For decades the way retailers approach store design has not changed much.

You hire an external designer (assuming you think you need one) – get the first store opened – and then take the design in-house and roll it out yourself.

It was not uncommon for in-house design teams for some large Australian retailers to consist of teams in excess of 100 people.

What’s changed?

A few things – I believe.

A combination of complacency in the good times and cost cutting in the tough times has meant that many retailers have not changed their store designs to any great degree over the past 5 to 8 years.

The impact of international retailers coming to Australia in greater numbers has been a wake-up call for many local operators.

Financial pressures have meant that fit-out costs as a whole are being forced down – in some cases to half of the levels they were twenty years ago.

New store growth has always critical for many retailers but roll-out programs have been curtailed or stopped altogether, in some cases.

The shop-fitting industry has seen some major casualties and the successful players have morphed into fit-out managers with little or no manufacturing capabilities.

The cost and lead-times of fixture manufacture in China have reduced drastically, along with improved quality. The need for retailers to get stores opened faster and cheaper has never been greater.

New CAD software such as REVIT is revolutionising the way stores are designed and documented.

The emergence of the ‘fit-out Supply Chain’ philosophy means that retailers are starting to realise that fit-out and fixtures can be seen in the same light as any other product in their supply chain – and that a smarter process is needed to manage it.

Major retail landlords are putting greater pressure on retailers to update, upgrade and innovate.

What hasn’t changed?

Retailers still believe they can do store roll outs faster and cheaper themselves.

Retailers lacking in store design experience still make fundamental errors in an attempt to save a few dollars on external designers – and yet have to suffer the consequences of poor planning or design for the life of the store ( I once calculated that a bad store design decision on a typical 250 sqm store with a turnover of around $1m could be as high as $1m over the life of the store). Retailers still maintain that in-house is best.

Store fit-outs are still taking too long, being implemented inefficiently and wastefully.

Budgets and programs are still blowing out and lingering interruptions to sales is still a major problem.

The complexity of design approval processes is still slowing down the fit-out process inside retail groups.

Customers still love to shop in new stores – and will always spend up at new store openings.

Is there a solution?

I believe that once the cost of running an in-house design team exceeds the cost of specialised, outsourced store design services, retailers will need to take a long, hard look at their store development approach.

There has been much innovation within the retail design industry, and as new software, design technology and more sophisticated methodologies lead the way to more efficient store roll out processes, retailers will find some significant advantages.

For example, new CAD software used for store design can simultaneously produce a number of outputs within a 3D model of a store design:

• Easy to use 3D views of the new stores for the non-designers in the business ( which includes most retailers)
• A standard library of fit-out elements and fixtures ( we call that a ‘kit of parts’)
• Detailed working drawings for builders and shop-fitters
• Estimates and cost plans and take-offs for project managers 
• Square and linear meterage information and space planning data for the buyers
• Key financial information for the bean-counters’ financial models
• Energy management and lighting data to specialist consultants
• Assigning asset codes to fixtures and equipment to create an Asset Register for the fit-out

I suggest that, in the same way as IT providers such as IBM provide outsourced services, that design firms will increasingly look at applying this model to store design.

And because retailers are hands-on people and like to have things at their fingertips, that outsourced store design teams will develop into in-sourced teams – located in the offices of the retailer – but on the payroll, and using the technology of the specialist design practice.

It is an interesting possibility and one that we at RED are working on furiously.

Watch this space!