Even with growth in online sales, chief financial officers (CFOs) for retail firms are looking to put the biggest share of their investment in redesigning their physical stores this year. They're not ignoring the importance of online marketing, but hope to meld it with the in-store experience.

"The smart money is now going towards bringing the convenience, customization and interactivity of e-commerce to the stores." - Natalie Kotlyar, BDO

According to the 10th annual Retail Compass Survey of CFOs conducted by BDO, 31% of retail CFOs plan to make redesigning and remodeling stores their top financial investment. This is up from just 9% in 2015. After several years of increased investment in e-commerce channels, less than 10% say they'll invest the most capital online. This is down by half from the number who said they would last year. 

Increased investment in mobile marketing may be down from the 68% of CFOs who planned to grow such spending last year, but a healthy 41% still make it a growing priority in 2016. 

"Savvy retailers are looking to supplement customers' online shopping habits with tactile, engaging in-store experiences." - Natalie Kotlyar, BDO

Besides trying to enhance the in-store/online hybrid experience, retail CFOs are also motivated by the standard drivers of enhancing customer service, brand awareness, product promotion and general merchandising. According to the Association of Retail Environments (A.R.E.) survey of retailers in October 2014, almost all of those surveyed said that customer experience in their stores is important to their brand. 

Fully half redesign their stores to strengthen their connection with current consumer base. A slightly larger number do it to increase sales or market share. About a fifth redesign their stores to reinvent their brand--or align the retail experience with a redefined brand. Less than a tenth remodel to appeal to a new customer segment. 

"Ninety-nine times out of 100 the impetus to remodel is going to be competition." - Andrew Swedenborg, King Retail Solutions

Even though the A.R.E. survey shows that less than a quarter of retailers say they redesign their stores to attain a competitive edge, no one can deny competition is a major investment driver. When a competing chain freshens up their concept, or enters a market region for the first time, it can be quite a jolt--one that highlights how the store down the street is aging.

". . remodel dollars are wasted if you don't take care of the underlying problems." - David J. Livingston, DJL Consultants

Some store redesigns don't pay off.

Retail store redesigns that tie up staff, keeping them from other duties like stocking shelves, seem inadvisable--as does adding sections that add ambience without making money. And no amount of renovating will fix underlying issues.


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