Retail Psychology

Retail Marketing Psychology – Frank Mayer

The Psychology Behind Retail Marketing

Editors note – originally published on the Frank Mayer and Associates, Inc. blog.  Link to article

 Katie Kochelek February 8, 2019

If you’re anything like me, you’ve visited that magical, wholesale warehouse Costco with good intentions to pick up the necessities – paper towels, cheese, yogurt, the like.

Fast forward an hour and you’re now walking out with an economy size bag of Tootsie Roll pops, a jug of raw honey, and a party-size serving of chicken salad for your young family of four.

Whoa.  What just happened? Retail Psychology.jpg

We’ve all seen the silly memes about Costco, Target, and the other big box stores, gently teasing the point that there’s no way to shop these retailers without deviating from your list.

But it turns out there’s a lot of psychology behind encouraging you to go rogue during your shopping trip, and below we detail a few of the insider tricks retailers use to inspire the impulse buy.

The Science of Discovery

Much has been written about Costco’s “treasure hunt” approach to in-store merchandising, a strategy that involves constantly shuffling staple items to different locations in the store.  The science behind this is simple.  Rearranging items forces shoppers to walk by tempting triggers in the search for their usual goods.

Ever notice the lack of signage above the aisles at Costco, too?  Chalk that up as another element of the treasure hunt, designed to encourage exploration.

But wait a second.  Every article written about retail in the past few years has the word “frictionless” in it.  Why is Costco so popular, consistently scoring high on the American Customer Satisfaction Index, if it’s constantly making shoppers jump through hoops to find their favorite products?

It boils down to science.

When humans discover unexpected items or experience something new, our brain releases the same chemicals associated with joy and love.  So, in essence, stumbling upon the row of smart lighting solutions on my way to buy diapers makes me feel happy because my brain is programmed that way.  And the fact that Costco changes up their endcap displays in addition to rotating store merchandise means I’m always entering the store subconsciously anticipating the thrill of discovery.

FOMO and the Impulse Buy

The fear of missing out, or more commonly referred to as FOMO, is another hardwired human trait that brands and retailers use to their advantage.

In the book “The New Rules of Retail: Competing in the World’s Toughest Marketplace” by Robin Lewis and Michael Dart, the authors write, “Neuroscientists have proven that the anticipation of rewards – or the potential of not getting what you want – will produce dopamine, which actively drives behavior.”

They go on to use fast fashion retailer Zara as an example of a business model that draws shoppers to its stores more often than the average retailer.  Why?  Because Zara releases new clothing lines constantly.

As Lewis and Dart state, “Customers visit Zara seventeen times per year, compared to only three or four times for traditional retailers, because they are afraid of missing something new and exciting.  The connection is so strong that customers are compelled to buy in fear of the item’s being bought by someone else.”

It’s why marketing messages like “Act now!” and “Hurry! While supplies last!” trigger our knee-jerk decisions.  We appease the FOMO anxiety and release that good-feeling dopamine when we keep from missing out.

Tell Me About Yourself

Marketers have become hip to how millennials, now the largest consumer demographic, want to interact with a brand.  Not only is this generation hit with traditional marketing in their everyday lives, but these digital inhabitants are also bombarded by a whole different wave of brand messaging online.  And because access to product review information, pricing, and more resides at the tap of a finger, they’re known for seeking out authentic experiences to cut through the information overload.

While companies regularly use online platforms like social media and websites to share organic content and brand stories, it’s just as alluring to shoppers when done well in-store.

Merchandising displays and interactive kiosks can play a big role in helping to paint a brand picture to customers.  A sleek free-standing display with a monitor featuring a video loop of a runner wearing her fitness tracker draws in the person who identifies with that woman.  A shoe display with signage detailing how proceeds go to charity gives potential buyers the warm and fuzzies.  Predictably, these little details help people feel more invested in your brand.

Interactive displays that allow shoppers to test a product are equally effective.  Just ask the crowd of children waiting their turn at the video game demo at Best Buy.  These displays are magnets, drawing in the customers and promoting the products while people eagerly test drive them in the store.

The Grocery Game Plan

It’s not just big box stores that employ consumer psychology to encourage shoppers to buy.  Grocery stores follow their own set of guidelines to persuade additional purchases.

Your journey to impulse buying starts before you even step foot in the door.  In an interview for a Today.com article, “Supermarkets wage war for your dollars,” marketing consultant Martin Lindstrom details an experiment of doubling the size of a shopping cart.  The results?  People ended up purchasing 40 percent more.  So grabbing a cart the size of a Cadillac has already primed the customer to fill it.

On entry, grocers like to promote the seasonal treats that are hard to pass up.  And if you manage to do so, you’ll see them populated through the store as tempting reminders.

Produce often comes next and for good reason.  When you feel good about buying healthy items, you’re more likely to cave down the line when faced with junk food temptations.  With all that healthy food in your cart, surely you deserve a treat.

And what about those staples like milk and eggs that brought you to the store in the first place?  You’ll find those in the back of the building, forcing you to walk down an aisle or two of enticing food shelved at eye level.

Finally, just as you roll to the checkout line, congratulating yourself on avoiding the lure of snack food, you’re left waiting while staring at the array of chocolate bars and candy thoughtfully organized on the row racks.

Okay, fine.  Just one candy bar won’t hurt.

The New Hip Spot to Hang

It’s no secret that, in the current market of online competition, retailers have had to get creative to get feet through the door.

It’s why there’s been so much buzz around experiential retail – the practice of offering an experience during what would normally be a traditional shopping trip.

We’ve seen it at places like Target stores that often have Starbucks coffee shops and retailers such as Tommy Bahamas that offer restaurants within some of their brick-and-mortar stores.

Even generous sampling can attract a crowd, as Costco knows all too well.  (In fact, Costco’s sampling has its own fascinating psychology.)

Brand retailers are taking experiential retail even further. There’s been big buzz around Nike’s Live concept that not only offers services like style consultations and the ability to try out products, but also curates collections based on where stores are located.  NordstromREI, and countless other brands have jumped on the bandwagon as well, realizing that engaging with customers and “activating” their shopping experience leads to increased sales.

Us humans are a simple bunch when it comes down to it.  We’re often driven by emotions, which means when retailers can capitalize on this fact, they’d be silly not to.  So the next time you find yourself in an aisle seriously contemplating taking home a fancy juicer you didn’t know you needed, consider the neuromarketing behind what’s driving your behavior.

We’re big geeks about retail!  Did we miss other strategies that brands and retailers use to delight shoppers and encourage more purchases?  Let us know in the comments or on social media.