measure net performance against net cost. In its most basic form ROI = RETURN/COST, right? Your challenge is calculating that in terms you can use. You can do that in large and small ways. I suggest that you do both, but take care that you do NOT try to attribute any single thing (a font choice, a coat of paint) to performance – up or down.

For example, here are some quantitative numbers you can (and really should) be tracking and analyzing:
– immediate sales lift
– sustained sales lift
– foot traffic
– unique customers
– return customers
– visit duration
– cart size and contents
– community engagement

Launch your brand, let it guide your initiatives, get your numbers, and then tweak the dials. See what works, what works better, and what combinations of efforts yield the best results. A/B test concepts. Take calculated risks and be flexible. Look at your store holistically (there’s another buzz word for you). But really, do it, because you can sell more cheese or more wine, but what is the best net result for the larger brand? Only you can answer that for your store.

In short: Create a brand; embody it with integrity; evolve it smartly. If your brand holds up, so will your sales. If it falters, you’ve lost your cornerstone, and everything else starts to crumble.

You can read part two of this series, focusing on Space Planning and Design, here and part three, focusing on design integrity in real world rollout, here

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