Retail research is something that all retailers should engage in, no matter how big or small. In this presentation, I’ll share why it’s important to do retail research, what the typical retail research subjects are, and we’ll look at some insights generated through research along the way.
Why do we do retail research? The insights provided by retail research can help us anticipate shoppers’ needs and desires. You’d be amazed at how the small task of actually talking with customers can provide you big results.
You can discover the points engagement and friction in the shopping process. If you sit and watch customers in your retail stores, you can quickly see where shopper become frustrated, the areas of the store they avoid, where they are most likely to congregate and other useful insights.
You can also improve the retail experience for the customer and measure how shoppers respond. In essence, you retail stores can become a place of experimentation to help you improve your operations and increase customer engagement.
As retail researchers, the three big areas you are likely to study are shopper behavior (what your shoppers do while they’re in the store), atmospherics (how the physical environment impacts the shopper), and purchase patterns (what shoppers tend to buy together, what is purchased certain times of day, or the seasonality of products).
Let’s take a break to look at a research insight from Why We Buy by Paco Underhill. Endcaps are a great merchandising tool for retailers to use and there are a number of benefits to their use. One is that shoppers must pass them as the enter an aisle. Chances are it’ll be the only merchandise that is perpendicular to their vision as they enter the aisle so it automatically stands out. This means that merchandise on an end-cap nearly always sees a sales boost. But the only problem is, there are only two per aisle, so use them wisely.
Shopper Behavior
Ok, let’s look in-depth at shopper behavior. What we do as shoppers is chock full of useful information for retailers. The shopping lists with carry (or don’t carry), how long we stay in the store and the type of shop we do, how many products we buy, or basket size, the decisions we make while in the store, how we move around the store, and so on. All of our behaviors and decisions say a lot about us, but also provide valuable data to retailers, who, if they’re smart, will try to turn that into actionable insights.
Speaking of shopper behavior, let’s actually take a look at what American shoppers do in mass market retail stores. The following data are from the Point of Purchase Advertising International Mass Merchant Shopper Engagement Study. This organization periodically runs this study, the most recent one was 2014, and they have uncovered some interesting insights. Mass market retailers, by the way, are large retailers that sell a large variety of products. For this study, it was retailers that sold groceries as well as other products. Think Walmart, Super Target, Kroger Marketplace, etc.
First, is shoppers’ use of shopping lists and so-called pre-store media. As you can see by the data in red, mass merchant shoppers rely far less on written shopping lists and are much more likely to have no list at all compared to the data for grocery store shoppers in blue. We can also see that mass merchant retail customers are a lot less likely to use pre-store planning media, in other words, store circulars and newspaper inserts. Imagine how useful knowing this information would be if you were a store manager. You’d know that mass merchant shoppers were probably going to make more impulse buys and you could probably stop wasting money on in-store circulars.
The report also sheds some light on typical based basket for shopper trips. Interestingly, the break down the different types of trips that shoppers take, fill-in trips, quick trips, and stock-up trips.
Finally, and I think this is one of, if not the most, interesting insights from their report: in-store decisions. You can imagine that if shoppers don’t use shopping lists, then they are more likely to make their purchase decisions while they are in the store. And you’d be right. From this report, we can see that only 18% of purchases that shoppers made were specifically planned, meaning that 82% of purchases were made with an in-store decision. The in-store decision can vary from knowing you want to buy spaghetti sauce, but you’re not sure what brand to buying something purely on impulse that you had no idea you were going to buy when you entered the store.
Atmospherics
Atmospherics are another important area where we can uncover valuable insights in the retail environment. What lighting will keep your shoppers in the store longer?What colors coordinate with your products most effectively? What sounds and music put shoppers in a more comfortable and receptive mood? What smells can make your shoppers hungry? What fixture, carpeting, and furniture textures will make your shoppers feel more welcome? Heck, even taste! What tastes will make your shoppers want to come back? Think free mints at checkout or even food samples throughout the store. Atmospherics are hugely important to retailers, but the retail space is a blank canvas just ready for a retail design artist to make the right decisions that will lead to longer shops, largest basket sizes, and happier shoppers.
Here’s a video that shows how shopping malls think about attracting customers and keeping them in the shopping environment.
Purchase Patterns
Finally, purchase patterns are an important insight for retailers because they can tell us a lot about what products are bought together. This can help when merchandising products and creating purchase synergies through adjacencies. Retailers can also see how often products are purchased by individuals, when products are typically bought, and by whom. These are great insights to help a retailer provide targeted promotion for the individual shopper such as coupons.Product purchases can also help retailers predict the life stages on specific shoppers.
There’s a famous article written in the New York Times titled, How Companies Learn Your Secrets, about how Target used product purchase patterns to predict a teenage girl’s pregnancy, much to the dismay of her father. It’s an interesting read.
One more shopping insight from Why We Buy. At grocery retailers, the use of shopping carts is common. But oftentimes, shoppers don’t want to travel all the way down an aisle for a product with their cart. They often leave the cart at one end, walk to the middle of the aisle, and the return to their cart. Paco Underhill noticed this common shopping practice and named it the “boomerang effect.” One of the ways that retailers can encourage shoppers to traverse the entire aisle is by putting the most popular items towards the center of the aisle. That way the see more products on the way to what they want, increasing the likelihood that they’ll make another unplanned purchase.
By the way, we shouldn’t forget about online retail. 51% of Americans prefer to shop online, but online purchases only make up 16% of retail purchases. That means there’s a lot of retail research left to be done to figure out what it will take to push those shoppers over the edge and get them to buy more online.
To recap, we do retail research to understand consumer needs and desires, discover points of engagement and friction, and improve the customer’s experience. The subjects of most research in the retail realm are shopper behavior, atmospherics, and purchase patterns. And finally, while 51% of Americans prefer online shopping, only 16% of retail purchases are made online, meaning there’s much more retail research to be done!