IRI released some research last month that found most decisions to purchase “Store-Brand” product are made at the shelf-edge, as compared to “Name-Brands” which tend to be planned purchases.
This prompted a bit of discussion on LinkedIn with the old “70% of all decisions are made in store” statements being rolled out again (Peter Breen summarizes the validity of that statistic here). The reality is that purchase decisions are not a single magical moment of truth. Rather, they are the cumulative result of a huge number of previous experiences.
I doubt any purchase has ever been made in a retail store without being influenced by the in-store experience. There are the easily identified in-store influences such as: price, location, inventory level, assortment, merchandising, promotion, etc… but there are also others that are more difficult to measure. If construction was making it difficult to access a parking lot, would you make your purchase elsewhere? If a checkout line is long, would you curtail your purchases to the bare minimum to take advantage or the relative speed of the express lane? If your planned purchased was held hostage by a surly and poorly trained sales associate, would you complete your purchase or walk out?
That’s not to say that all random in-store experiences hinder purchase decision. What if every person you saw in the store was purchasing the same item. Would you be intrigued? Would that influence your decision to buy it? If you are intending to purchase a suit, would you be more or less likely to buy one like the one you saw on the attractive salesperson? The consumer decision tree and path to purchase are far too complicated to be divided into two columns (made-in-store vs. made-out-of-store). Further, the path to purchase will be dramatically different for a $1 consumable item than for a $1,000 durable good. So given IRI’s focus, when they talk about “Store-Brands,” they mean alternatives to Tide, not items such as Insignia Televisions at Best Buy.
While the consumer’s path to purchase is always in a state of evolution, I do believe we are currently experiencing a period of dramatic and disruptive change, to which our connected lifestyle, the internet, the rapid evolution of consumer goods, and the global economic slowdown have all contributed.
It’s clear that the strength of Name Brands have eroded as a result of the “pretty good” phenomenon. If poorly-made flour might kill you, Pillsbury may seem like an important brand. But if all flour at the store is “pretty good” and does not jeopardize your mortality, the preference for the Pillsbury Brand isn’t as strong. (Rob Walker talks about this in his excellent book: Buying In: What We Buy and Who We Are). The bestselling brand of televisions in the US, Vizio, didn’t even exist in 2002. That kind of meteoric rise of a durable consumer goods manufacturer could never have happened without the “Pretty Good” effect.
It’s also clear that shoppers are doing a lot more research before they even enter the store. Best Buy recently disclosed that half of all shoppers who spent more than $50 had researched the purchase on-line. Not that long ago, less than half of all Best Buy shoppers even had access to the internet! If online research followed by in-store purchase is the predominant shopper behavior, how will Best Buy facilitate unplanned or impulse purchases? The in-store shopping experience will have to change to be more research friendly. QR codes on the shelf-edge, anyone?
Add to that:
- Products are more complicated. Today’s TV can stream movies from Netflix, turn themselves off to save electricity when you leave the room, and show you 3D movies. They, like other consumer electronics products, have come a long way as compared to the relatively static feature set (size, brand, remote) from a few years ago.
- Products are introduced faster and have shorter shelf-lives, so consumers (and sales associates) have less opportunity to get familiar with a particular model.
- Interoperability is a new requirement. We no longer expect to simply use a product, now we need for the products we buy to work with all the other products we own or might own in the future. Will this TV work with my Tivo? My WiFi network? Is it compatible with 3D? If so, will I need to buy special glasses?
In the midst of all this complication, what is replacing Brand at the top of shoppers’ decision trees? Variations on peer recommendations and expert opinions seem to be rising up the list. And that makes perfect sense… as the decision gets more complicated, more of us will outsource our choice to a specialist. This is why I think K-Mart’s effort to get product reviews on the shelf edge make a lot of sense. It’s another reason why mobile will play a major role in the future of in-store marketing. But this is only a first step… the problem with peer reviews is that the signal-to-noise ratio is very low. I don’t want random reviews from strangers; I want reviews from a person in my social network whose opinion I trust. That’s not going to happen with a static fact tag.
The bottom line is that we need to learn what sort of experience this new consumer wants at each phase of the purchase decision – and deliver it to them, no matter if it is in the home, out of the home, or in the store. I can tell you where you won’t find these new customer experiences… in your rear-view mirror! We won’t be able to meet these new consumer needs by recycling our old assumptions and ideas from the past. It’s time to get out the blank sheet of paper and invent new shopping experiences. I, for one, can’t wait.