The Retail dilemma: shopping groceries on auto-pilot
Have you ever gone into your local supermarket to find that the store has rearranged the layout and the milk is no longer on the 3rd row in the middle of the aisle? Did you leave the store afterwards feeling very tired and maybe annoyed about the time it took to find your brand of milk or toothpaste?
The reason for being mentally tired or potentially frustrated is that in order to navigate your supermarket, all of a sudden you needed to process a lot of new information, whereas before the re-structure you could rely on what is called ‘heuristics’. Heuristics are like mental rules of thumb that allow us to automate the decision making and make complex decisions without processing large quantities of information (3rd row, middle of aisle, blue label).
This automated decision making process means that we basically eat the same sandwich every day, use the same toothpaste brand, drive the same route to work, etc. Previous research (Quinn & Wood, 2005) has shown that 45% of our behaviour is repeated almost daily, however 59% of our retail shopping is habitual (Brandhook, 2012) as consumers tend to buy the same brands, purchase the same amounts at particular retail stores (Vogel,Evanschitzky, & Ramaseshan 2008).
Automatic decisioning is both a blessing and a curse for retailers. Because we exercise these routine response behaviours, it’s easy to predict what we put into our basket, how often and where we purchase our groceries, which allows retailers to tailor their offerings. But the routine response behaviour is also a curse when trying to change behaviour e.g. if you order a Diet Coke with your lunch every day you are not likely to switch to Orange Juice very soon. In the past retailers have been using old tricks such as sensory cues (in-store product demonstration, eye-level product placement, till products etc.). However, what happens when consumers start using the fast growing online channel and shop groceries from home?
All of sudden the traditional sensory cues are out of play – causing consumer to spend less on groceries compared to in store shopping. Comparison sites predict that the consumer can save an average of £20 per week by doing grocery shopping online as opposed to shopping in-store. Consumers will exercise the same repeat behaviour online as in store, however, to interrupt this automated behaviour retailers need to understand the customer journey that consumers take online. For retailers it is important to understand the concept of Digital Shopper Relevancy which is not only about understanding but also anticipating and continuously addressing shopper needs and perceptions across the customer journey. A recent study developed by Capgemini(Download PDF) categorised the consumer consideration into 5 five attributes that retailers needs to understand: Access, Experience, Price, Product, and Service, and how the digital environment differs from the traditional store environment. In other words elements such as:
- Influencing the consumer’s sensory palate using visual cues only e.g. where to place products, offers etc. online (page display) so that it gets noticed as on the shelf
- Understanding the journey from landing page through to payment and back to re-visit, understanding drop off rates, bounce rates etc.
- Understanding which and when your customers are likely to respond to offers, introduction of new products, needs new inspiration etc.
All of this is hidden in your data today.
Thomadsen (2012) revealed that price sensitivity and responsiveness to feature advertising diminished when consumers shop at the same store as compared to when they switch stores, which means that if you design the optimal online experience based on the consumer data, you have the added benefit of lower price elasticity and increased loyalty in the long run.