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Retailing at 20,000 Feet

Underhill goes over what it takes to see store from big picture to out on the floor

CHICAGO -- Paco Underhill, author and CEO of Envirosell, a company that tests concept stores globally, says he believes in three things "with messianic fervor": amenability and profitability are linked; retailers have to "give good store"; rubber-soled shoes. Underhill told attendees of the 2008 NACS State of the Industry Summit in partnership with CSP that the first translates to a responsibility to understand the customer better. The second means much more than format or expensive tile or skylights. It is "the interrelationship between physical design, communication within that design and [image-nocss] the operating culture." The third addresses the need for executives to regularly visit stores, rather than "thinking sitting down," he said.

"So many of us have gotten obsessed with our Excel spreadsheets," said Underhill. "Yet all of the things that make c-stores strong and functional are based on what happens out on the floor and out on the pad."

Viewing the c-store industry "from heights of 20,000, 10,000 and 1,000 feet," Underhill made suggestions to attendees for battling the other trade channels vying for the convenience dollar—"they're looking at what you do and seeing if they can do it better."

From 20,000 feet, Underhill said retailers should realize that their customers are dictated by the type of road that goes by the store, and to merchandise and stock accordingly. They should have a strategy for signage, test stores, invest in the training of store managers, have tools for both "generals and sergeants" and have regional and seasonal strategies.

From 10,000 feet, Underhill said he sees the need for standards for point-of-purchase (POP) messaging, experimentation with off-peak hours, knowledge of when to go upmarket and when to do the opposite, a re-invention of cash-wrap strategies, to focus security only on trouble spots and to better serve the urban market. He said Best Buy's best three locations in sales by square foot are in New York City, mainly because they use cheaper below-street space.

"We need a better urban lab," he said. "We're watching major chains across the U.S. recognizing that the last markets and underserved markets are ones in large, urban locations. If Walgreen's and Best Buy and Home Depot and Loews are all working on urban formats, there is no reason why a 7-Eleven, a QuikTrip, a Wawa, can't be doing the same thing."

From 1,000 feet, there should be better understanding of what customers see on their pathways inside the store, said Underhill, citing the detail that 90% of people are right-handed and thus much more comfortable reaching for things placed on their right sides. Products could be bundled with more creativity and common sense, coffee and newspapers, for instance. Retailers should consider ethnicity, gender and natural foods when trying new positioning. Strengthen ties with existing customers, experiment with fixtures and understand the real estate under the stores, said Underhill.

"Anybody in the retail world has to spend some of their time out on the floor, doing it," said Underhill. "I don't care if you're the chief financial officer, the chief marketing officer, the CEO. What is critical in the 21st century is getting out there and seeing how it works. I have often seen the best of ideas fail for the worst of reasons, because somebody hasn't gone out on the floor to take a look. If you're not spending at least one weekend a month on the floor of your stores, I think you're consigned to the dust heap of history. The golf course is not going to miss you for one weekend a month."

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