The Science behind the Store Layout
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Introduction
Costco Wholesale Corporation commonly referred to as Costco, is one of the world’s largest stores, best known for selling large quantities of products at deeply discounted prices to members who are required to pay an annual membership fee. The store boasts at least 780 membership warehouse stores spread across the United States and serves almost 100 million regular customers in 45 of the 50 states in the United States. Despite the safety measures enacted during the COVID-19 pandemic, the store still managed to post a profit.
Decompression Zone
The argument can be made because Costco is more of a warehouse than a conventional store. Nevertheless, Underhill’s concepts are quite apparent and noticeable when inside the store. Regarding the decompression zone, an entry area customers use to adjust to the new space, the store’s entrance is quite ample, with both sides of the pathway into the store littered with a small range yet expensive items. Consequently, the first items one meets are these expensive collections of products that welcome you into the store. The store’s design does not force the customer to go through or interact with the product as there are wide lanes that go around the items.
Customer Flow
Another concept that is apparent at all Costco branches is customer flow. Customer flow refers to customers’ pattern of behavior and their navigation through the store. Retail management strategy depends heavily on the store layout, which dictates customer flow and provides useful insights into common patterns. Flow patterns then inform the management’s optimization of customer experience and shopping behavior. In this aspect, Costco is also different from other retailers or stores in the United States. The design of the layout encourages customers to move around. The layout design aims at encouraging shoppers to interact with, and hopefully purchase, products they would otherwise interact with if the design were to remain constant.
Speedbumps
The third concept that is quite apparent at Costco is the adoption of speedbumps. Beyond the decompression zone, the store aims to slow down the movement of the shopper so they can spend more time and money at the store. The goal is achieved with the use of displays that feature seasonal lines, sale items, or new products. Costco nails the use of speedbumps by placing costly items both at the decompression zone and at the center of the store. There are also ‘action alleys’ that prominently display ‘best deals.’ As is the case with the decompression zone, the rest of the store features ample space to give the customers the comfort and space they need, and therefore, sufficient time to soak up the retailer’s product offering. Other speedbumps include the constant moving around of the items and changing of the store layout, and the use of limited time buys.
Suggestions for Improvement
Costco’s decompression zone lags behind its top competitors, both in layout and design. There is a lot of room for improvement to bring it up to par with industry standards. The second a shopper steps in a store, they are greeted by the decompression zone, which spans between five and fifteen feet. The zone provides customers with a store’s cursory glance, meaning that items placed in this area will go largely unnoticed. As a result, stores should avoid placing key items in this zone. However, the exact opposite is true for Costco. High-demand products, new electronics with appealing price tags, and an assortment of other essential products are placed right in the decompression zone, meaning most shoppers do not get to interact with them. The suggestion would be to move these products further down the line away from the decompression zone.
Conclusion
Costco is a successful retailer. Part of the reason for this success is the clever implementation of an intuitive store layout, design, and visual merchandising. Coupled with the decompression zone concepts, customer flow, and slow it down, the brand manages to surpass performance expectations year after year. However, it could improve the design and layout of its decompression zone to further drive up sales.