Retailers get a splash of icy water today with Bloomberg reporting U.S. retail sales fell 4.4% in the week ending Dec. 1 vs. a year ago. With all the rumblings of housing crisis and looming recession, consumer confidence may be waning.
Which brings us to our favorite article on how to get shoppers to buy from you instead of your competitor. Researchers at MIT dug in to the psychology of shopping, running a series of tests to see how to get consumers to spend more or less than usual. In general, they found that influencing consumers early in their decision process is critical — because shoppers tend to start out with fuzzy goals and then get specific when they are about to make a choice.
For instance, consumers like to shop in huge malls with many stores, because when they begin to shop, they have a vague desire to purchase something but don’t know exactly what. When they arrive inside a mall or large retail store, they then must enter a second mode to grapple with the complexity of choice. Because managing complexity is difficult, consumers put blinders on — narrowing their vision to a subset of manageable options. Thus, you may be drawn to Wal-Mart because you like the huge selection, but once inside, you grab for a few specific items and then escape.
The researchers suggest the way to get consumers to buy more requires two steps: (1) Use some highly visible incentive to get consumers to come to your store vs. others, while their initial shopping mode is vague, and then (2) once a shopper is inside your store, seek to streamline and minimize the burden of choice. For example, a coupon is a good incentive to get a shopper to cross your doorway; but giving a consumer a coupon after they walk into the store complicates the decision process, and might actually depress sales. If you offer fewer options once the consumer is inside, he or she is likely to spend more.
Now we finally understand why we get a headache in Wal-Mart.