CStore Life

 

June 2011

 

Title: CStores and the changing science of shopping

Sub-title: CStore operators can profit big time by getting ahead of new trends in pricing, buying patterns and consumer profiles.

 

Convenience store retailers make it their business to keep abreast of the latest consumer trends in order to provide better service to customers and thus boost sales and profits.

 

Yet that’s easier said than done. In today’s fast-paced, inter-connected world, with communications increasingly dominated by portable computers, mobile devices and social media, it is harder to track changes than during the days when local newspapers and US broadcast television networks dominated. However according to one expert, recent economic travails, wars and demographic upheaval aren’t just changing just changing what we buy. They are also changing the psychology of who is doing the buying and how they are doing it.

 

Not surprisingly retailers are struggling to adapt. “Changing a store layout is easier to do than changing owner mindsets,” says Paco Underhill, president of Envirosell, one of the foremost shopping psychology experts. “For many stores the entire nature of their business and the competitive environment they face has shifted, without them ever being fully aware of the changes.”

 

Underhill isn’t just your ordinary business consultant. He began to do work for the convenience store sector shortly after founding his New York based behavioural firm back in the 1970s. Underhill achieved particular notoriety in the late 1990s with the release of his book Why we Buy: The Science of Shopping, which quickly received widespread acclaim due to its insights into one of North America’s favourite pastimes.

 

The science of shopping

At that time, Envirosell was one of the few consultancies that used video cameras and human trackers, to follow consumers in their natural environments, stores, to note and analyze their behaviour. One famous observation he likes to talk about is the “butt brush” phenomenon, which is the tendency of customers in overly narrow aisles to stop shopping there if they are “brushed” even slightly by other customers trying to squeeze by.

 

Underhill also closely tracks the placement of cash registers after noting many customers turning around even before they get into a store, if they see a line-up there. Much of Underhill’s research is related to impulse buying, so not surprisingly, he has done a lot of work for the convenience store industry over the years, which he says has been adapting to recent shifts in a variety of ways.

 

“Strategies are in large part based on where stores are located,” says Underhill. “If you are a Petro Canada outlet located on a Canadian highway, where 95 percent of your client based is drive-through customers whom you will only meet once, you will react differently than if you are in suburban Mississauga, where you meet the same people every day and sometimes twice a day.”

 

Laying out the store from back to front

One weakness common in C-Stores located on busy highways says Underhill is that they plan their store layouts from the front of the store to the back, which does not coincide well with buyer habits. “When a customer walks into a highway-outlet he makes a B-line to the bathroom at the back of the store or the soft-drink fridge right beside it,” explains Underhill. “Only then, when those demands are satisfied, does he now walk back slowly to the cash, and thus now have more time to study products that are on the shelves.”

 

An increasingly important key for stores in repeat-traffic areas is developing a closer and more sophisticated rapport with clients to get feedback regarding their needs, argues Underhill. “Unlike other businesses in which buyers and sellers never meet, one of the CStore industry’s biggest advantages is that clients walk up to an employee every time they make a purchase,” says Underhill. “You’d be crazy not to take advantage of that.”

 

Underhill notes that traditional communications with clients are often limited because they start with the CStore employee asking questions such as “Can I help you with anything?” that can be answered with a “yes” or “no,” which tends to cut off chatter rather abruptly. Underhill prefers open ended questions, such as “Isn’t that rain heavy today?” or “How about those Maple Leafs?” that create an environment where more open dialogue can take place.

 

Serving women: bright, light and white.

One of the biggest changes affecting convenience store owners, and the subject of his latest book What Women Want: the Global Market turns Female, says Underhill, is the growing importance of women customers. As early as 2005, young US women under the age of 30 earned more than men did, for the first time in history, which increasingly left them with more buying power than ever before

 

The past recession accelerated that trend, because of its more profound effect on male-oriented fields such as manufacturing, than in female-dominated ones like healthcare and education.

 

Of the eight million jobs lost in the US recession, six million belonged to men. As a result, women soon made up more than half the US labour force for the first time in history. Trends here in Canada are in the same direction. “More that half the cars on the roads today are driven by females,” notes Underhill. “That is having a profound effect on how US convenience store chains are doing business.”

 

The keys to convenience store operators attracting female customers boil down to three words says Underhill: Light, Bright and White. “Convenience stores needs to take into account the fact that women are far more safety conscious than men are,” says Underhill. “For example if you ask a man the last time he felt unsafe in the last couple of weeks, many of them will say never,” says Underhill. “Women will be able to rattle off a series of occasions in which they felt uncomfortable, from being in an elevator alone with someone they don’t know, to walking into an underground parking garage.”

 

Safety first … and keep it clean!

The upshot is that CStores should spare no expense to ensure that women feel safe there. Stores should have open layouts and gas pumps need to be well-lit, and in-sight of store employees and other people. Women also have far different standards of cleanliness than men do, which means that to attract them, stores need to be spic and span. “Survey show that women will pay a premium price in order to go to a convenience store outlet in which they know that the bathroom is cleaned every hour,” notes Underhill.

 

Nor is catering women a passing phase says the veteran marketing expert, who cites a trend in Japan where CStore operators are opening locations that target women only, as a sign of thing to come. These Japanese female-only stores are designed in softer colours, have special snack foods that cater to women’s tastes, stock more beauty products and offer ancillary services such as faxing capabilities and dry cleaning drop-offs tailored to their clienteles.

 

Of course figuring out what all of those customers want isn’t easy, notes Underhill, because women like to be talked to differently than men do. “You have to make sure not to address them in a demeaning manner, because women have a better radar than men for that kind of stuff,” says Underhill. “Guys, even very close friends, are often in the habit of putting each other down. It’s a mark of masculinity. It does not work that way with women.”

 

The psychology of pricing     

Marketers have also long been instinctively aware of the psychological effect that pricing has on buying decisions. The number of items with retail prices that end in with a “9,” such as $0.99, $9.99 or $29.99 (thus making them appear far cheaper than had that extra cent been added to round out the amount) is proof of that. The strategy works because of what is called the “encoded effect,” that stems from the fact that we read from left-to-right and thus tend to remember the digits we see first.

 

“For pricing, $0.99 really is a magic number,” says William Poundstone, the author of Priceless: The Myth of Fair Value and How to Take Advantage of It. “You can see it in the popularity of everything from Dollar Stores, to Apple’s ITunes, both of which use the $0.99 pricing model.”

 

In fact there are a slew of pricing strategies that retailers can adopt to make their products appear more reasonably priced to their customers. According to a recent study one way may be by removing the word “dollars” or the “$” symbol. Researchers at Cornell University in New York, discovered that diners in high-end restaurants spent far more on their meals when prices in the menus were shown without the accompanying word “dollar” or the $ symbol.

 

Setting customer limits on sale items, such as “a maximum of six per client,” also appears to maximize buyer attention, as do specials such as “five for $5.00” and writing prices down in a smaller font sizes.

 

That said, one big challenge facing retailers is what they will do if the penny is ever phased out and a nickel becomes the smallest currency unit. Will consumers be as thrilled paying $0.95, $9.95 or $99.95, instead of $1.00, $10.00 and $100.00?

 

Only time will tell.

 

 

Peter@peterdiekmeyer.com

 

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