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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2 The primary research question of this study: “How important is retail atmospherics to the fashion industry?” The following secondary research questions follow from the primary question and strengthen the focus of the study: i) What are the possible elements that are particularly popular in high-quality fashion stores? ii) Are the atmospheric elements of the stores in the five shopping centres in this study the same or do they differ? iii) In research studies by previous researchers, which atmospheric elements have been found to provide a positive experience to customers?

iv) Do fashion stores make use of retail atmospherics? v) Is it important for the fashion stores to do extensive research on atmospherics and their target market before they design their store? vi) Is retail atmospherics important to the customer? vii) Does the customer look at the atmospheric elements separately or as a whole? viii)Can atmospheric elements be divided into those that work on the conscious mind and those that affect the sub-consciousness? 1.3 RESEARCH OBJECTIVES The primary research objective of this study is to determine how important retail atmospherics is in the fashion industry.

Atmospherics are an important marketing tool for fashion stores. The question is if the fashion stores are aware of the importance of atmospherics and if they make use of it. The research examines atmospherics from the perspective of high-quality fashion stores. The focus is on similar-sized, high-quality fashion stores, which target similar income brackets. The secondary objective is to analyse the atmospheric elements that are especially popular in highquality fashion stores and to determine if high-quality fashion store managers/owners are up-todate with the newest atmospheric trends. The research also wants to establish if the high-quality fashion store managers/owners have undertaken sufficient research about the atmospherics that their customers prefer.

Another secondary objective is to determine if some atmospheric elements only work on a sub-consciousness level for the customer. By comparing academic literature that focuses on the behaviour of customers in their physical environment with our findings of what customers expect from a fashion store, we can establish whether customers are aware of the influence that the atmospherics have on them.

1.4 LITERATURE REVIEW 1.4.1 Atmospherics as a marketing tool When customers need to make a purchase decision, they respond to more than the tangible product or service. They respond to the total product. The total product includes packaging, advertising, images and services. If customers are not satisfied with the service that they receive in a store, they might not return to the store even though they have no problem with the product itself. The store or location where the product is bought is one of the most significant features of the total Stellenbosch University

3 product.

Some customers will not even consider entering a fashion store that does not have a wellknown brand name. The atmosphere of the place plays a bigger role in influencing the customer than the product itself (Kotler, 1973: 48). Shopping for clothing and accessories is not a necessity; customers have to be persuaded to shop. Many shop owners have neglected the importance of atmospherics as a marketing tool. Atmospheric planning can make the difference between a successful business or a failing business (Bitner, 1990: 69). In recent times, many fashion stores are struggling to keep their doors open.

According to Kotler, atmosphere is “the effort to design buying environments to produce specific emotional effects in the buyer that enhance his purchase probability” (Kotler, 1973: 50). The sensory channels for atmosphere are touch, sight, scent and sound. The difference between the atmosphere at a funeral house and a shopping mall is noticeable. The shopping mall strives to provide a positive experience to the customer. Also, there is a difference between intended atmosphere and perceived atmosphere. Intended atmosphere is what the designer of the physical setting sought to imbue into the space.

Perceived atmosphere is different for every customer (Kotler, 1973: 51). Different cultures have different expectations about the atmospheric elements in a place. Western cultures may have a certain expectation of atmospherics that differ from Eastern cultures. Older generations’ expectations also differ from younger generations’ expectations. Atmospherics is not a relevant marketing tool in all situations. Atmospherics is a less relevant tool for manufactures and wholesalers. Manufactures and wholesalers do not have customers who regularly visit their sites. Atmospherics as a marketing tool is more important for retailers.

However, within retailing the importance of atmospherics may vary. Atmospherics have become an important tool to attract customers in certain segments of the retail market (Kotler, 1973: 52). This is especially important where competition is likely to increase.

When there is little differentiation between products in the market, atmospherics will differentiate the product. Atmospherics can be an important competitive advantage to a retailer. 1.4.2 Customers’ purchase behaviour in a store According to Kotler (1973: 54), atmospheric elements have an effect on purchase behaviour in three ways as atmospherics can be an attention-creating medium, a message-creating medium and an affect-creating medium. To create attention, the retailer uses noises, colour and motion to obtain the attention of the customer. This medium assists the retailer to stand out among the others.

Atmospherics that create messages communicate various things to potential customers. Message-creating atmospherics can, for example, advertise the purpose of the retailer. Affectcreating atmospherics trigger sensations in customers, and this is created by the sounds, colours and textures of the establishment.

Consumers can respond cognitively, physiologically and emotionally to retail stores (Bitner, 1992: 57). Studies have found that individual personality traits can influence the reactions of the Stellenbosch University

4 customer to the environment of the store. Shoppers will avoid a fashion store or approach it because of the atmosphere in the store. If the customer approaches the fashion store because of the atmospheric elements in the store, the customer is likely to stay longer in the store. Most customers who visit shopping malls have a particular goal or purpose.

The environmental setting of the store may hinder or aid their goal. When a customer enters a store and the atmospheric elements are not approachable, the customer will most likely not return to the store. If a customer’s first impression is positive, it is usually easier to meet or exceed the customer’s expectations (Knutson, 1988: 14). The first impressions that a customer receives from a fashion store influence the customer’s perception of the store. The physical environment helps to create a perception of the services that will follow. It is important that fashion stores pay closer attention to the physical settings of their stores.

During financially troubled times the competition between fashion stores is relentless. In big shopping malls with a variety of fashion stores, a store needs every competitive advantage it can use.

1.4.3 Choosing an atmospheric design Turley and Milliman (2000: 193) noted that the link between atmospherics and sales is very strong. This indicates that the environment of a store has the capacity to influence the purchasing behaviour of shoppers. Relatively small changes in atmospheric elements in the retail environment can have a massive impact on sales. The retail store’s atmosphere is complex and consists of a variety of components. Customers respond to their environment holistically. Mishandling of even one component could have a severe effect on the signals sent to customers and could have an adverse effect on purchasing.

Atmosphere forms part of the strategic planning process (Turley & Chebat, 2002: 125). Once the strategic goals have been identified, the specific atmosphere can be developed. This is a difficult task. It takes a significant amount of money, time and managerial attention to implement the atmospheric design. Choosing a new design is difficult. However, implementing a redesign in an established retail chain is even more complex. The atmospherics that enhance one environment may not enhance others. Fashion stores have to do sufficient research of the different atmospherics that can influence their target market.

Bitner (1992: 66) noted that the environment could influence store personnel and customers. The store environment influences the way the personnel interact with the customers. When choosing an atmospheric design the employees who work in the store for long periods should also be considered. Customers develop a place attachment to certain stores. When customers approach a particular store, they generate a range of emotions and behaviour towards that store (Kotler, 1973: 50). Atmospheric elements can assist customers to develop a place attachment to a specific store. Stellenbosch University

5 Atmospheric design must be continuously revaluated in relation to competitive developments and new possibilities (Kotler, 1973: 62). The initial attraction declines over time due to changing styles. Managers must be aware of signs calling for revising their atmospheric designs. 1.5 CLARIFICATION OF KEY CONCEPTS 1.5.1 Atmospheric elements Atmospheric elements include lighting, music, temperature, scent, layout and colour that make out our physical environment. Fashion stores use these elements to enhance the experience of the customer in the store.

1.5.2 Environmental psychology This field focuses on the interplay between human behaviour and their physical surroundings.

The term environment is broadly defined and includes natural environment, built environment, learning environment, informational environment and social settings. Environmental psychology has developed models that predict the environmental conditions under which humans will behave in a reasonable manner. 1.5.3 Mehrabian-Russell model (M-R model) The Mehrabian-Russell model is a theoretical model developed by Mehrabian and Russell. The researchers used the model to study the effect that the physical environment has on human behaviour. Researchers studying atmospherics frequently use the model.

1.5.4 Stimulus-Organism-Response (S-O-R) paradigm The S-O-R paradigm relates to the environment and the approach-avoidance behaviour within the environment. For example, the environmental stimuli produce an emotional state in the individual. The emotional state could be arousal or pleasure, which leads to the individual approaching or avoiding the environment.

1.5.5 Stimulus A stimulus is a component that produces a reaction in an individual. Atmospheric elements are environmental stimuli which provide a sensory experience to individuals. 1.5.6 PAD emotional states PAD consists of three emotional states, namely pleasure, arousal and dominance. The PAD emotional states explain the approach-avoidance behaviour in the Mehrabian-Russell model. 1.5.7 Congruent and incongruent Congruent means when something is suitable or appropriate for the situation. Incongruent is something strange and not suitable for the situation.

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6 1.6 IMPORTANCE / BENEFITS OF THE STUDY In this study, we look at atmospherics from a qualitative point of view. We have come to understand how customers view the atmospheric design of high-quality fashion stores. From the interviews with the participants we learn how important atmospherics are to them and we find out whether they notice the difference between stores that use atmospherics and stores that do not. The observations showed us how many fashion stores in Cape Town use atmospherics and we have come to the conclusion that fashion stores should spent more on the atmospheric designs in their stores.

Most of the previous studies on atmospherics focused on a single element. This study looks at atmospherics from a holistic perspective.

1.7 RESEARCH DESIGN AND METHODOLOGY 1.7.1 Sampling The focus of the study is high-quality fashion stores that target the higher income bracket. The following stores are included in the sample: Mango, Jenni Button, Hilton Weiner, Slate, Jo Borkett, Hip Hop, Gucci, Guess, Diesel, Poetry, Senso, Marion & Lindi, Nicci, Ana Sousa, Max Mara, Polo, Gerhard Darel, Burberry, Hugo Boss, Pringle, Juno, Mitzi, Callaghan, Forever New, Urban and Kingsley Heath. All of these brand names have stores in Cape Town that focus on the Western Cape consumer. Purposive sampling was used to select participants to visit four of the fashion stores in our sample.

1.7.2 Data collection A literature study has provided a good understanding of relevant research on atmospheric retail. The literature study is based on secondary sources, which include books, journals and newspapers. The literature review provided a foundation on which to build our research. Observations of the atmospheric designs of the fashion stores in the focus group have been conducted. The atmospheric designs of the fashion stores have been observed in order to determine which atmospheric elements are most popular in today’s high-quality fashion stores. This research also used semi-structured interviews as an additional method to collect data.

Some of the questions were standardised. However, the order of the questions varied depending on the flow of the conversation. The interviews were conducted face to face (Saunders et al., 2007: 312). An important part of the study is the customers’ view of which elements they perceive as important in a high-quality fashion store. Four stores have been selected from our focus group for an in-depth study. Ten participants have been selected through purposive sampling to visit these four stores and to compare the elements in the store.

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7 1.7.3 Data analysis Qualitative data analysis was used to interpret the data that was collected. Qualitative analysis is a process where the researcher extracts some form of explanation or understanding of the people or situation that is under investigation (Maree, 2007: 99). The interviews were transcribed immediately to ensure that all of the data were extracted from them. Open coding was used to highlight key concepts. After the coding, the data was summarised into manageable categories. The researcher made use of a checklist to gather data from the observations.

The data in the checklist was also summarised.

Next, the researcher looked at the data from three different angles: the observations, interviews and literature review. We were then able to see any relationships between what the participants considered as important atmospheric elements and what the literature has found to be important. These observations allowed us to conclude whether fashion stores make use of atmospheric retail to provide a hedonic experience for their customers. 1.8 CHAPTER OUTLINE Chapter 2 covers the literature review on store environments. We look at atmospherics in the store environment from the retailer’s perspective.

We also look at the decisions that retailers have to make when they plan their atmospheric designs. Should head office make all the decisions or should the branches also have a say? We also look at atmospheric design from the customer’s perceptive. This section explains how atmospherics arouse the customer’s senses. The literature review shows that the Mehrabian-Russell model is often used in studies on store atmospherics. We explain how the Mehrabian-Russell model works, and the changes that Donovan and Rossiter have made to the model. Next, the customers’ reactions to the atmospherics in the stores are explained.

Here we look at what the customers’ responsiveness to atmospherics are related to. In Chapter 3, we focus on the individual atmospheric elements. We take a deeper look at the following atmospheric elements: background music, lighting, scent, interior colour, temperature and store layout. We also explore how the atmospheric elements influence human behaviour. Most of the previous studies on atmospherics were experimental studies where the researchers focused on a single element. We also highlight the importance of matching the various atmospheric elements. In Chapter 4, we discuss our research design.

We explain why we have chosen a qualitative research design and what the benefits of such a design are. In this chapter, we discuss our sampling method and the stores in our sample. We describe the data collection methods and the advantages and disadvantages of these methods. At the end of the chapter, we discuss our data analysis and how we have analysed the data that has been collected. Chapter 5 covers our research findings in terms of each individual atmospheric element. We discuss the data that was collected and the conclusions drawn from the data. At the end of the Stellenbosch University

8 chapter we look at the atmospheric elements from a holistic perspective. We discuss the importance of designing the right atmosphere for a store. Chapter 6 provides a summary of our study. We discuss further research on atmospherics and we look at atmospheric retail from a global and South African point of view. We also identify priorities in terms of atmospheric designs in fashion stores and make recommendations for fashion stores. Stellenbosch University

9 CHAPTER 2 LITERATURE REVIEW ON THE HIGH-QUALITY FASHION STORE ENVIRONMENT 2.1 INTRODUCTION In the last decade, the world of shopping has changed drastically.

We have seen the introduction of electronic commerce and the devastation of the global financial crisis, which led to consumers changing their shopping behaviour. Shopping for clothing is not seen as essential, but rather as a luxury. One of the first things that individuals do when they are under financial pressure is to limit the amount of money that they spend on luxuries. The influence that atmospheric elements in the store environment have on customers’ shopping behaviour is essential knowledge that store managers need to develop as the fashion retail industry is extremely competitive.

High-quality fashion store owners have to focus on the experience that they can create for the customers in their store by appealing to their customers’ sense of smell, sight, touch and sound. Focusing on creating a positive experience for their customers in the store could be a competitive advantage for the store over their competitors.

2.2 THE STORE ENVIRONMENT FROM THE RETAILER’S PERSPECTIVE The store atmosphere influences the perception that the customer has of the quality of the products in the store. The store atmosphere serves as a function of social identity. The atmosphere in the store influences (a) the perception of the quality of the products as a socially communicative function, (b) the store’s social image, and (c) the intention to visit the store and purchase items for social occasions. The atmosphere in a store has little influence on the perception of the quality of utilitarian products (Schlosser, 1998: 363).

Utilitarian products are products that are more practical than attractive. Shopping for clothes, however, is a hedonic experience. Hedonic consumption is an experience where the customer seeks pleasure and enjoyment. Atmospheric cues can be used to increase the level of enjoyment for the customer (Ballantine, Jack & Parsons, 2010: 642-643). When customers walk into a fashion store the atmosphere in the store is communicated to them through non-verbal channels, which are their senses. This influences the beliefs that they have about the product and the service that they can expect (Kotler, 1973: 48).

Accumulated literature has shown us that customers are sensitive to the smallest of changes in the retail atmosphere. Even though the customers may not notice anything different, these changes have the ability to modify the behaviour of customers while they are in the store (Turley & Milliman, 2000: 17). Turley and Milliman (2000) reviewed 60 studies of previous researchers and found that in each of the studies there is a significant relationship between the atmospheric manipulation and the shopping behaviour of customers. This indicates that customers do respond to the stimuli found in the environment.

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10 Retail atmospherics are defined as physical and non-physical elements that the retailer can control in order to enhance the shopping experience of the customer (Eroglu & Machleit, 1989). The fashion retailer wants to design a store atmosphere that produces specific psychological effects in customers to motivate them to buy more products (Kotler, 1973: 49). Customers want to shop in a store that gives the perception of quality in their surroundings. The fashion retailer may not define quality in the same way as the customers, since customers vary and have different opinions about quality (Tai & Fung, 1997: 312).

Fashion retail managers have realised that the store environment is similar to the packaging of the products which are for sale (Kotler, 1973: 48). According to Turley and Milliman (2000: 193-197) the store environment can be separated into five categories of atmospheric cues. The first atmospheric cue is the exterior, which includes the building size and shape, exterior windows, the surrounding area and parking availability. The interior includes atmospheric variables like music, lighting, interior colours, temperature, ambient scents and general cleanliness of the store. Layout and design variables consist of merchandise groupings, aisle placements, traffic flow, racks and fixtures and placement of cash registers.

Pointof-purchase and decoration variables consist of atmospheric elements like product displays, signs and cards, interactive displays and point-of-purchase displays. The fifth cue is human variables, which include employee characteristics, employee uniforms, retail crowding and density. When choosing a retail strategy, fashion managers should look at the five categories with a holistic perspective. Neglecting one of these categories would make it difficult for retailers to accomplish their goals. The goals that fashion retailers want to achieve may include high sales revenues, high traffic flow and loyalty from their customers.

2.2.1 Atmospheric design Choosing the right atmospheric design for a fashion store can be difficult. Then again, implementing a redesign in an established fashion retail chain is even more difficult. Implementing a design requires money, time and managerial attention (Turley & Chebat, 2002: 129). Previous studies have indicated that if a store has had a complete atmospheric redesign and the entire atmosphere is altered, customers’ perception of the store will change noticeably (Pinto & Leonidas, 1994; Andrus, 1986).

Large fashion retail organisations design the atmosphere in their stores with the help of a number of people that are involved in different stages of the design.

Smaller fashion stores often make the design decisions on their own. Top management from large fashion retail organisations seek advice from architectural and design consultants on ideas for their brand. The consultants will then propose an initial design. Visual-merchandising managers are involved after the initial design direction has been decided on. At this stage, the visual-merchandising managers would add more details to the store design. Top management will then approve or amend the plans so that the store design represents the way that they believe their brand should be portrayed. Field-level retail managers are often included in the design discussions.

However, this is usually done towards the Stellenbosch University

11 end of the planning process after the direction for the store design has already been decided on. At that time, the field-level retail managers are only able to make minor changes to the store atmosphere (Turley et al., 2002: 126). The field-level retail managers know what their customers’ tastes and preferences are based on their direct and ongoing contact with their customers. Including field-level retail managers in redesign discussions from the beginning can be crucially important to companies as it could result in an atmospheric design that includes customers’ tastes and preferences.

Facility designers and top managers often fail to consider the influence that the atmosphere in the fashion store have on the personnel.

Personnel stay in the fashion store for longer periods than customers. The fashion store environment influences the way that store personnel interact with customers (Turley et al., 2002: 136-137). Therefore, it is necessary to consider the store personnel when designing the store atmosphere. Dube, Chebat and Morin (1995: 314-317) found that music have significant influence on customers’ desire to interact with store personnel. When customers find the music selection in the fashion store pleasing to the ear, they are more open to interact with store personnel.

Fashion store managers utilise atmospheric elements to entertain customers in the store. These elements may include music, interactive displays and in-store television. Most fashion managers recognise that the longer customers are entertained in the store, the higher the possibility that they will browse through the merchandise. An increase in customer browsing behaviour can result in an increase in impulse purchasing behaviour (Beatty & Ferrell, 1998). Also, keeping customers in your store may decrease the time that these customers spend in competitors’ stores. The store atmosphere should be pleasant, but the atmosphere elements should not detract from the merchandise in the fashion store (Obermiller & Bitner, 1989: 52-53).

Store atmosphere can serve as a competitive or differential advantage. Finding a differential advantage is essential for fashion retailers as this allows them to find other differentiating traits that do not necessarily include pricing. Managers do not have many options in making their stores unique and different from those of their competitors. Often, the only true options for managers are to create unique atmospherics and to focus on delivering distinctive service when they attempt to differentiate their store. When consumers perceive the products from competitive stores as similar, it becomes even more important to create a unique atmosphere (Turley et al., 2002: 127-128).

Fashion managers should visit competitive stores on a regular basis in order to find new atmospheric design ideas. This does not mean that fashion managers should copy their competitors’ atmospheric themes; it is important to create a unique atmosphere. However, visiting rival stores will give them a new perspective on their own store (Turley, 2002: 51). Darden (1983) found that the physical attractiveness of a store has a higher correlation with customers’ spending behaviour than the price, quality and selection of the products in the store. From this we can conclude that the store environment does influence customers’ shopping Stellenbosch University

12 behaviour. However, the influence may be between stores that provide similar products rather than stores that are in different categories (Baker, Levy & Grewal, 1992: 446). Price and quality of products account for planned purchases in the fashion store, while the emotional responses induced in customers by the fashion store environment account for unplanned purchasing and may motivate customers to spend more than what they had originally planned (Donovan & Rossiter, 1982: 54-55). Figure 2.1: Elements used in atmosphere creation Source: Grayson and McNeill, 2009: 518. Fashion stores want to encourage impulse buying.

Hence, if there are atmospheric elements that induce unplanned purchasing decisions, it will be to the fashion retailer’s benefit to use these elements in the store. Wider aisles, attractive product displays, soothing colours and background music are instruments that encourage impulse buying (Turley, 2002: 50). Figure 2.1 provides a detailed list of elements that are used to create atmosphere. All of the factors play an important role in creating an atmosphere that customers find appropriate. The focus of this study is on ambient factors.

The exterior of the fashion store is the first set of cues that consumers notice. The rest of the atmosphere may not matter if the external stimulus is poorly managed. The importance of exterior Interior elements Exterior elements Ambient factors Design factors Social factors Exterior factors  Air quality - Temperature - Humidity - Circulation - Ventilation  Noise  Scent  Cleanliness  Colour schemes  Lighting  Music - DJ reputation  Floor and carpet  Aisle width  Wall composition  Paint and wallpaper  Ceiling composition  Merchandise  Layout  Traffic flow  Queues  Furniture  Point-of-purchase displays  Product displays  Price displays  Customer - Customer type - Number - Appearances  Employees - Service - Personnel - Number - Appearances  Other - Crowding - Privacy  Exterior signs  Display windows  Surrounding stores  Address and location  Architectural style  Surrounding area Stellenbosch University

13 atmospheric stimuli is recognised, but marketing literature does not represent these store atmospherics very well (Turley et al., 2000: 195). Today, fashion retailers use traditional atmospherics in an innovative manner in order to stimulate the senses of current customers. Store environments have become more vivid with the help of new technology (Bäckström & Johansson, 2006: 423). 2.2.2 Atmospheric decisions: centralised or decentralised control The smallest of changes to the fashion store atmosphere can have an impact on sales and purchasing behaviour. As a result, centralised control over the retail environment is seen as more favourable then decentralised control.

Field personnel may not have the capability to coordinate the atmospheric variables correctly, even though they understand the goal that top management has in mind for the atmosphere in the store (Turley et al., 2002: 130). Some fashion retail chains make use of prototype designs, where the stores are virtual copies of each other. The retailer develops the prototype designs centrally and local store managers are expected to follow the design. The thinking behind centralised control with its rigid environment is that the expectations and perceptions of all of the fashion stores will be consistent.

The disadvantage of this approach is that chain-wide store redesigns induce high costs for the retailer. Another disadvantage of centralised control is that the centralised planners are not close to the final customers and they do not understand the customers’ preferences and tastes (Turley et al., 2002: 130-135).

Where fashion retail chains have an international presence, decentralised control may be more suitable. Customers all over the world have different tastes and preferences. The atmospherics that are suitable in one country may offend customers in another country as cultures differ. The rules and regulations that apply to store atmospheres may also differ from country to country. Another disadvantage of decentralised control is that fashion retail chains could create very diverse images that may confuse their customers. A blended approach may therefore be the most appropriate one for fashion retail chains.

This approach takes the advantages of both the decentralised and centralised control into account while limiting the disadvantages of these approaches. With this approach the stores will have similarities, while leaving room for modifications where needed. Most retail organisations would prefer a more standardised approach as their brand image will be more consistent. However, this may be impossible as the size and shape of the stores in shopping centres differ and as a result, many fashion stores are forced to use the blended approach (Turley et al., 2002: 134-135).

2.2.3 Atmospheric audits It is necessary to conduct atmospheric audits on a regular basis (Turley et al., 2002: 135-136). Design trends are constantly changing in the fashion retail business and retailers have to stay upto-date with the most popular designs. New merchandise often requires a change in the store’s Stellenbosch University

14 layout display. In addition, shops become “shop-worn” because of high traffic in the store. Fashion retail managers are constantly in the store and the “shop-worn” effects may not be as noticeable to them as it would be to their customers.

With atmospheric audits, fashion retail managers are forced to look at the store atmospherics with a critical eye. After the audit, retail managers have to decide whether a redesign of the fashion store is necessary (Turley et al., 2002: 135-136).

2.3 CUSTOMERS’ SHOPPING ACTIVITY IN RETAIL STORES 2.3.1 Introducing arousal to the customer Based on the theories on consumer decision-making and on what we have learned through environmental psychology we can conclude that store atmosphere induces arousal reactions to attract consumers. Arousal is the basis of emotions, information processing, motivation and behavioural reactions. Personality traits differ and as a result some individuals are arousal seekers and others arousal avoiders. Arousal seekers anticipate that they will be happier in environments that are arousing. Arousal avoiders find arousing environments uncomfortable (Stokols & Altman, 1987: 255-257).

Arousal-inducing stimuli can be divided into three groups. The first group is affective stimuli, which evoke pleasant or unpleasant emotions based on the customers’ response mechanism. Examples of affective stimuli are scents, symbols from nature, warm colours or plants. The second group is intense stimuli, which produce automatically orienting responses. Intense stimuli include flashy colours, striking price tags, spotlights and interactive displays. The third group is collative stimuli, which refer to different and surprising arrangements like unexpected decorations (Groeppel-Klein, 2005: 430).

Arousal and pleasure have a positive impact on the money that customers spend in the store, whereas arousal only influences the time that customers spend in the store (Sherman, Marthur & Smith, 1997). The reason why customers usually stay longer in fashion stores with high arousing qualities is that these stores are more interesting to these customers (Baker et al., 1992: 457-458). Research on environmental psychology has found that customers respond to their environment holistically. Although one atmospheric stimulus may be more favourable to certain customers than to others, the total configuration of the stimuli will determine how customers respond to the fashion store environment (Mattila & Wirtz, 2001: 273-274).

2.3.2 Mehrabian-Russell model Approach behaviour is defined as a positive response to a fashion store environment that results in customers having a desire to explore the store and the willingness to stay longer. Avoidance behaviour refers to a negative response where customers wish to leave the fashion store and have no desire to return. Stellenbosch University

15 Mehrabian and Russell (1974) conclude that approach-avoidance behaviour can be expressed in three different emotional states: pleasure, arousal and dominance. The atmosphere in a store has a bigger influence on customers’ in-store behaviour than the choice that customers have of which store to enter.

A theoretical model was introduced by Mehrabian and Russell (1974) who studied the effect that the physical environment have on human behaviour. The Mehrabian-Russell model originated from the Stimulus-Organism-Response (S-O-R) paradigm. The model is based on two assumptions: (1) What individuals do and how they do it is based on their feelings and emotions; and (2) individuals’ emotions differ and because of that, they react differently to environments, which prompt them to avoid or approach the environment (Tai et al., 1997: 315). Stimulus factors When customers walk into the store, huge amounts of information are projected to them through cues such as colour, display, lighting and layout. All of these elements create a sensory stimulation that leads to a high level of sensory involvement for the customer. Mehrabian and Russell define the information rate that customers come into contact with as a degree of stimulus based on novelty and complexity. Novelty is what the customer does not expect. It could be a surprise, something new or the unfamiliar. Complexity is the total of atmosphere elements that customers are exposed to, and the extent to which these elements change the environment.

The information rate increases according to how novel and complex the environment is (Tai et al., 1997: 317). Emotional states as the mediating variables According to Mehrabian and Russell, the approach-avoidance behaviours of customers in the retail environment can be explained by three basic emotional states: pleasure-displeasure, arousalnonarousal and dominance-submissiveness. These three emotional states are known as PAD. The degree to which customers are feeling joyful, happy or satisfied with the situation is reflected in the pleasure-displeasure dimensions. Arousal-nonarousal dimensions reveal to which degree customers feel excited, alert, stimulated or active in the situation.

The M-R model states that when individuals enter an environment, they react emotionally to this environment. This is characterised by the PAD emotional states (Tai et al., 1997: 317-319). Behavioural responses Customers’ reaction towards the environment can also be divided into approach or avoidance behaviours. The approach-avoidance intentions of customers can be measured by the following behavioural dependent variables (Tai et al., 1997: 319). i) Do the customers like the store environment and enjoy shopping in the store? ii) Will the customers be comfortable to interact with the store personnel? iii) The customers are actively browsing in the store. iv) The time and money spent in the store is more than what the customers intended. Stellenbosch University

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