SUPPLY CHAIN

M&M’s Taste for Color

BY Marianne Wilson

Standing out amid the visual overload of New York City’s Times Square is no easy feat. But M&M’s World pulls it off with ease in a 24,000-sq.-ft., three-level glass box whose colorful, engaging interior reflects the essence of the famous candy brand.

“We used dynamic color to make the M&M’s candies larger than life,” said Denny Gerdeman, principal, Chute Gerdeman, Columbus, Ohio (the firm also designed M&M’s World in Orlando, Fla.).

High-profile flagship stores are often executed with little thought to budget. But Mars Retail Group made it clear from the start that M&M’s World had to be affordable. The initial concept was value-engineered.

“We were on a given budget,” Gerdeman said. “We evaluated the space from top to bottom to see how we could get the most bang for our buck. Our strategy was to utilize the budget so that customers could interact with the product on a human scale and the brand at a larger-than life scale.”

Color is used throughout the space to illustrate the brand’s tag line: “Chocolate is better in color.” On the exterior, two enormous video screens feature moving kaleidoscopes of M&M’s candies and the brand’s signature characters.

“Starting on the outside, we set to work bringing the brand to life with an eye to the budget,” Gerdeman said. “We used fluorescent lights, for example, rather than more costly LEDs to light the M&M’s signage.”

Also, rather than have each candy-shape on the sign (in which M&’s are stacked on top of one another) rotate, only two do. The other candies remain stationary.

“It’s something very few people notice,” Gerdeman added. “But it was a great way to trim both the sign’s production and maintenance costs.”

Project Resources

Design: Chute Gerdeman, Columbus, OhioDesign architect: CG Architectural, Columbus, OhioConsulting architect: Jerome Gillman, New York CityGeneral contractor: MacKenzie Keck, Hackettstown, N.J.Lighting design: Illuminating Concepts, Farmington Hills, N.Y.Interior signage: Superior Graphics & Signage, Jackson, N.J.; Broadway National, Ronkonkoma, N.Y.Fabrics and beads: Moss, Belfast, Maine; ShimmerScreen, Mount Vernon, N.Y.Fixtures: Seven Continents, Toronto; Group DKG, TorontoRetail hardware: Capitol Hardware, Niles, Mich.

Originally, plans called for the Red character to be fashioned as a 3-D character element attached to the exterior (à la King Kong). But that proved too expensive. Instead, he was created as flat art with pieces raised to varying degrees.

“We used dramatic lighting to help create a dimensional look, “Gerdeman added, “allowing him to cast shadows as if he were 3-D.”

The interior is a carefully orchestrated expression of the brand’s three core elements: color, shape and scale. Color-changing LED lighting on the perimeter walls turns the storefront into a glowing billboard for the brand, day and night.

The design leverages the storyline of the M&’s brand characters and gives it a New York twist. Green, for instance, is dressed as the Statue of Liberty, complete with torch. Other fun elements include what is billed as “the world’s biggest wall of chocolate,” 50-ft. wide by two stories high and made up of 72 continuous candy-filled tubes, where shoppers can create their own color mix. At the interactive “color mood analyzer,” shoppers can determine which M&’s color best suits their current mood. A video component projects their images onto two giant in-store video screens.

To help keep costs in line, the ceiling was left exposed (it was painted chocolate brown) and a clear sealer was added to the existing concrete floor.

“The store environment is very playful and colorful, and it captures the focus of customers,” Gerdeman explained. “Because the rest of the store is so engaging, the floor and ceiling recede and the overall space really pops.”

In a low-tech but effective strategy, huge graphics were applied to the flat walls, providing dynamic visual impact for a relatively small price. In one instance, a digitally printed graphic replicates the look of the Times Square subway station and subway signage.

“The finished effect is totally authentic,” Gerdeman said.

The shapes throughout the space are rounded or curved to replicate the iconic “lentil” shape of the M&’s candy. Fixtures are finished with high-gloss fiber-glass in the brand’s signature colors.

“The fixture hardware was condensed to include as few pieces as possible—one item may have three uses,” Gerdeman said. “This allowed for maximum efficiency in fabrication and minimum parts and pieces to inventory.”

The numerous structural columns in the building were incorporated into the design. Backlit, stretched fabric “funnels” encase the columns, which are used for merchandising and branding. “Using fluorescent rather than color-changing light allowed us to create a more cost-effective brand statement,” Gerdeman said.

It took Mars Retail Group two and-a-half years to find the right spot in Manhattan for M&’s World. As to future locations, the company has feelers out, but is not rushing into anything.

“For us, it’s about finding the right location in the right city, not just the right city,” said John Haugh, president, Mars Retail Group.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: SAM’S REALIGNS STORE-LEVEL MANAGEMENT

BENTONVILLE, ARK. Sam’s Club is changing the management structure in its stores. In the realignment, approximately 250 positions will be eliminated, Wal-Mart Stores announced last week. The company said it’s replacing five lower level management positions at each Sam’s Club location with three new higher level and higher paying assistant manager positions.

“This is not a cost cutting effort. We expect a slight increase in payroll upon completion of this change,” said Sharon Orlopp, senior vp of Sam’s people division.

THE FIX: Differentiation would better help Sam’s

Since Sam’s decided that its refocus on the business customer was too narrow, it has sought to find ways to make its clubs more attractive to primary shoppers, i.e., women. And that’s a pretty tough row to hoe, as Costco has done a pretty good job at satisfying the club customer in general and BJ’s has been going after female shoppers for several years now, with some success.

Having fewer managers with more direct responsibility could create a tighter knit club-level management and shorten lines of responsibility and accountability. Yet, without differentiating the offering, execution isn’t going to overcome all of Sam’s challenges.

That being said, a store-level management realignment might be overlooked at other retailers, but, this being Wal-Mart, everyone has to make a big deal about it. But that’s the price you pay as the big guy on the block.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: TOYS ‘R’ US EARNINGS GAIN 40.1%

WAYNE, N.J. Toys “R” Us today posted net earnings of $199 million for its critical fourth quarter, which meant it turned a profit for the fiscal year ended Feb. 3. But special charges and gains had an impact on its numbers.

Sales for the previous fiscal annum were $142 million, the difference translating into a net earnings increase of 40.1% year over year. For the last fiscal year, Toys “R” Us posted net earnings of $85 million versus a net loss of $384 million for the previous period.

Operating earnings in the fiscal 2006 fourth quarter gained 53.1% to $571 million versus $373 million for the fourth quarter of fiscal 2005. For the last fiscal year, operating earnings were $649 million versus an operating loss of $142 million for the previous period.

THE FIX: Improved shopper experience ups comps

Of course, any observer has to take into consideration special financial circumstances. Fiscal 2006 operating earnings were positively impacted by $96 million from gains on property sales, slightly offset by restructuring and other charges. In fiscal 2005, operating earnings were negatively impacted by $410 million in costs relating to the merger of the company, as well as $58 million of costs and charges relating to contract settlement fees, restructuring and other charges.

Still, sales were trending up at last year’s end. Net sales gained 15.8% to $5.7 billion. In the full fiscal year, net sales advanced to $13 billion, up 15.2%.

Comparable-store sales for the Toys “R” Us’ U.S. division gained 0.6% in fiscal 2006, and that represents the division’s first comps increase in six years. Comps at Babies “R” Us were up 4.8% and those at Toys “R” Us international were up 2.6% for the fiscal year.

Jerry Storch, chairman and ceo of Toys “R” Us, said the company is “pleased with the strides we made in fiscal 2006 to improve at all levels of the organization and reposition the company for profitable growth over the long term.”

He said the company’s new management team has been focusing on executing a strategy that would turn the retailer into a global toy and baby products authority.

“This translated into higher overall sales, positive comparable-store sales, improved gross margins and strong operating earnings growth for the 2006 fiscal year,” Storch asserted. “The key to our strategy has been improving the customer shopping experience in our stores. We are accomplishing this by delivering a more compelling merchandise selection, better service and a cleaner and more comfortable shopping environment.”

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