Thursday, June 06, 2013

“Retail Psychology”

c. 2013 Rod Ice
All rights reserved

Note to Readers: About two years ago, I began a series called ‘Retail 101’ when asked by a friend in the industry to write material specifically targeted to hourly workers. What follows here is the third chapter of that creation. While writing this piece, I recalled that a former Kroger manager had said he was required to complete a psychology course to be in charge of a store. With hindsight, it obvious that such education was very useful, indeed.

Working in retail management has offered many opportunities for this writer to study the fascinating subject of human behavior. First-hand experiences have been plentiful over the past thirty years. Yet I have typically taken each of these as sales-floor lessons to be learned and remembered - not things to be considered ‘useful’ outside of my own experience.
Recently however, a college student joined our team in search of part-time employment. He spoke about working on a PhD in psychology. While stocking items and straightening shelves, he repeated tidbits of enlightenment from his classes.
The result was pure entertainment for most of the crew.
But in personal terms, I began to share stories from my own shopkeeping past. Pondering the subject of his higher education, I offered a few vignettes of retail life to the young student, while reflecting on a business journey around Geauga County.
At my first supermarket, building displays at the end of an aisle was a routine chore. But because of time constraints, it was necessary to put these artful constructions in place before the ‘sale’ actually began. The intent was to be ready when demand increased at the start of our new ad. But I noted immediately that a particular item would increase in popularity simply because of its prime location. A multi-column stack of paper towels began to move quickly into customer carts, for example. They assumed the item was at a value price because of its prominent spot in the store.
Also at my first supermarket, their ‘house brand’ was a familiar favorite of customers. The label used a white background, with logo text done in a rainbow. This style eventually grew stale and the company decided that a freshening of sorts was in order. What resulted was a modernistic update complete with pinstripes over a bright, blue field of color. They intended to convey the spirit of ‘new’ 1980’s America. But instead, customers started to complain that the products tasted different. One particular woman demanded that we find ‘old stock’ of tomato sauce, because the staple item she had used for years was suddenly unacceptable.
In both cases, customer perceptions produced unintended results, in positive and negative ways. Understanding customer psychology has helped retailers achieve success for many generations.
Old-style stores placed goods behind a counter, with attention from a clerk needed to procure items. Yet the modern ‘supermarket’ concept, pioneered by Clarence Saunders in 1916, empowered customers in a way never seen before. They were literally able to select many items for themselves while shopping. The underlying theme produced by this layout was irresistible – at long last, the CUSTOMER was in charge. Eventually, every food retailer in the nation adopted this format.
The young employee at my side was impressed, but had a question. What about modern, low-frills retailers like Walmart? Were they ignorant of consumer psychology?
My response was that the well-known Arkansas chain was actually quite gifted at understanding the expressed and unexpressed desires of everyday consumers. Their focus on ‘price’ had created an expectation of value that transcended the actual cost of goods for sale. By operating as a thrifty outlet for popular goods, they were able to sidestep the usual concerns about customer service and the total shopping experience. ‘Deep discount’ venues carried that philosophy to a new level. Savings in return for small sacrifices. Minimal price = minimal store.
Other, more traditional retailers moved in the opposite direction. These full-service grocers rightly reckoned that a higher overall cost could be supported by better selection, creative merchandising, and careful customer service.
I related a story of one homemaker from bygone days, who had inadvertently left the store without a full bag of groceries. Included were items necessary to prepare the evening meal for her family. I was instructed by my employer to deliver the items DIRECTLY to her kitchen table! In bottom-line terms, this meant driving a few miles outside of the city. There was no way to ‘juggle the numbers’ and avoid saying we lost labor hours and the price of fuel from this extra expenditure. But the benefit in real terms was overwhelming. We satisfied a customer and earned her loyalty in a way no other gesture could achieve.
My young employee smiled while considering these stories of life before cell phones and the Internet. He promised to share them during his next stint in the college classroom. I could only imagine the fruitful discussion they might inspire.

Postscript: The psychology of retailing is, in real terms, about understanding the ways in which all human beings act and react in a public setting. Providing respect and good customer service. Providing value not just in terms of the goods for sale, but also in terms of the overall shopping experience.

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