THE IMPORTANCE OF ATMOSPHERICS IN THE FASHION INDUSTRY Anel Morkel Research report presented in partial fulfilment of the requirements for the degree of Master of Business Administration at the University of Stellenbosch Supervisor: Prof F.J. Herbst Degree of confidentiality: A December 2011

ii Declaration By submitting this research report electronically, I, Anel Morkel, declare that the entirety of the work contained therein is my own, original work, that I am the owner of the copyright thereof (unless to the extent explicitly otherwise stated) and that I have not previously in its entirety or in part submitted it for obtaining any qualification.

A Morkel September 2011 Copyright © 2010 Stellenbosch University All rights reserved Stellenbosch University

iii Acknowledgements I would like to express my gratitude to my parents, Seppie and Elouwna Morkel, for their support and confidence in me. I would also like to thank my supervisor, Prof Frikkie Herbst, for his advice and encouragement. Finally, I would like to thank the participants who committed their time to the interviews. Stellenbosch University

iv Abstract Customers expect from a store that displays expensive products to make an effort to decorate the store with atmospheric elements to create a prestige atmosphere. The four stores that the participants visited target upper-class customers and display expensive products.

One of the participants mentioned that the atmosphere in Hip Hop remind her of a take-away restaurant. Hip Hop was making no effort to decorate its stores to create a hedonic experience for its customers. They were relying on their well-known brand name to sell their products. In the long run, this strategy will not be effective as the competition gets tougher and more brands enter the market. High-class fashion stores focus more on hedonic customers. Customers do not need to buy expensive clothes as there are many discount stores that could fulfil their clothing needs. In order for high-class fashion stores to attract customers they need to create a hedonic experience for their customers in the store.

The customers must want to enter the store and spend time in the store. Atmospheric elements can attract customers to the store and influence the time they spend in the store. It is important that new fashion stores have the right atmospheric design in their stores. New stores cannot rely on a name as this is not well known. The atmospheric design of a store tells customers what they can expect in the store.

One of our main findings is that there is a difference between the atmospheric designs in shopping centres. The fashion stores in the V&A Waterfront in Cape Town use atmospherics in their stores to create a prestige atmosphere for their upper-class customers. On the other hand, the atmospheric designs in the fashion stores in Canal Walk, which attracts middle-class customers, had a lower quality and were not regarded to be as prestige as those of the V&A Waterfront stores. The most expensive merchandise was also found in the fashion stores in the V&A Waterfront. Most of the stores in our sample use some atmospheric elements.

However, the combination of the atmospheric elements in the stores did not always match. The participants viewed the atmospheric design as a whole and it was important to them that all the atmospheric elements fit together. The participants were noticeably disappointed with a store that did not make use of atmospherics to enhance its customers’ shopping experience. They found the store too plain as the storeowner did not make any effort to decorate the store. When they entered a store that did make use of atmospherics, the participants mentioned that they would like to spend more time in the store.

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v Table of contents Declaration ii Acknowledgements iii Abstract iv Table of contents v List of tables viii List of figures ix CHAPTER 1 ORIENTATION 1 1.1 INTRODUCTION 1 1.2 PROBLEM STATEMENT 1 1.3 RESEARCH OBJECTIVES 2 1.4 LITERATURE REVIEW 2 1.4.1 Atmospherics as a marketing tool 2 1.4.2 Customers’ purchase behaviour in a store 3 1.4.3 Choosing an atmospheric design 4 1.5 CLARIFICATION OF KEY CONCEPTS 5 1.5.1 Atmospheric elements 5 1.5.2 Environmental psychology 5 1.5.3 Mehrabian-Russell model (M-R model) 5 1.5.4 Stimulus-Organism-Response (S-O-R) paradigm 5 1.5.5 Stimulus 5 1.5.6 PAD emotional states 5 1.5.7 Congruent and incongruent 5 1.6 IMPORTANCE / BENEFITS OF THE STUDY 6 1.7 RESEARCH DESIGN AND METHODOLOGY 6 1.7.1 Sampling 6 1.7.2 Data collection 6 1.7.3 Data analysis 7 1.8 CHAPTER OUTLINE 7 CHAPTER 2 LITERATURE REVIEW 9 2.1 INTRODUCTION 9 2.2 THE STORE ENVIRONMENT FROM THE RETAILER’S PERSPECTIVE 9 2.2.1 Atmospheric design 10 2.2.2 Atmospheric decisions: centralised or decentralised control 13 2.2.3 Atmospheric audits 13 2.3 CUSTOMERS’ SHOPPING ACTIVITY IN RETAIL STORES 14 2.3.1 Introducing arousal to the customer 14 2.3.2 Mehrabian-Russell model 14 Stellenbosch University

vi Stimulus factors 15 Emotional states as the mediating variables 15 Behavioural responses 15 Donovan and Rossiter perspective on the M-R model 16 2.3.3 Customer responses to store atmospherics 16 2.4 SUMMARY 18 CHAPTER 3 LITERATURE REVIEW ON ATMOSPHERIC ELEMENTS 19 3.1 INTRODUCTION 19 3.2 ATMOSPHERIC ELEMENTS 19 3.2.1 Background music 19 3.2.2 Scent 21 3.2.3 Interior colour 23 3.2.4 Lighting 24 3.2.5 Temperature 25 3.2.6 Store layout 25 3.2.7 Matching atmospheric elements 26 3.3 SUMMARY 26 CHAPTER 4 RESEARCH DESIGN AND METHODOLOGY 27 4.1 INTRODUCTION 27 4.2 RESEARCH DESIGN 27 4.3 THE POPULATION AND SAMPLE 28 4.4 DATA COLLECTION 28 4.5 DATA ANALYSIS 31 CHAPTER 5 FINDINGS 33 5.1 INTRODUCTION 33 5.2 PROFILE OF THE RESPONDENTS 33 5.3 THE IMPORTANCE OF ATMOSPHERICS 33 5.3.1 Background music 34 5.3.2 Scent 35 5.3.3 Interior colours 36 5.3.4 Lighting 37 5.3.5 Store layout 38 5.4 ATMOSPHERICS IN FASHION STORES 39 CHAPTER 6 SUMMARY, CONCLUSION AND RECOMMENDATIONS 41 6.1 INTRODUCTION 41 6.2 SUMMARY OF MAIN FINDINGS 41 6.3 POLICY IMPLICATIONS 43 6.3.1 Globally 43 6.3.2 South Africa 43 Stellenbosch University


viii List of tables Table 5.1: Summary of music observations in shopping centres 35 Table 5.2: Summary of scent observations in shopping centres 37 Table 5.3: Summary of interior colour and floor observations in shopping centres 38 Table 5.4: Summary of lighting observations in shopping centres 39 Table 5.5: Summary of store layout observations in shopping centres 39 Table B.1: Observations of the lighting in the fashion stores 56 Table B.2: Observations of the music in the fashion stores 57 Table B.3: Observations of the scents in the fashion stores 58 Table B.4: Observations of the store layout in the fashion stores 59 Table B.5: Observations of the flooring in the fashion stores 60 Table B.6: Observations of the interior colours in the fashion stores 61 Table D.1: Summary of stores that made optimal use of atmospheric elements 91 Table D.2: Summary of stores that did not make optimal use atmospheric elements 91 Stellenbosch University

ix List of figures Figure 2.1: Elements used in atmosphere creation 12 Stellenbosch University

1 CHAPTER 1 ORIENTATION 1.1 INTRODUCTION The purpose of this study is to observe the atmospheric elements of lighting, music, temperature, scent, layout and colour that make up the physical environment of high-quality fashion stores. The role that atmospheric elements play in influencing customers’ perception and impressions has become increasingly important to the fashion industry. This study investigates the atmospheric elements that create a positive atmosphere that appeals to the high-quality fashion store’s target market.

By creating a positive atmosphere in the high-quality fashion store, the customer can be manipulated to stay in the store for a longer period of time.

According to psychologists, the physical environments that surround human beings have an effect on their behaviour. This part of psychology is known as environmental psychology. Environmental psychology emerged in the 1960s as a result of societal and scientific concerns. In the 1960s there were increasing concerns about community problems and the deterioration of environmental quality. Psychologists studied these concerns and found that there is a relationship between the behaviour of human beings and their physical environment (Stokols & Altman, 1987: 1). Interest in and research on environmental psychology have increased significantly since then.

The term atmospherics was first used and defined by Philip Kotler. In 1973, Kotler (1973: 50) noted in his research that, if the physical environment can influence human behaviour, then the behaviour of customers in a store could also change as a result of the atmosphere in the store. He argued that the environment could be designed to produce specific emotional responses in shoppers that would increase their purchase probability.

The challenge of studying retail atmospherics is that most research findings rest on the underlying assumption of human behaviour. 1.2 PROBLEM STATEMENT Atmospheric elements influence the customer’s perception of the store, which has an effect on the customer’s buying decision. Customers’ first impression of a store influence their expectations of the shopping experience that they may encounter in the high-quality fashion store. The atmospheric elements can create a positive or negative experience for the customer. Atmospheric elements are widely used in fashion stores as a marketing tool.

Although the importance of atmosphere in high-quality fashion stores is recognised, there is a shortage of sufficient documentation. There is no clear guidance for the opening of new high-quality fashion stores. High-quality fashion store managers should strive to create a store atmosphere that is comfortable for the majority of the store’s customers.

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