Last week Wal-Mart announced it is closing 269 stores, 154 of which are in the U.S. Wal-Mart’s stock has declined 30% in the last 12 months so it’s no surprise that the company is taking aggressive action to improve its financial performance. Given the rise in online shopping and the way in which retail store footage has outpaced population growth over the last decade, additional store closures should be widely expected. Retail is a mature business with excess capacity so rationalizing that capacity is a natural part of the evolution of the industry. So given this environment, what are the implications for point of purchase design?
Point of purchase design and in-store merchandising have always been important elements of successful retailing. But given the current retail environment, point of purchase design is more important than ever for 3 primary reasons:
- As retail capacity is reduced, there will be greater emphasis on sales per square foot metrics, and ultimately the remaining retail space will have to produce more to make up for the sales that are being lost through store closures and space reductions.
- As retailers cut space and staff, retailers will be looking to reduce the number of products they carry and suppliers they deal with. To stay in the game, product manufacturers will need to have excellent products and strong point of purchase designs that drive sales.
- Retailers will increasingly squeeze the profit margins of product manufacturers in order to improve their own financial performance. Product manufacturers who want to keep their retail space will likely be forced to accept lower margins. The pressure to increase sales velocity to make up for the lost margins will only increase. Effective point of purchase displays and in-store marketing programs represent the best chance for product manufacturers to increase sales.
Jim Hollen is the owner and President of RICH LTD. (www.richltd.com), a 35+ year-old California-based point-of-purchase display, retail store fixture, and merchandising solutions firm which has been named among the Top 50 U.S. POP display companies for 9 consecutive years. A former management consultant with McKinsey & Co. and graduate of Stanford Business School, Jim Hollen has served more than 3000 brands and retailers over more than 20 years and has authored nearly 500 blogs and e-Books on a wide range of topics related to POP displays, store fixtures, and retail merchandising.
Jim has been to China more than 50 times and has worked directly with more than 30 factories in Asia across a broad range of material categories, including metal, wood, acrylic, injection molded and vacuum formed plastic, corrugated, glass, LED lighting, digital media player, and more. Jim Hollen also oversees RICH LTD.’s domestic manufacturing operation and has experience manufacturing, sourcing, and importing from numerous Asian countries as well as Vietnam and Mexico.
His experience working with brands and retailers spans more than 25 industries such as food and beverage, apparel, consumer electronics, cosmetics/beauty, sporting goods, automotive, pet, gifts and souvenirs, toys, wine and spirits, home improvement, jewelry, eyewear, footwear, consumer products, mass market retail, specialty retail, convenience stores, and numerous other product/retailer categories.