INDOOR CLIMATE IMPACT ON RETAIL SALES:A LITERATURE REVIEW

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1 INDOOR CLIMATE IMPACT ON RETAIL SALES:A LITERATURE REVIEW AC Boerstra *, JL Leyten BBA Indoor Environmental Consultancy,P.O. Box 774, 3000 AT Rotterdam, the Netherlands ABSTRACT Studies in other IEQ (Indoor Environmental Quality) related fields show that e.g. daylighting and sound (music) can have a considerable impact on the sales figures in retail buildings. Famous are the American Heschong et al. studies showing that the installation of skylights can lead to sales increases of up to 40%. The author hypothesized that also indoor air quality and the thermal environment have an impact on consumer wellbeing and behavior resulting in retail sales improvement. A literature review was conducted focussing on field and lab studies that investigated the impact of indoor climate aspects on retail sales. The conclusion was that hardly any studies are done in this field, at least when general IEQ literature like Healthy Buildings and Indoor Air Proceedings are considered. Nevertheless, based on the limited studies that where found, a conceptual model is presented describing (qualitatively) how HVAC system design and maintenance affects IAQ and the thermal environment; and how this on it s turn affects consumer wellbeing and behavior and retail sales. INDEX TERMS Human performance, Productivity, Return on Investment, Shops, Commercial space INTRODUCTION In the worldwide bible of Marketing professionals, called Marketing Management (Kotler et al, 2001) it is postulated what factors determine whether consumers buy or not. The main factors are often referred to as the 4 P Marketing Mix : Product: referring to the quality and value (to the consumer) of the product at hand; Price: referring to the price of the product at hand; People: referring to the quality and skills of the salespeople at hand, and: Place: referring to the (actual or virtual) place where consumer get acquainted with products and the place where the actual sales are made. Several studies, mainly conducted by environmental psychologists, indicate that the quality of this Place factor or to be more specific store atmospherics have an important impact on the emotions of people shopping in retail environments. While on their turn these emotions do have an effect on shoppers behavior. Resulting e.g. in a changed walking pace, a different attitude towards products (more positive or more negative) and changes in the amount of money spent during a visit (Brengman, 2003). Not much of a wonder if one realizes what shopping actually is. Underhill (2000) describes this as experiencing that portion of the world that has been deemed for sale, using our senses sight, touch, smell, taste, hearing as the basis for choosing this or rejecting that. In this context Underhill also postulates that virtually all unplanned purchases and many planned ones too come as a result of the shopper seeing, touching, smelling or tasting something that promises pleasure, if not total fulfillment. Than if sight, touch, smell, taste and hearing play such an important role when shopping, how big is the influence of the quality of the lighting, the acoustical properties of the environment and especially the impact of temperature and contamination of the air inside? * Corresponding author bba@binnenmilieu.nl 412

2 Isn t it likely that indoor air quality and thermal environment have an impact on retail sales? That the average consumer visit to e.g. a mall or superstore will last shorter if the temperature is too high and the air is smelly? Leading to a decline in the amount of money spent during the consumer's visit? And on the other hand: couldn t it be true that an extra pleasant temperature or the right scent at the right place actually could increase sales? Think for example of an extra low temperature in the corner of a store where air conditioners are sold. Especially on a hot, humid day this might be very convincing to the doubting consumer. And how about scent as a hidden temptation? Think of what the smell of freshly baked bread can do to the baker s corner s sales. A literature review was conducted focussing on the impact of indoor air quality and the thermal environment on retail sales. The main questions to answer were: (1) What factors influence shopping behavior and therefore retail sales especially when zooming in on the aspect Place? (2) How about the impact of Indoor Air Quality and the thermal environment? What is known about the effect - quantitative and qualitative of the indoor climate in shops and other commercial environments on shopper s emotion, buying behavior and retail sales? (3) Based upon general literature about the impact of store atmospherics on retail sales, what would a (preliminary) conceptual model describing the mechanism behind the indoor climate impact look like? RESEARCH METHODS To answer the two research questions presented above a first limited literature review was conducted. First, all of the proceedings of the Indoor Air and Healthy Buildings conferences since 1990 where scanned. The subject indices and the complete lists of titles were checked for the key words: retail, shop, store and warehouse. In addition a literature search was done on the internet with a larger list of key words (see table 1). Also widely used Marketing textbooks were scanned on statements and scientific findings relating to Indoor Air Quality (IAQ) and the thermal environment. Table 1. Search Keys for Internet Literature search AIR INDOOR CLIMATE IAQ ATMOSPHERICS TEMPERATURE LIGHT(ING) SKYLIGHT DAYLIGHT SOUND ACOUSTICS and 413 RETAIL STORES SUPERMARKET SHOPS CONSUMER BEHAVIOR (BEHAVIOUR) SALES REVENU PROFIT Because hardly any relevant direct publications concerning the effects of thermal comfort and indoor air quality on retail sales were found, during the review process it was decided to also partly review the literature on the effects of thermal comfort and IAQ on workers productivity in office buildings and call centers. First of all because productivity effects are correlated to comfort and acceptability. Also, because productivity seems prima facie a good proxy for activity level and lack of fatigue and therefore for patronage behavior. RESULTS In general marketing textbooks a lot of beliefs can be found (often not backed up by scientific research) about the killer variables that determine whether a retail environment stimulates sales or not. For example Underhill (1999) describes the following crucial atmospheric and design factors: Architectural quality (e.g. of entrance area) Layout of the store Spacing between shelves and privacy Signage Amount of rest areas (chairs etc.) Daylight penetration (Quality of the) artificial lighting

3 Acoustics / background noise level Music. Concerning the (quantitative) effect of specific factors: Heschong et al. (2002) investigated 108 one-story retail stores in the US all belonging to the same retail chain. The stores were comparable in all aspects, except that two thirds of the stores had skylights all over the ceiling, while one third had no skylights at all. Sales were measured over an 18 month period. The data showed that sales were on average 40% higher in stores with skylights, independent of what kind of products where sold. Interviews with shoppers showed that the vast majority of them were not aware of the skylights. But shoppers in skylighted stores experienced the store as cleaner, more spacious and brighter. The original authors hypothesized that the following mechanisms explain the effect: Improved vision due to: higher illumination levels under daylight better color rendition under daylight improved spectral content of daylight improved three-dimensional modeling with high lights and shadows reduction of flicker effects. Improved shopper and/or employee morale due to: mental stimulation from various lighting conditions calming effect of a connection with the natural world biochemical responses to daylight resulting in greater mental alertness improved shopper and/or employee loyalty due to any combination of the above. Another relevant atmospheric factor in retail environments with proven effect is music. For example Milliman (1982) found that in supermarket stores with background music with at beat =< 72 beats per minute the pace of shoppers is significantly slower and the sales volume is significantly higher than with background music with a higher beat. Mattila & Wirtz (2001) found that when scent and background music were congruent, that is when low tempo music was combined with low arousal scent (lavender) or high tempo music was combined with high arousal scent (grapefruit) consumer satisfaction and inclination to buy was higher than when scent and background music were not congruent. But there is more to say about scents in retail environments. Von Kempski (2002) argues that conditioned air in stores and the like will be perceived as lacking and that exposure to odors just above the detection threshold will improve satisfaction with the air quality and general wellbeing. Experimental data are presented to support this. The author specifically emphasizes that with this approach it is very important that the dispersion of the odors is controlled and uniform. Because hardly any other relevant direct studies concerning the effects of thermal comfort and IAQ on retail sales were found, also effects of thermal comfort and IAQ on workers productivity in office buildings and call centers where studied. This with the idea that relations found here might apply too to people s behavior in retail environments. There are many studies into the effect of temperature on workers productivity. The most important have been reviewed by Seppänen et al (2003). They conclude that productivity (in offices, call centers etc) decreases linearly with 2% per degree centigrade as the temperature increases above 25 C. Based on lab and field studies Wyon (2000) gives temperature effects for different tasks: 1 ) The performance of mental tasks requiring concentration is reduced by 30% at 27 C, in comparison with 20 C. 2 ) Performance of routine, well practiced office work such as typing is 100% at temperatures up to individual neutrality, to decrease linearly to 70% over the next 4 K. 3 ) Performance of skilled manual work (physical work) is 100% at temperatures down to 6 K above individual neutrality, and decreases linearly with temperature to 80% at temperatures 12 K or more below individual neutrality. 414

4 4 ) The speed of finger movements is 100% at temperatures down to 6 K above individual neutrality, and decreases linearly to 50% at temperatures 12 K or more below neutrality. Since patronage behavior in retail environments includes both mental tasks and physical tasks (e.g. walking, handling goods, carrying goods) and is probably also influenced by experienced comfort level, it is likely that both too high and too low indoor temperatures have effect on retail sales. Without further study nothing can be said about the magnitude of the effect. A further complicating factor is that the effects described above are derived from laboratory data. In non-laboratory real life situations thermal is not only determined by the classical thermal parameters, but also by individual control opportunities and by expectancy. The latter is determined by the (momentary) outside weather and by whether the building is free running or air conditioned (Boerstra et al, 2003). Now individual control opportunities are most likely not to be expected in stores, but it should be expected that the outside temperature influences the preferred temperature. So if thermal comfort is itself a determinant of patronage behavior, these outside temperate effects should be taken into account too. The fact that many retail activities take place in semi-outdoor environments (e.g. in malls) is important too: in semi-outdoor environments occupants turn out to be much more tolerant of high and low temperatures than in regular indoor environment (Nakano and Tanabe, 2003a and 2003b; Shimoda, 2003). Than, concerning the effect of Indoor Air Quality (IAQ): Recently a considerate amount of studies have been conducted into the effects of ventilation rate and indoor air pollution on workers productivity in office and call center environments, for example: Halving the ventilation rate:2% productivity loss (Wargocki et al, 2000) Introduction of polluted carpet: 3-7% productivity loss (Wargocki, 1998) Introduction of polluted air supply filters:8% productivity loss (Wargocki et al, 2003) Introduction of new CRT monitors:9% productivity loss (Bakó-Biró, 2004) From the combined results of these studies it can be concluded that for every increase of the number of dissatisfied by indoor air quality by 10%, the performance decreases 0.8% (Bakó-Biró, 2004). These figures all apply to mostly mental tasks like editing and call centre work. For retail environments the conclusion can be: indoor air quality is expected to lower proneness to buy and the number of consumers dissatisfied with air quality might be an indicator of retail sales effects. As far as sources for Indoor Air pollution are concerned: Grimsrud et al (1999) found that as a whole indoor air pollution was low in a retail building investigated. Nevertheless high pollution levels occurred locally as a result from CO caused by a propane fired floor burnisher and d-limonene caused by cleaning. No other relevant papers where found on sources, but based upon common sense it is expected that pollution levels inside are determined to a high degree by the kind of goods in the store. Think e.g. of new wall-to-wall carpets emitting in a carpet retailer s building. Concerning models explaining the (possible) relation between IAQ, the thermal environment, consumers behavior and retail sales, a conceptual model ( chain of events ) could be derived off Underhill (1999) and Heschong et al (2002). See figure 1. DISCUSSION Although the data are very limited in quantity and show many gaps, the following overall patterns can be detected that apply to IAQ and thermal effects too: Ambient conditions in retail buildings should be within certain limits to avoid discomfort and dissatisfaction. On the other hand some sort of arousal (daylight, sent, music, local temperature) may improve inclination to buy. It seems to help if the arousing factors are not consciously perceived. Factors should not be so arousing that shoppers circulation pace is increased. Since shoppers acceptance of less than comfortable conditions can in general not be increased by providing more individual control, their expectancy should be made to match the situation. 415

5 Quality of a store s HVAC systems (design and maintenance) IAQ and quality of thermal environment during shopping hours Other atmospheric factors (lighting, music, etc.), social factors (affinity with other shoppers etc.) and design factors (layout, architectural quality, etc.) Wellbeing and (non)arousal of shoppers during visits to premises Wellbeing and motivation of salespeople in the store Shopping behavior Amount of retail sales (p. day, etc) Figure 1. Conceptual model or chain of events explaining relation HVAC system design and functioning in relation to IAQ and the thermal environment, consumer and salespeople wellbeing and behavior and retail sales. CONCLUSION AND IMPLICATIONS The first research question was: What factors influence shopping behavior and therefore retail sales especially when zooming in on the aspect Place? The conclusion was that (often anecdotal) evidence point to the following atmospheric aspects : architectural quality, layout, privacy, amount of daylight, quality of artificial lighting and music. Striking is especially the impact found by Heschong et al of daylighting: 40% higher retail sales under skylights. The second question was: How about Indoor Air Quality and the thermal environment? The literature search showed that the impact of indoor climate on retail sales in shopping environments has hardly been studied by anybody. Or if it has been studied, results where not published especially not in the mainstream IAQ / thermal comfort literature (proceedings Indoor Air, Healthy Buildings, etcetera). The authors conclude that a further literature search in the marketing and environmental psychology literature is needed. Also: a field study seems inevitable if the goal is to make quantitative claims of the impact of indoor climate. The third question was: What would a conceptual model describing the possible chain of events relation between indoor climate and retail sales look like? Based on the literature available the model presented in figure 1 was presented. REFERENCES Bakó-Biró Z Human Perception, SBS Symptoms and Performance of Office Work during Exposure to Air Polluted by Building Materials and Personal Computers, Ph.D. Thesis, Danish Technical University (Denmark). Boerstra AC., Raue AK., Kurvers SR., Linden AC. van der, Hogeling JJNM. and dedear RD A new Dutch adaptive thermal comfort guideline, Proceedings Healthy Buildings 2003, Singapore: HB 2003, Vol 1, pp Brengman M. and Geuens M The four dimensional impact of color on shoppers' emotions. Universiteit of Gent, Faculteit Economie & Bedrijfskunde (Belgium). Grimsrud DT., Bridges BB., Carlson NG. and Hadlich DE Ventilation requirements in a retail store, Proceedings Indoor Air 1999, Edinborough: Indoor Air 1999, Vol 1, pp Hedrick N., Berveland M. and Oppewal H Selling the experience: the impact of retail salespeople and store atmospherics on patronage intentions, Proceedings for the 7th Annual Retail Symposium, St. Petersburg, USA: Society for Marketing Advances. Heshong L., Wright RL. and Okura S Daylighting impacts on retail sales performance. Journal of the Illuminating Engineering Society, Summer 2002, pp Kempski D. von The use of olfactory stimulation to improve indoor air quality, Journal of the Human-Environmental System, Vol 5, No 2, pp

6 Kotler P., Saunders J. and Wong V The principles of Marketing, New York: Pearson Prentice Hall. Matilla AS. and Wirtz J Congruency of scent and music as a driver of in store evaluations and behavior, Journal of Retailing, Milliman RE Using background music to effect the behavior of supermarket shoppers, Journal of Marketing, Vol 46, pp Nakano J. and Tanabe S. 2003a. Thermal comfort conditions in semi-outdoor environments for short-term occupancy, Proceedings Healthy Buildings 2003, Singapore: HB 2003, Vol 1, pp Nakano J. and Tanabe S. 2003b. Behavioral adaptation in semi-outdoor environment, Proceedings Healthy Buildings 2003, Singapore: Healthy Buildings 2003, Vol 1, pp Seppänen O., Fisk WJ. and Faulkner D Cost-benefit analysis of the night time ventilative cooling in office buildings, Proceedings Healthy Buildings 2003, Singapore: HB 2003, Vol 3, pp Shimoda T., Noguchi M., Nakano J. and Tanabe S Thermal environment and behavioral adaptation in semi-outdoor cafeteria, Proceedings Healthy Buildings 2003, Vol 1, pp Underhill P Why we buy: the science of shopping. New York: Simon & Schuster. Wargocki P Human perception, productivity and symptoms related to indoor air quality, Ph.D. Thesis, Danish Technical University (Denmark). Wargocki P., Wyon DP., Sundell G. and Fanger PO The effects of outdoor air supply rate in an office on perceived air quality, sick building syndrome (SBS) symptoms and productivity, Indoor Air, Vol 10, pp Wargocki P., Wyon DP. and Fanger PO Call-centre operator performance with new and used filters at two outdoor air supply rates, Proceedings Healthy Buildings 2003, Singapore, Healthy Buildings 2003, Vol 3, pp Wyon DP Individual control at each workplace, in: Clements-Croome D. (ed.) Creating the productive workplace. pp London: E & FN SPON. 417

MODELLING THE COST EFFECTS OF THE INDOOR ENVIRONMENT

MODELLING THE COST EFFECTS OF THE INDOOR ENVIRONMENT M Tuomainen 1, J Smolander 1, J Kurnitski 1, J Palonen 1 and O Seppänen 1 1 HVAC laboratory, Helsinki University of Technology, Espoo, Finland ABSTRACT