The End of the Impulse Shopper
The Web Has Made Consumers More Intentional, Smarter
Elisabeth Hoffman and fiancé Josh Loeser paused by a display of artfully decorated cakes and pastries while shopping recently at a Pick n Save grocery store here. But after a split second of interest, their expressions faded.
Theyre not on the list, said Ms. Hoffman, a 35-year-old interior designer and remodeler, as they pushed on to pick up chicken breast and diced tomatoes for a chicken chili recipe.
She and Mr. Loeser, a 30-year-old heating and ventilation repairman, have adopted a series of habits to make sure they buy only what they came for. They shop together, for instance, and when possible they avoid grocery carts, which come with the temptation to fill them up.
Retailers wondering whats gone wrong with their business could learn a lot from the coupleand from other Milwaukee-area families The Wall Street Journal spent time with this fall.
Observations of their carefully executed shopping plans identified what may be an endangered species in the retail landscape: the impulse buy.
A new intentionality has taken hold of shopping. Many Americans have the money and the will to spend. But they are time-pressed and deal savvy, visiting stores only when they run out of items like cereal or toilet paper and after doing extensive research on purchases online and with friends. They buy what they came forand then leave.
Those habits threaten more than just gum sales at checkout. Impulse is why stores offer deep discounts on loss leaders, why they put the milk in the back corner and why marketers spend heavily to pile up products in displays at the ends of the aisles. If shoppers just target the deals and dont let their eyes wander, long cherished models for boosting sales fall apart.
Store layouts are a known strategy that retailers use to influence how shoppers behave. But can sounds and smells also be used to get you to spend more? Here's #TheShortAnswer.
The shift of attention toward the Web and lingering frugality after the trauma of the financial crisis are the underpinnings of the problem. And the symptoms of the industrys malaise are clear enough: extended declines in shopper traffic, weak sales growth, and a discount-driven race to the bottom that is sapping pricing power.
Chicos FAS Inc. says customers are now browsing online first and then coming into stores on a mission. Shoppers who once spent two hours at the womens apparel retailer are down to 45 minutes.
When youre online, you lose a lot of the impulse and your units per transaction are less online than they are in a store, Chicos Chief Executive David Dyer told analysts in September.
Much of that intentionality has now spread beyond the Web to in-store shopping as well. Consumers are now conditioned to shop for specific items and its not just affecting online consumer psyche but offline consumer psyche as well, said Joel Bines, a managing director at retail consultancy AlixPartners.
Wal-Mart Stores Inc. moved aggressively into the low-margin grocery business in the 1980s hoping it would prove a weekly draw for shoppers who in theory would also pick up more profitable items like clothing and toys. But the formula has come under strain.
Groceries now account for 56% of Wal-Marts $279 billion in U.S. sales, and categories like electronics and toys are waning or migrating online. Only once since 2012 has the company reported increased U.S. sales, excluding newly opened or closed stores. Meanwhile, traditional grocers like Kroger Co. are eroding Wal-Marts price advantage.
Wal-Mart and other retailers are reacting to shoppers extreme planning in a variety of ways. Wal-Mart is trying to pair items that sell well together, like Corona beer and limes. They call it, Better Together. It is also investing in e-commerce and smaller stores that cater to more targeted shoppers. At Dollar Tree Inc., each week the chain designates a product like a pen or candy bar as drive items that cashiers push at checkout.
Its just that one last chance to get another item in their shopping bag, Dollar Tree CEO Bob Sasser told investors in May.
Adriana Salgado, a 26-year-old Milwaukee native who lives in a townhouse with her older sister, prefers to pick up pens and other supplies for her job running after-school programs at the local Boys & Girls Club at the Dollar Treeeven though her employer has a charge account at Wal-Martbecause she says they are cheaper. After a recent trip, she carefully folded the receipt she would need to get reimbursed for the $11.62 she spent.
She and her friend Paola Felix are just as penny-pinching with purchases for themselves. On a recent evening, as they watched the TV show Scandal, they admired the sharp blazer worn by actress Kerry Washington. Oooh, that jacket is at The Limited! Ms. Felix exclaimed, before demurring that shed never buy it because the retailers well-advertised Scandal collection is too expensive. (The Limited said the line is targeted at a slightly older demographic and that most pieces are priced between $49-$100.)
Please, she said. I shop at H&M and Forever 21. Forty dollars is a splurge for me. (excerpt from wsj.com/shelly banjo)
