There is perhaps no other retail sector that takes better advantage of consumer behavior research and in-store optimization than grocery stores. From circular to layout, from shelf-space to checkout, supermarket marketers are masters of merchandizing.
How can you apply supermarketing psychotactics to your ecommerce experience?
Loss-leaders (popular, non-clearance items offered below cost in order to bring in foot traffic) can be profitable for brick-and-mortar stores, but not so much online. Loss leaders work in physical shops because shoppers tend to buy whatever else they need while in-store during that visit. It’s not the same online, where picking up extra items requires searching and browsing the website.
Amazon can afford to sell below cost because it turns over inventory well before it must pay suppliers. This “negative operating cycle” allows Amazon to make a return on cash flow. Most online retailers don’t run this business model.
The goal of loss leaders is to increase checkout total. Realistically, most online sellers will not succeed with product loss-leaders, rather with free shipping offers above a certain dollar amount. With 90% of consumers believing free shipping offers would entice them to spend more online, it’s no wonder so many e-tailers offer free shipping above $X year-round as a perpetual loss-leader (occasionally lowering the threshold during promotional periods).
Grocery aisle endcaps are premium space, and typically feature high margin products or brands that pay for this primo real-estate.
What are the ecommerce equivalents to these merchandising zones?
Beyond the obvious home page carousel (which nobody looks at anyway, consider “e-endcaps” in category navigation and on search pages (searchandising).
For example, Sephora bakes featured brands and products into its flyout menus and category results:
Get it right
“Most stores move customers from right to left. Due to this flow and and the practice of driving on the right side of the road, the items you are most likely to buy tend to be on the right hand of the aisle.”
We read and view Web pages the opposite, left to right. While moving calls to action to the left of a page has paid off for some e-tailers, merchandising “endcap” content (including cross-sells and upsells) to the right of home, category and search pages may work on the same principle as grocery store navigation (it’s worth a test!)
Apply the breaks
Brian Dyches, chief experience officer of retail branding firm Ikonic Tonic studies retail shopping patterns, and says shoppers skip over up to 20% of a store’s merchandise in long, uninterrupted aisles.
Could eyes glaze over in long, uninterrupted search and category results pages? You bet.
Take a page from Wal-Mart and other big-box retailers: Create stopping points in the middle of long aisles, such as signs or displays that create a visual break. Dyches likes how clothing chain Anthropologie often repeats a design behind wall displays and then changes or ends the pattern to try to get customers to stop at a special display.
Online this can be accomplished by creating “breaks” in the design. Burton’s 13 Things feature does this crazy well, dropping humorous and lifestyle images into the experience.
A bit of text/content can also break up a page to renew attention.
Shoppers tend to subconsciously buy more when a store’s crowded to be “part of the group.”
Merchandisers can create a group mentality with social proof. Feature what’s currently trending socially, for example.
During sales periods, show what’s selling out to create social urgency. Flash-sale sites like HauteLook and BeyondTheRack do this well.
One way to promote this is through real-time email that continually updates what’s sold out.
Class it up
To compete with Walmarts and other discounters, groceries “class it up” by bringing in “butchers who are skilled with the knife” or in-store seminars and events, like Whole Foods’ gluten free tours and kids craft days.
To compete with the Amazons of the ‘Web and other discounters, online retailers are becoming more like publishers, peppering content and other value-adds throughout the Web and mobile experience. Live “ask an expert” tools, product knowledge/shopping tools, and visual search.
Ten for ten
“We’ll take an 89-cent can of tuna and mark it ‘ten for $10,’
and instead of buying six cans for 89 cents, people will buy ten for $10.”
While any non-grocery retailer can do the X for $X promotion (and many do), the idea here is to leverage pricing psychology. Round numbers can affect how consumers perceive cost and value.
For example, “when something costs $100, consumers tend to rely on their feelings, whereas when something has an irregular price—such as $98.67—consumers have to use reason to compute whether it’s a good price.”
If ten-for-ten feels good, customers will like it. So experiment with 2 for $20, $3 for 50, etc. And remember, when customers are working towards reaching a free shipping or loyalty points threshold, there’s incentive to spend more than what’s rational!
Milk in the back
While it’s erroneously believed that grocery stores put the milk, cheese and eggs in the back so you have to walk through the store to get to them, that’s just a convenient side effect of the real reason. Dairy trucks load through the back of the store and milk needs to be refrigerated right away, thus the cases are in the back to be filled as quickly as possible.
Nevertheless, “best stuff in the back” became standard retail practice, even for stores like Staples. It wasn’t until Staples’ new (at the time) CMO Shira Goodman developed its “that was easy” positioning did the most popular items get moved to the front of the store.
While sales did drop a little due to less impulse buying, it strengthened the brand, and helped Staples successfully differentiate against competitors.
Moral of the story? Borrowing design conventions from other industries is not always the right move.
Online also has an advantage of tailoring the “front of the store” to the customer. Smart use of personalization means what’s “in the back” for one customer can be “in the front” for another. Take advantage.
The ecommerce equivalent to the impulse checkout aisle is cross-selling in the cart.
But online impulse shopping has a benefit – you can A/B test and personalize the heck out of it.
We all know why supermarkets have loyalty cards — data, data, data to optimize their merchandising and send you targeted offers.
For cross-channel retailers, loyalty cards are all the more valuable for personalization. Whether a physical card or simply tied to an email address, understanding online and offline behavior helps better target the online experience. And with emerging in-store digital like iBeacon, customers can do even more with their loyalty account, such as receive targeted offers by mobile, check account balances in-store, etc.
We complain about abandoned carts and half-finished checkouts, but supermarket shoppers commonly ditch stuff in the checkout line. That’s why checkout lines have been designed narrower and narrower with less space to dump items!
That’s the same idea behind enclosed checkouts and not providing cart summaries during the checkout process.
Carts are never cleaned
Literally. Call it the grossery store, but shopping carts are chock full of nasty germs and fecal matter and never get wiped out.
Online, carts get wiped clean regularly — as in wiping cart contents. We know many shoppers don’t check out in a single visit. Persistent shopping cart cookies help save sales. Use ‘em or lose ‘em.