There’s a reason why gossip magazines, candy, lip balm and tchotchkes are within arm’s reach at the checkout. Retailers are counting on a shopper’s inability to resist these impulse buys, some of which have a high profit margin.
A recent study by global management consulting firm A.T. Kearney shows about 40 percent of shoppers said they bought more than they had planned when going into stores. About 25 percent of those surveyed said they took the bait when shopping online.
“Stores are more likely destinations for what we call ‘occasion trips,’ or time spent browsing, window shopping, treasure hunting or making impulse purchases,” researchers with A.T. Kearney wrote in their report. “Online shopping, in contrast, is more likely to involve ‘mission trips’ for those on a mission to find specific products or services at the lowest possible price.”
Shep Hyken, a customer service trainer and author, said the day will come when both physical stores and online retailers will entice customers to pick up or click to buy impulse and promoted items based on the consumers’ wants and needs as recorded from past shopping trips.
“You’re going to see it go to a whole new level when you walk by a particular item and your cellphone gives you an alert, ‘Hey stop - you’ve bought this before. It’s on special today,’” Hyken said.
Some retailers - he wouldn’t say who - are testing technology in which a recorded voice speaks directly to a shopper in his language either from a display or from a speaker overhead.
“The cool thing about it is that the person standing 5 feet away can’t hear it because it’s directional sound,” Hyken said.
E-commerce retailers have their own strategies. Who hasn’t seen the section on Amazon.com labeled “Customers who bought items in your recent history also bought this?” Any good online company will push impulse items based on a shopper’s buying habits, which the retailers track as consumers peruse their sites, Hyken said.
“I actually think it’s a great advantage for the buyer,” he said. “If they like a store or website, let [the retailer] create a better experience for them.”
But some won’t see it that way. Hyken expects retailers to soon start asking customers if it’s ok to look over their shoulder.
“Otherwise you’re going to feel creeped out,” he said.
The practice of stocking impulse items in stores was implemented long before the Internet. And retailers aren’t limiting them to the checkout. It’s not uncommon to find end-of-aisle displays pairing Rotel and Velveeta, chili and crackers or soda and chips.
Some convenience-store chains employ a less intrusive tactic for suggesting sales: a full-color, tablet-size interactive screen at the register that promotes items that complement those that customers are already purchasing. Gilbarco Veeder-Root, a subsidiary of Danaher Corp., produces such mechanisms under the brand Impulse.
“Depending on the sophistication of the system, these [messages] are built on the fly,” said Steven Montgomery, president of Chicago area-based b2b Solutions LLC, which works with Gilbarco Veeder-Root through the client Odysii. “It picks an image, picks a message, picks a price point and pops it up on the screen.
“It literally goes out in micro-seconds,” he said.
The technology was designed for convenience stores and wouldn’t likely work for larger retail outlets because customers would have to comb too large of an area to find the additional items.
Also on the low end of the stalker monitor is a technology known as heat mapping, which uses body heat to track customers through a store. Without identifying consumers or following their purchases, retailers are able to decider where large groups of shoppers tend to congregate, how much time they spent in a certain section and more.
Few industries or retailers make a sustainable livelihood off impulse purchases, thoughgetting existing customers to spend more in stores is key to increasing sales volume.
A 2008 study by IHL Consulting Group, a global research and advisory firm headquartered in Franklin, Tenn., determined that the average American woman could lose 4.1 pounds a year by bypassing impulse items such as chocolate candies, chips and soda once they are in the checkout line.
“The average woman in the study claimed to purchase and consume over 14,300 calories from calorie impulse items over the period of a year,” IHL’s Greg Buzek said. The weight gain is based on 3,500 calories per pound. While women had a higher average than men overall, men under the age of 25 were the heaviest consumers of caloric impulse items at that time, taking in enough calories each year for an additional 8 pounds, he said.
The study also concluded that self-checkout systems have a dramatic impact on the purchase of impulse items at checkout. Impulse purchases among women drop 32 percent and purchases by men dropped nearly 17 percent at self-checkout stations. According to the study, selfcheckout areas don’t have as much tempting merchandise as staffed lanes in most retailers and there is usually a shorter line at each unit.
In the years since, retailers have increased their amount of shelving for impulse items at self-checkout, Buzek said.
“It was quite a nice feeling on our end to know that we helped change the industry,” he said. “We actually saw change from the retailers based on our study.”
Though the A.T. Kearney report concluded that consumers are more likely to make impulse buys in a store than online, Hyken said use of online website technology by retailers is on the increase.
Mark Price, managing partner of Minnesota-based M Squared Group Inc., said it is all in the timing.
“The main reason is that the time between selection of an impulse product and completing the transaction online is so much less than the time between selecting a product in store and completing the transaction,” Price has said. “As a result, consumers have more time to read, think and impulse purchase in-store than they do online, which should lead some to put that impulse product back instead of actually purchasing it.”
Business, Pages 23 on 10/28/2013