Retailers Smarten Up On Behavioral Science!

If you are in the business of selling, you better know your customers, what drives behavior. Sounds logical, but how come only one retailer I met so far is truly into the science behind shopper behavior?

Really, there is a lot of complaining about ‘unstoring‘, off-line losing vs. on-line. Yet, there is still a lot that can and must improve in off-line retailing. In this post I will not address the need to make store performance data accessible, find trends, best practices. That is good retailing (still a challenge in itself).

Let’s talk about understanding thou shopper.

To learn more I interviewed Marko Bokulic. He is a Psychology PhD candidate who worked on various social cognition and consumer behavior studies. He is the driving force behind deep shopper insight at Monolith, a retail analytics company with a strong focus on shopper behavior in fashion.

Marko, how should one think about how shoppers decide what to buy, what is the main principle?

According to the psychologist and Nobel-prize winner Daniel Kahneman, one of the leaders in the field of human decision making, we have two systems of thinking: System 1 and System 2. System 1 is the emotional, fast and intuitive part of our brain, while System 2 is the logical, slower and more deliberative part. In retail, System 1 is setting our general “mood for shopping”. By that I mean it will influence our attention, associations, feelings and initial shopping goals (whether and what we will “feel like” buying).

OK, so how does that work in retail, can you give some examples?

Yes, here are a few:

  1. Priming. Priming is an effect when exposure to one thing influences how we react to another; typically the two stimuli are related in some way. Recent studies showed that priming leads to greater liking. A study by Berger and Fitzsimons showed that pictures of dogs rose liking of Puma shoes (the link being dogs -> cats -> Puma). Priming is already used a lot in stores, although subtle priming like dogs in the Puma case much less.
    But a more practical question is interesting. Retail is all about space, so do you want to trade in space for products with space for advertisements? If you substituted a shelf with shoes with, for example, posters associated with the shoes, would the priming effect be stronger than the loss because you have fewer goods on offer? Since a lot of research suggests that too much choice is in any case counter-productive, that might be the case.
  2. Easy-to-use presentation. What also increases liking is presenting the product as if it were easy to use. When we observe something our mind is poised for action and simulates how it would be to interact with the product. If you’re a right-handed person and see a mug that is turned so that the handle is on the right side, you will like the mug more. In most fashion stores the clothes or shoes are typically positioned so that it is not so easy to put them on. For example, shoes have tied shoelaces and are turned sideways. I’d like to see if positioning shoes like we do at home (untied shoelaces, the back of the shoe facing us) would increase the likelihood shoppers try them on and buy them, even if it creates a less attractive presentation.
  3. Motoric fluency. In a study of my own I showed that easy and smooth movements (like working with a modern laser mouse vs. those old ball mice; or even, think of the iphone / ipad) lead to a more positive judgment about the consumer goods. In retail you might employ this idea by having a floor that is very pleasant to walk on, and by removing objects that impede shoppers’ unobstructed movement, like having a place for them to store shopping bags or jackets.
  4. Touching. Touching something makes us feel like we own it, and if we feel that way, chances are we will buy the item and value it more. I think touch is the strongest force in brick-and-mortar compared to online shops. Therefore, you should try to make touching effortless. Position the products you want to be sold the most, somewhere below the shoulders of shoppers. Our work with fashion retailers clearly proved that hanged clothes sell better than folded, and placing a mirror close to current season’s jackets can do miracles.

Marko, how about the product itself and price, when does that kick-in?
The unconscious influences we talked about have more of an influence at the beginning of the shopping trip, when we’re unsure of what we think about the products inside. Later on more conscious thoughts will kick in, mostly about the price and quality of the products we’re looking at. This suggests where one should put their promotional, “mood-setting” in-store tools: close to the entrance. There is a great study by Leonard Lee and Dan Ariely on “shopping goals” and how they become better defined later in the shopping trip. Basically, it says you want to influence the shopping goals at the beginning, while they’re still malleable.

So, what would a retailer have to do to start using these principles?

Theory is a great source of ideas, but in real-life retail you need to experiment, like doing A/B tests or more. The only way to improve is to try out something you think will ‘work’. And then you measure if you were right, since even the right theoretical idea might not work. The reason for that is because in retail you’re dealing with trade-offs and conflicting effects. You may put more promotional posters in order to enhance priming, but you will have to remove some SKUs to be able to do that. Or you may put your products under glass so that they look more expensive and premium. But, you just made it harder for the shoppers to touch them.
In order to see what the net effect is you need to measure it.

And I believe it’s better to work with behavioral data and not just sales, since most of what you do will first and maybe only manifest itself on the behavior of shoppers. For example, you put the products on sale, and you’re successful: the shoppers are trying out these products. But sales could remain the same, meaning you probably have a bad or niche product in your hands. Between the changes you make in your store and your sales, stands shopper behavior. Knowing more about it allows you to recognize the impact of your in-store changes better, and to anticipate whether they will have a similar effect in other stores.

Thank you Marko, I look forward to see more behavior science lessons applied in stores!