The endcap is back. And it's back big.
The redesign of Wal-Mart's Supercenters include an effort to clean up mid-aisle displays, but at the same time emphasize massive creations at the ends of their aisles where a single product is showcased in a tiered, winged arrangement using a pallet on wheels. Described as “a traditional endcap on steroids,” the effort showcases products that Wal-Mart intends to dominate and provides a bold statement to the power of its pricing at a time where consumer concern — and retailers' attention — is clearly on value.
Grocery stores large and small are also in on the move to better utilize endcaps, observers say, in some cases taking them back from manufacturers who traditionally used the space to push their brands. Today, endcaps emphasizing price are part of supermarkets' efforts to make their store environments an ally in the battle to enhance price perception and overall value.
Some believe this current adjustment is only the start of a longer-term trend toward stores designed to provide price with style in a market where consumers will come to expect nothing less from all retailers, regardless of their target demographic. That trend, sources said, will inform design among retail food stores long after the economic crisis is over.
BIGGER AND BOLDER
This emphasis on bigger and bolder endcaps extends to signs in the stores and for many retailers, an effort to use store design and layout to reinforce a pricing message through other media including television commercials and weekly ad fliers. Retailers at the same time are making more efficient use of their space behind the scenes, observers say, in part to support the pricing emphasis in the front of the store.
Endcaps and the accompanying “stack 'em high, watch 'em fly” philosophy are nothing new in supermarket retailing. But the new focus on them is more in service of delivering a message of value across the store, according to Jon Hauptman, a partner at Willard Bishop, Barrington, Ill.
“One of the things we're seeing are larger, more dramatic endcaps and signs, and large fixtures allowing retailers to swap in and out price messages and savings,” Hauptman told SN. “The most important thing to communicate on the endcap is the price of the item and the savings associated with the item, and making sure the shopper can see that from far away. The reason for that is not just for the customer who wants to purchase from that endcap, it's a reinforcing of the message that ‘this is a great place to shop — we have great prices and values.’”
Retailers are also looking for larger endcaps featuring fewer products. Some have had success bundling like items together such as pasta, sauces and a loaf of bread at a particular price point, said Tom Henken, vice president and director of design for API Plus, a retail design and branding firm based in Tampa, Fla.
“First and foremost, endcaps, and what's on them, are being considered more important than ever,” Henken said. “Over the past few years, it seems that retailers have transferred the endcaps to be a more important component in their arsenal of tools. There was a time when it was more common to see the branded battery endcap, or the snack endcap from Keebler. With the transfer to owning the endcap presentation, retailers have been focusing on deals.”
Similarly, Henken noted displays like a “wall of values” are making a comeback as retailers endeavor to make their stores match the intensity of their weekly ads. San Antonio-based H.E. Butt Grocery Co. has integrated a drop pallet into its displays featuring products selected especially for the store's demographic. “The emphasis on quantity screams, ‘We have buying power and this is a great buy,’” Henken noted.
Making a dramatic statement of value on an endcap can be especially useful for higher-end food retailers that have struggled to maintain sales momentum amid a rush for customers to trade down.
“In today's increasingly competitive environment, upscale retailers need to provide not only a high level of service and assortment that helped them stand out in the past, but they have to demonstrate they have great values as well,” Hauptman said. “You have to pick your spots, but strong price communication is essential for upscale retailers. No retailer benefits by trying to hide great values. Even the most upmarket shopper today is looking to save money and make trade-offs. The retailers that do the best are those who can demonstrate great service as well as deliver value.”
PRICE IN THE HIGH-END ENVIRONMENT
For retailers that spent a good part of the decade renovating stores to appeal to upscale shoppers, the sudden shift to value has been a bumpy ride, observers say. Key to delivering a value message for these stores is to utilize assets like private brands to provide lower-cost alternatives, and service to emphasize the value of the experience. Decor that suggests a store is high-end is more difficult to change.
“There's not an easy answer,” said Daniel Montano, principal for Little, a Charlotte-based retail architecture and design firm. “We are aware of the struggle many upscale retailers are facing now, with the economy the way it is and with stores that set out to be really plush, with expensive decor packages and a high-end feel.
“It's difficult to overlay a signage program on an environment that has Corinthian columns, and details, and wainscoting everywhere. It has to be done very delicately, or it will seem a little forced,” he added. “What you have to remember is that their core customer guided them in the design of the high-end interiors. It's a struggle now that the economy has gone down, but is it justifiable to downgrade the interiors? Probably not. It's too much of a shift of where they are in the market environment.”
According to Montano, decreasing the perception of cost at higher-end food stores is a matter of leveraging its quality and service aspects.
“If you are going to spend $5 on a premium, exotic piece of fruit, maybe the store can explain its origin and why it was expensive,” he said. “I think those grocery stores have to go more in-depth on service now than they used to.”
Todd Rowland, director of design for Little's retail practice, acknowledged that higher-end retailers may eventually pursue stores with “a little more straightforward design and maybe less sophistication,” but noted that the potential for those stores to better compete with price operators is through emphasis on private label, service and sustainability.
“It's important to have more proprietary products at attractive price points, and making consumers aware of them, not only from signage but from a customer-service side,” Rowland said. “If customers understand locally grown produce doesn't have to travel as far and that it not only tastes better but is more nutritious, it really becomes a win-win and it takes the focus off price.”
Certain materials and fixtures can also help emphasize a value image, said Joe Bona, retail president of Coleman Brandworx, a New York-based design firm. These include products displayed on warehouse shelving, and in cut cases. But these design touches aren't for every environment, he added.
“There is a trend in retail toward the development of cleaner and simpler stores,” according to Perennial, the Toronto-based design firm whose directors Alex Schnobb, Brent Roth and Kevin Lund provided written responses to SN's questions. “Overly complex and expensive-looking store decor seems to be a thing of the past.”
PRIVATE BRANDS, NATIONAL PUSHBACK
Increasingly, observers say, food store design may be affected by efforts to merchandise store brands and to improve pricing, profitability and shopability by reducing selections of branded products. Ahold's effort to pare down its selection, for example, is allowing the company to operate smaller stores that are less expensive to build and staff. These savings can be invested toward additional lower retail prices.
“We see a lot of retailers pruning the environment now with price and assortment,” Henken said. “They're looking at each product and its importance on its core customer. They are focused on making every square inch of the store perform at as high a level as it can perform, on an SKU-by-SKU basis.”
A spate of retail big-box bankruptcies in the meantime — including Circuit City and Linens n' Things — has provided the potential for food stores to obtain properties at appropriate sizes, noted Rowland of Little.
According to Bona, the emphasis on private label from retailers — not to mention an accompanying trend of reducing product selection — is prompting response from national brands that is also affecting store environments.
“We're seeing a push back from the national brand and consumer package goods companies, trying to create more compelling brand activation pieces in the store,” Bona said. These include endcaps, shelf displays and other marketing tactics.
“The national brands are trying to be that much more competitive against private label,” Bona said.
According to Perennial, retailers are using design to enhance value perception by “delivering a single message consistently across the store environment to ensure that customers understand who they are and what they stand for.” This is conveyed at key moments in the shopping trip not only through product displays but also through in-store communication — “delivering a price message at all levels of the store environment from banners at nine feet [above the floor] all the way down to value messages at the price-item level.”
Store brands can help differentiate a retailer's value message, designers added. Loblaw, for example, has used its No-Name and President's Choice labels to distinguish itself among shoppers hunting for opening price points and those looking for national-brand equivalents. The company has connected the President's Choice brand to its banners by dubbing them “the home of President's Choice.”
BUILDING FOR THE FUTURE
Architects and designers say retailers today are putting just as much emphasis on improving the economics of the box as the look inside. Sustainable designs and features — everything from bulk energy buys to the use of local building materials — are paying off by making stores most cost-effective to build, according to Amin Fikry, studio manager at Cuhaci & Peterson Architects, Orlando, Fla.
“A few years ago you could see contractors build a store for $4 million,” Fikry told SN. “I've seen now they can do it for $2 million.”
According to Henken, stores are also being designed to make more efficient use of energy inside.
“There's inherent waste in having separate cold storage for every area of the store — for example, a refrigerator for deli and a refrigerator for the meat. If you can lay the store out so they all can use a common facility, that can be much more efficient.”
Stores are also getting by with less area devoted to storage as distribution efficiency increases, Fikry added. That's helping bring down the size of stores and making them less expensive to build and operate.
“We were up to 65,000- or 75,000-square-foot stores,” Henken said. “There's a place for them, but that's a very specific customer that wants to spend time there, browse, have a latte. The bulk of the population does not have that much time.”
For Simon Graj, founding partner of New York retail branding firm Graj + Gustavsen, the economy is only one factor driving change to store designs. The bigger shift, he argues, is a consumer base that through greater connectivity has gained the power to make competitors of discount stores and luxury retailers alike, and hasten a blurring of the lines between them.
“I believe this is a new era of an intelligent consumer who is picking up on everything. We are connected, we do research, we do a great job of picking up on different products and markets. We are no longer behind a local wall, but aware of everything,” Graj told SN. “As a result, everything is competing. At one time a low price could have meant less design. Now everything has to be value, and everything has to be great design. The educated consumer has become the everyday consumer.”
Graj counts Ikea, Target, Trader Joe's and Aldi for leading the way toward retailers fusing utility and value, along with proprietary offerings in well-designed environments. “What's high-end today is to provide utility and value,” he said. “The opportunity for food retailers today is to embrace a utilitarian store idea and make it elegant.”
