How Shell improved margins by a fifth with a new store format

30.03.16

When you describe what you do as the “forgotten bastard-child of design,” you certainly grab people’s attention, and this assessment of retail design by Shopworks MD Craig Phillipson certainly did that. But so too did what was gradually revealed to be a very successful involvement in Shell’s revamped store strategy, as explained to visitors on day two of Retail Design Expo2016.

The roll-out of Shell forecourt stores that would better reflect why visitors come to its outlets was the culmination of extensive research and retail design planning. An expanse of customer data and insight resulted.

People shop at 60 degrees peripheral vision

“People’s active peripheral vision is 60 degrees for men and 65 degrees for women,” said Phillipson. “Shoppers want to turn to see things at no more than 45 degrees, and they also only buy when a product is 1.2 metres away,” he continued.

“Using these principles, stores were re-pointed in such a way that we got incredible results. Food category sales – one of the main product types we wanted to increase – improved by 49.2%; total shop sales increased by 15.1%; while shop margins improved by 19% because customers were buying more higher margin items.”

The redesign project involved three formats for Shell stores. The first were those defined as frequented by transient visitors – high mileage drivers, for whom food would be the main product category to push – while the second was ‘local stop’ shops (where snacks and alcohol would be the main focus) and finally those that satisfied ‘fuel stoppers’, where on-the-go products would be the main focus.

Store re-design to maximise sales

Said Shell’s UK retail convenience manager, Will Green: “Local shops saw us massively boost our range of chilled beers and groceries, while fuel stop shops all had Costa Coffee machines in them.”

Green says the roll-out is now seeing all shops refocused according to their visitor type, and then redesigned accordingly to maximise sales. And it is yielding excellent results. “We’ve converted about 400 stores since 2012, and are doing another 50 per year, but already we’re seeing that overall store margins are three times the margin tobacco provides – where just four years ago, the margins were the same.”

Green added: “In 60% of transactions, there are now convenience retail purchases too – which is up from 40% in 2012. Moreover, in 30% of transactions we are seeing convenience-only purchases – that is no fuel purchases at all – meaning our stores are becoming places people want to go to.”

This article first appeared in Retail Design World 

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