Optimizing Retail for Frugal Times
The current economy is tough on retailers. These stores often operate on thin margins to begin with, and make most of their profit during the holiday season. Now, with buyers either suffering from job loss or at least concerned enough to rein in spending, stores are trying to adapt to the new reality and induce shoppers to spend their dollars. Retail guru Paco Underhill studies shopper behavior and has worked for names like Best Buy and Wal-Mart. Much of Underhill’s work involves analyzing video footage of how shoppers behave in actual stores. His firm, Envirosell, captures 50,000 hours of video each year.
“Making Things Occur to the Shopper”
In an article in the current Business Week, Getting the Most Out of Every Shopper, Underhill notes that increasing sales is all about in-store marketing. Underhill says that people more often make buying decisions when they are out shopping, not before.
One of the effects of the recession is to increase the amount of looking without actually buying. While in the past consumers usually bought an item they selected from the shelf, now the customers are spending more time studying the product. Increasingly often, the item is abandoned before purchase, sometimes in another area of the store.
Using Customer Wait Time
Visiting a Whole Foods butcher shop, Underhill notes that more than half the time the shopper spends in the area is AFTER she places her order. He applauded that store’s effort to market to the waiting shopper by hand-writing an ad for strip steaks on the counter glass. This conveys the appearance of a fresh new offer, and might induce an additional purhase.
Informing the Customer
Both Whole Foods and Williams Sonoma use signage to inform the customer. The former placed a large sign with the headline, “Why Buy Organic,” over lettuces. Even though the text was too lengthy for most shoppers to read, Underhill thought it conveyed a good message by making the shopper feel virtuous. Williams Sonoma, meanwhile placed a pepper-grinding tutorial above a display of high-end pepper mills. Underhill thought the message was a bit long at 100 words; he recommends about a third of that, which takes the customer about 15 seconds to read.
Observing video of consumers shopping is fine, if your intent is to simply understand current behavior at retail. What it doesn’t tell you is what retailers and manufacturers could due to influence consumer behavior. Gathering data as to the current state is important, but it’s only one step in the process of reinventing a category, department, or total store.