Article first published in Retail Pharmacy magazine 2013
In 25 years I’ve yet to find a retailer who hasn’t been at least mildly shocked at the cost of shop fitting. I often muse that if I had a dollar for every time a client said “You could build a house for that” - I’d be happily retired.
Yes, shop fitouts are expensive. But shop fitting is a unique process that must be undertaken in a specific way to achieve a successful business outcome. Retail stores are businesses that not only depend on a customised fitout to increase sales, but also suffer loss of income during downtime. After all, your customers don’t pause to wait for you to finish your fitout before resuming spending – they go elsewhere, sometimes never to return!
A shop fitout must therefore not only be precisely designed and constructed to sell sometimes hundreds or even thousands of unique product lines, it must also be completed in the shortest possible time to an exact standard.
This always reminds me of a quote that hung on the wall of one of my more philosophical suppliers: “Speed, Quality, Price – pick any two.” Most retailers need a highly specialised solution (quality) in the shortest possible time (speed), so the price is inevitably high.
So for most retailers, store fitouts are a necessary evil. Nobody likes putting capital at risk, however likely the promise of return. But unless you are well rehearsed in the methods and practices required to obtain the best fitout price, you’ll probably end up like most - captive to the industry. However this does not mean there are not savings to be made. All hope is not lost, and by applying even a few of the methods described below you can make significant savings on the cost of your next fitout.
1. Keep it simple.
Undertaking a new store fitout can be an exciting venture for any retail business. There is a huge variety of retail design ideas available in the marketplace, and an internet image search will quickly reveal hundreds of spectacular stores in exotic locations, making it is easy to get carried away with the possibilities. The truth is that Australia’s population, distance and higher labour costs make many of these ideas unrealistic for our market. The key to saving money is to keep the design simple. By all means include one or two unique features to make a statement, but on the whole you will make substantial savings with standardised fixtures and readily-available materials. Chasing the exotic is a sure-fire way to increase cost.
2. Don’t over-specify.
It is a common misconception that the more exact the design specification, the keener the price from suppliers. In my experience the opposite has proven to be true. Suppliers are actually more likely to be scared off by over-detailed specifications. Not only are they more complex to understand and require more time to compute, but they also take suppliers out of their comfort zone and create the fear that the slightest variation will make their offer unacceptable. This invariably leads to a much higher, risk-compensated price. Alternatively, set out a basic specification and inform suppliers of the objective you wish to achieve, then be open to their ideas for solutions. After all, they have the industry knowledge and can offer a much better price on a product or process they have experience with than one they are not accustomed to.
3. Minimise on-site construction work.
It is a fact of our regulated construction industry that tradespeople who work on building sites incur greater cost than those who work in factories. Whilst this may be due to a number of factors including negotiated pay rates, skill levels, travel loadings, site conditions, insurances, and permitted working hours, the bottom line is that the less site work there is, the less the cost. By designing your store with the least amount of modifications to the existing tenancy structure (walls, ceilings, fire sprinklers, air-conditioning, plumbing, shopfronts etc) and the most pre-manufactured items that can be just delivered and installed, you will not only minimise expensive site labour, but also minimise the downtime of your whole fitout.
4. Minimise changes.
Designers often recant that the quality of their ideas can only be as good as the brief they’re given. The same goes for the smooth-running of your store fitout. There is no surer way to add extra cost to your project than by changing the specification half-way through. You will have wasted the cost of work already undertaken by your shopfitter, and will also be captive to the price they provide for the new work requested.
5. Get quotes.
Whilst this seems common sense, it is quite amazing how many retailers end up with just one quote, or at the most a semi-serious check-price from a second supplier. It could be that they have developed a trusting relationship with one supplier, or that they sent plans to other suppliers and did not get a response in time, or even that it just seems too much hassle to deal with more people. In any case, without competitive tension there is always the risk of avoidable expense.
The best way to obtain competitive quotes is to make sure each supplier not only has the same information to quote from but also believes they have an equal chance of winning the work. Have proper plans and specifications prepared and don’t underestimate the power of industry talk. Suppliers probably know more about your buying habits than you think, and if they feel their quotation will not be considered seriously they will not take pricing your project seriously.
Also understand that the results of most tender processes follow a bell curve. Out of five quotes you will probably get one very cheap, one very dear, and three somewhere in the middle. But remember that value is not necessarily equal to price, and the cheapest is not always the best.
6. Limit the cooks in the kitchen.
Most retailers undertake a store fitout only every few years at best, so when it does come around they are often susceptible to advice from well-meaning staff, friends, partners and even relatives who all have an opinion on the ideal store design and construction process. The problem here is that whilst designers and shop fitters would prefer you accept their knowledgeable recommendations, they are ultimately obliged to take direction from their client (you) and bill accordingly. Too many cooks can thus quickly turn an otherwise smooth running recipe into a culinary disaster! If you must decide by committee, then agree from the outset on a small group of 2-3 stakeholders, set clear objectives, and stay focused. This way you’ll save money and keep more friends.
7. Develop a realistic timeline and stick to it.
Finally, by far the most common cause of extra cost in store fitouts is the disproportionately diminishing timeline through the quotation and construction phases.
At project commencement, the priorities of the entities in control (including leasing agents, lawyers, landlords and even designers) are different to those of the shop fitter. Parkinson’s Law states that “Work expands to fill the time available”, however in the case of shop fitting, work expands to far exceed the time available! It is far too easy for retailers to be swept along spending extra days and weeks at the front end debating, negotiating, adjusting, and fine-tuning, whilst blissfully ignoring the shopfitter’s inevitable challenge to shoehorn a fitout into an unrealistic deadline.
With a fixed deadline there is only one way this can go – extra cost on your quotes. The only way to avoid this is to set decision deadlines at each stage of the leasing, design and fitout stages and stick to them. Don’t leave everything beyond the last minute.
So now in answer to the statement “You can build a house for that” I am far more tempted to reply “Yes, but will it be constructed in four weeks, inside a trading shopping centre by a team of elves who work 24 hours a day as quiet as mice to create a fully customised interior that will maximise your business profit?”
Happy Retailing!