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The importance of unplanned buying for retailers’ profitability

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It is difficult to overstate the importance of “unplanned buying” to retailers and branded goods suppliers. As we have explained in an earlier post unplanned in-store buying behavior accounts for a major part of supermarkets profits. Actually Advertising Age has reported that consumers tend to make 70% of their brand decisions in the store!

In a recent article the effects of “preshopping” factors—the overall trip goal, store-specific shopping objectives, and prior marketing exposures that the shopper brings to the store- have been investigated. The authors used a novel methodology and in particular observed 400 shoppers over several trips, representing 18,000 category purchases in more than 50 product categories. As the authors explain “the same shopper is observed invoking different goals, shopping in different stores, and buying under different circumstances”.

Three main results are reported in this study which should be of interest to retailers and marketers.

 

Unplanned buying increases during “abstract trips”

A rather logical conclusion is that “unplanned buying increases with the abstractness of the overall shopping trip goal established before the shopper enters the store”. The authors suggest to make the shopper think more abstractly about the shopping trip mission but honestly this seems something that it is very difficult to realize.

One interesting insight though is that hard discounters attract more “abstract-goal” trips.

 

Store-linked goals affect unplanned buying

One important conclusion is that “unplanned purchases are higher on trips in which the shopper chooses the store for favorable pricing and lower on trips in which the shopper chooses the store as part of a multistore shopping trip”.

This conclusion is especially interesting in today’s economic crisis environment where shoppers tend to go on multistore shopping trip. Low-costs supermarkets tend indeed to propose a reduced offering to cope with low overheads whereas classic supermarkets offer a broader range in the hope of benefiting from up- and cross-selling. A classical European example would be for instance to purchase basic products from Colruyt, Lidl or Aldi and go to Delhaize, Carrefour or Leclerc for specialty products not offered in low-cost stores.

 

Out-of-store marketing has no effect, except …

Shopper exposure to out-of-store marketing has no direct effect on unplanned buying. However the authors show that consumers using marketing materials inside the store have a tendency to increase their unplanned buying behavior

 

Advice for your marketing strategy

The conclusions above are very interesting to better understand actual shoppers’ behaviors and how it affects stores’ profitability. In an article which we published earlier this year on online purchases that are picked-up at supermarkets (the collect&go concept), we explained how disastrous the current attempt to move offline purchases to online ones could be. The results of this study show that we were indeed right in claiming that a 100% online model would be destructive to the industry.

This conclusion also applies to the “Shop & Deliver” experiment currently carried out by the Belgian postal operator BPost. Although revolutionary in its approach, the purchasing behaviors induced by Shop & Deliver could mean a lower profitability for those segments shifting their behaviors from in-store to online. This being said Shop & Deliver remains a superb initiative that may be disruptive.

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Author: Pierre-Nicolas Schwab

Dr. Pierre-Nicolas Schwab is the founder of IntoTheMinds. He specializes in e-commerce, retail and logistics. He is also a research fellow in the marketing department of the Free University of Brussels and acts as a coach for several startups and public organizations. He holds a PhD in Marketing, a MBA in Finance, and a MSc in Chemistry. He can be contacted by email, Linkedin or by phone (+32 486 42 79 42)

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