Monthly Archives: July 2019

Lessons Grocers Can Learn From Department Stores: Introduction

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Each month brings with it another new dominant headline on how one of our most frequent shopping experiences—buying groceries—will be forever changed. Curbside pickup. Driverless cars delivering to our homes. Automatic checkouts.

The technological rush shows a willingness by the largest chains to ensure they outmaneuver upstarts and avoid suffering the same decline of the department store. Consider this. Annual U.S. department store sales peaked in 2000 at just over $232 billion. They’ve been falling ever since, and 2017 saw only $150 billion in sales, the lowest in at least 25 years. Over that time, many leading brands – Boston, Bonwit Teller, Burdines, The Bon-Ton, and B. Altman’s just to name a few B’s – have been absorbed or simply vanished, and the shake-out is far from over. In 1992, department stores accounted for the fourth-largest share of total retail sales. Today, they have fallen to 12th.

What’s behind the precipitous drop? One explanation is a change in shoppers’ behavior. Those who once appreciated the wide selection of brands available at department stores now opt for the convenience and even greater selection offered online. While this has certainly been a factor, it isn’t the full story, though. Similarly, situated retailers such as specialty and general merchandise stores haven’t experienced the same kinds of sales impacts.

The fact is department stores failed to adapt and evolve their merchandising and real-estate strategies with the times and with shoppers. What used to be destinations for retail and socializing – fun places to shop with memorable and unique design features – became utilitarian and generic. Because they ignored customers’ needs and failed to invest in spaces, amenities and the overall brand experience, department stores simply lost their appeal – and relevance.

Grocers Seeing a Different Kind of Shopper

As department stores have faded, the grocery category has remained the second-largest share of retail sales over the last 25 years with revenue nearly doubling over that time from $337 billion to $639 billion. What happened to department stores in the 2000s, however, is now threatening the supermarket. Consolidation and the trend toward commoditization are increasing. New online entrants such as FreshDirect and Peapod are entering the space seeking to simplify the shopping experience. Amazon’s purchase of Whole Foods has also been a major wake-up call, challenging operators to acknowledge and embrace changing consumer expectations, expand their offerings, redefine convenience and deliver a relevant – even engaging – shopping experience.

And, unlike their department store brethren, grocery stores have responded in bold and unique ways:

Kroger Kitchen 1883
Kroger Kitchen 1883
  • Aldi will open inside 10 Kohl’s stores around the country. While this is hardly the first pairing of food and fashion, it is certainly a departure from the norm.

  • Kroger is launching a restaurant chain called Kitchen 1883, both within stores and as standalone locations. It has also purchased a sales analytics company and delivery service to better understand and serve its customers. Recently, rumors have also been circulating that Kroger and Target might merge into one super-powered grocery store.

  • Walmart, America’s biggest grocery store by sales, acquired e-commerce site in 2016 to better fend off Amazon’s online grocery challenge and appeal to urban millennials that it had been unable to reach.

What Macy’s Can Teach Ralphs

The above are major, strategic investments and suggest that groceries and supermarkets have no intention of standing still – and tempting the fate of department stores. Groceries have continued to add home goods, clothing and personal care items that were once the purview of department stores. Grocers should look beyond this traditional department store merchandise, though, as they can learn a lot from how department stores have historically positioned that merchandise for sale, everything from the product displays and lighting to signage and the check-out process.

Stay tuned for Lesson One in the coming days.

SEGD Experience: Austin

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The most quintessentially SEGD Austin collection of signage features a new sign, tacos, and BBQ. (E. César Chávez Street)

On the last morning of the SEGD Conference, I wandered from downtown Austin under the I-35 overpass down East César Chávez Street in search of coffee. The morning greeted me with the incessant chatter of flamboyant great-tailed grackles and the deep hum of construction equipment. After thirty minutes, already feeling the heat of the Texas summer sun, I arrived at my destination and prepared for the day with a cappuccino, a plate of buttered toast, and some over easy eggs.

Flat Track Coffee repurposes an existing sign post and complements the patina with Corten signage. (E. César Chávez Street)

My walk back to the conference was not particularly eventful. It was a sleepy Saturday morning, and most of the people in the city had yet to start their day. However, as I took a second turn down César Chávez Street towards downtown, the street began to reveal to me what the many speakers at the conference were attempting to articulate as they described their beloved city.

I had heard Austin described as having a bit of “funk,” a little “scrappy,” and “rough around the edges,” but found it difficult to comprehend exactly what they were describing. It was my first time visiting the great state of Texas, and I had spent most of my time amongst the glossy, new high rises in Austin’s central business district. From slides and discussion panels, I had learned that Austin was a small town reconciling with its newfound identity as a major city. There was a great pride in the city coupled with a sense of urgency — something that was core to the identity of the city’s inhabitants was at risk of being disrupted by over-planning and over-design.

History and modernity sit side-by-side along West César Chávez Street in downtown Austin. (W. César Chávez Street)

Amidst the first ring suburbs, Austin’s spirit manifested itself through the hand lettering and neon signs of small businesses. Via a little bit of rust and some weathering from the sun, the grit which Austin’s design community had so fondly described began to speak to me of the city’s true character. While not all of the street’s businesses and signage were of the past, the signage collectively emulated the visual language that has come to define the city, capturing through materiality an Austin informality, honesty, and sense of humor.

Hand painted and vintage signage create a collage of the offerings at Cenote café. (E. César Chávez Street)

In true Texas fashion, much of Austin is adorned with large graphics that call out boldly for your attention. This is especially apparent downtown, where the scale of the signage fluctuates dramatically in size alongside the city’s evolving skyline. Spurred by economic development and an influx of an average of 120 new residents each day, the design community is adapting to the new demand for space within the city.

Public spaces have become crucial for equity not only among Austin’s residents but also between increased urbanity and Austin’s natural habitats. Refuges for people and wildlife alike are designed into a vast network of parks that create corridors from urban spaces toward the Colorado River and community spaces like the downtown public library.

Austin’s greenways emerge from the city’s newly constructed high-rise landscape. (Shoal Creek)

Upon my visit to the Austin Central Public Library, I found myself developing some serious library envy. The building is a visible, physical statement by the local municipality that communicates a desire to put the public first. I meandered from a mixed-use district across the Shoal Creek Trail and through the library’s gardens, where a macro bike icon identified a parking amenity to the approaching school children. When I entered, I was drawn up the grand staircase by the filtered, natural light pouring in through the façade and laughter from the children’s library, and to my surprise, I hadn’t even considered taking the elevator to ascend to the rooftop gardens on the 6th floor.

As I wandered the space, I discovered the signage system within the building focused on the users’ need to gather and seek the discovery of knowledge together. The overhead signage made finding amenities like “information” and “self check-out” a simple task from across a room. Large-scale floor plans next to the elevators made it easy to navigate the library’s main sections and multiple floors. Additionally, the subject matter titles were placed at eye level atop the bookshelves so they would be plainly visible as one entered a section.

Informative signage makes the library easy to navigate and accessible. Universal icons are used to communicate to all language speakers. (Austin Central Public Library)

The experiential graphics were not only informative, but they also created playful moments throughout the space. The infographic that detailed the history of the local electric infrastructure was cleverly placed on a window that overlooked the utilitarian structure outside. Sturdy letterforms were accessible for children to climb upon, inviting them to directly interact with the word “CHILDREN.”

The Austin Central Public Library was filled with life and energy. From a business group utilizing the reservable rooms as a secondary office space to youth organizing their regular Magic the Gathering meet up, it was clear to me that the library was a space designed with the user experience in mind — a space for all people to feel welcome and enjoy.

After exploring Austin for the three days of the 2019 SEGD Conference, it is apparent to me from first-hand experience that Austin’s passionate design community is not afraid to be bold, is proud of their Austin “funk,” and aspires to put the needs of their neighbors first.

Designing For Innovation In The Workplace

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A facility focused on research spurred steel manufacturer AK Steel to craft spaces conducive to collaboration and inspiration.

Teams at work
Cory Klein Photohraphy

Companies have long focused on fostering collaboration among employees, envisioning it as a solution to lagging innovation. To that end, architects have designed more and more open workspaces, where employees now easily and frequently interact. But it turns out that while this enhanced collaboration has sped up results, it doesn’t necessarily generate the new ideas that mark truly innovative companies.

So, in a quest to best understand how to design for innovation in the modern workplace, Cincinnati, OH-based BHDP Architecture convened leaders of more than 40 companies for a series of roundtable discussions. Though participants spanned diverse industries, BHDP Architecture found all innovative company cultures require three things: Definition, Delivery, and Design. As its architects began to envision a new Research and Innovation Center in Middletown, OH for steel manufacturer AK Steel, the facility became a testing ground for how design can foster innovation.

Facing global low-cost competitors and threats from materials like aluminum and carbon fiber, AK Steel sought to build a research center that would expand on its history as a leader in the ever-evolving metals market and a producer of value-added steels. That established the first of BHDP Architecture’s innovation criteria by defining what innovation meant to the steel manufacturer. Simply put, AK Steel seeks to always be the market leader.

With a $36 million investment, the resulting 135,000-square-foot facility in Ohio became a showpiece for how to not only better engage employees but also customers, who would become active participants in the research process through a tour loop designed into the space.

“Every single space within this building was thoughtfully laid out with collaboration, energy and excitement in mind,” says AK Steel’s Shannon Craycraft, senior research chemist, product research & development.

Customers as Collaborators

BHDP Architecture’s research found that delivering innovation focuses on examining a company’s own workforce to ensure it has a plethora of innovators who can envision new solutions, inventors who turn those ideas into products, and customers who can use them. AK Steel so embraced customer involvement that the tour loop became a primary focus to ensure visitors would not only experience all aspects of the research facility but also collaborate with employees on projects.

“We want our customers to come in, feel welcome, and share with us their problems and the type of service they would like to see from us,” says AK Steel’s Vijay Madi, general manager, process technology & research. “And we want them to be able to do that without any hesitation.”

The tour loop features 10 stops, starting with expansive views into the 65,000 square feet of pilot production space. The area includes 30? ceilings and cranes, essentially creating a smaller scale version of what is seen at a fully functioning steel mill. On adjacent stops, visitors watch scientists at work in a series of laboratories, ranging from wet chemistry to imaging and magnetic testing.

BHDP Architecture designed niches off each hallway, so customers can safely watch behind viewing glass. Large televisions in the niches display explanatory videos of the typical processes, so viewers can understand a group’s role even if scientists are working on something else. Tours also include a stop at the customer café, which was strategically placed near employee break areas and informal work spaces to encourage more customer-employee conversations. Discussions in a large customer conference center complete each tour.

Redefining Library Design

BHDP Architecture’s research found that at their core, innovative companies unite their researchers, provide them with the tools and technologies needed, and establish cultures of experimentation. AK Steel’s Research and Innovation Center supports work to do all three. Among its highlights is the Technological Information Center at the heart of the facility that serves as a meeting place and library for all employees with the goal of inviting more conversations and, through them, innovations.

The company’s former research facility typified libraries of old with stacks holding shelf after shelf of reading materials. With its bold colors and eclectic furnishings, the Technological Information Center’s welcoming design inspires employees to relax, eat in the adjacent café, meet with colleagues in conference and focus rooms, and catch up on news in their field.

Its central location in the facility is symbolic of its role in collaboration and innovation. Natural daylight floods the space through the building’s curved glass façade and large light monitors. While this minimized the need for artificial lighting, the space features artistic lighting fixtures with styles mimicking molecules and atoms as a nod to the scientific research underway.

The space’s casual furniture can be reconfigured to accommodate small or large groups; an employee favorite is a lengthy restaurant-style booth. The furniture includes charging ports, and monitors throughout the area allow employees to review their work with colleagues. BHDP Architecture replaced traditional book stacks with low, user-friendly shelving with wood, metal, and colorful accents.

The AK Steel Research and Innovation Center was among the first tests of BHDP Architecture’s research into designing facilities that spur innovation. The building more than satisfies the company’s needs for an innovative and efficient environment today, and it also provides the inspiration to innovate into new and exciting markets tomorrow.

“This new building is the perfect environment to support our work to drive the next level of innovation and a new generation of steel,” says AK Steel’s George Paraskos, manager, customer products research. “It gives us added inspiration to move forward. We have the people, the equipment, and now the facility to make those things happen.”

Originally published in Facility Executive Magazine.