Amazon bolsters Prime with try-before-you-buy fashion http://ift.tt/2soAcmE (£)
Shoppers and their behaviour (i.e. ‘shopping’) are always changing but we need to stop looking at what is changing or ‘by how much’ and start focusing on why?
‘Economics’ is defined as ‘the social science that describes the factors that determine the production, distribution and consumption of goods and services’ – which is precisely what just about everyone in retail incessantly focuses on. Economists and accountants across the board are telling brands and retailers how and where to save a penny here or shave a rupee off the cost there… and while this is all well and good they are missing a major point. Between distribution and consumption there is (the often overlooked) stage of acquiring, or as we like to call it – ‘shopping’. Why this is so frequently classed as an afterthought is mind-boggling, because quite frankly, if a product hasn’t been shopped or acquired – it’s pretty hard to consume!
In addition to this serious omission, brands and retailers are failing to ask the most important question that they should be putting across to the economists:
WHY do people shop for and consume certain items?
In order to get a meaningful answer to this all-important question, you need to put the accountants back in their boxes and dust off the psychologists – as they are the ones who can offer a much more powerful solution than plain old economics.
Behavioural economics applies psychological insights into human behaviour to explain economic decision-making. Psychologists go out and study shoppers in the shopping environment, whilst the economists rarely look up from their spreadsheets. As a result, the physcologists can provide us with ‘the why behind the buy’.
There is an ongoing love / hate relationship between the two, which makes it almost impossible to create a single solution that encompasses the positives of both outlooks:
What economists think about psychologists:
What psychologists think about economists:
In the 1980’s, when Little Chef had 400 branches, economists listened to their customers when they specifically said they wanted healthier food, whilst simultaneously wanting faster food. Little Chef then went on to make the ill-fated decision to make their food ‘freshly cooked to order’ and outright rejected the cost of providing restaurants with microwaves. At a time when the sole objective of its competitors was to provide ‘fast food’, this decision proved to be a costly error.
In the 1980’s, psychologists recognised that roadside restaurants needed to provide faster food for customers. At the time McDonalds only had 100 outlets.
Economists reported that the now infamous relaunch of ‘Tropicana’ just a few years back created a financial loss of $33 million in just 7 weeks! Now, psychologists would have recognised that a number of key visual heuristics were being either removed or changed as part of the new packaging design, which would therefore make it likely to fail. However, no one asked the psychologists…
Economists can report the financial implications of Tesco delisting Kingsmill, Carlsberg and Ribena, but the psychologists can provide the implicit reasons why people buy into these brands – allowing them to once again become true category champions.
Are you seeing a pattern emerging?
Economists have had their chance at dissecting retail in recent years, and frankly it hasn’t turned out that well! It’s time to move over and let the psychologists have a bash.
At SBXL we use a variety of research tools and studies to find out what shoppers think about shopping – whilst they are doing it.
My name is Phillip Adcock, and I am the Managing Director of Shopping Behaviour Xplained Ltd (SBXL). I have over 20 years of experience in the world of shopping behaviour, and I can help you to create better outcomes for both your store and your customers. Read our Expertise & Insight pages to learn more, or if you want a more in-depth look at how the human brain decides what to buy, why not read my books on the subject: ‘Shoppology – The Science of Supermarket Shopping’ and ‘Master Your Brain’.