Monday, October 1, 2007
Creature of Habit
Something very interesting that I came across in an NY Times article referenced on one of the retail e-letters that I subscribe to. Retail customers (that includes most of us) seem to be creatures of habit. So much so that a lot of them were upset when Macy's decided to do away with coupons as part of an initiative to make it easy for customers. Retail customers apparently like to get a deal even though most retailers actually budget for promotions so its not that someone is really getting a bargain. It was already accounted for to yield that much margin. I have also heard that some retailers like to give a treasure hunt kind of feel to shopping in their stores where some unannounced deals are selective placed in different aisles which give their customers a sense of achievement when they find them adding to that "I got a real smart deal" feeling. Its like "you win when you let them win".
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2 comments:
Talking of treasure hunt...I had gone for a tour at Costco with our market insights director and he mentioned the fact that all club stores are a treasure hunt..they keep all the necessities at 4 corners of the store and everything in between is a treasure hunt...so while the customer walks to all four corners of the store looking for milk and bread, all the treasure in between are waiting to be hunted...and that's how the average basket price is close to $100
Interestingly enough, once I purchased only bread at Costco and the check out lady made a light hearted comment that I am supposed to buy worth 100s and not just 10s of dollars...:)
When I was talking about treasure hunt I was actually referring to club warehouse stores like costco. Well really speaking all of retail is driven that way in terms of having the items that the customers come to your store for (referred to as destination items) located in such a way that there is some aisle travel required before they reach the destination items and in the process picking up some high margin items. Interestingly enough in India Big Bazaar - http://www.bigbazaar.com/ does the same thing. I am planning to put a post on how Kishore Biyani (owner Pantaloon) changed the display style in those stores to drive more business.
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