Best Buy Sales at Risk as Surgical Shoppers Lose Impulse: Retail
It’s a retail maxim followed by everyone from Best Buy Co. to Foot Locker Inc. (FL): Get shoppers in the door and then sell them stuff they didn’t plan on buying.
Impulse purchases require people to browse the aisles, however, and that’s happening less and less these days because Web-savvy consumers often already know what they plan to buy and simply pick it up and leave, said Bill Martin, the chief executive officer of ShopperTrak.
These mission shoppers visit fewer stores -- three per trip, down from five pre-recession, according to ShopperTrak. As a result, foot traffic may fall 2.2 percent during the holiday shopping marathon, says the Chicago-based research firm.
“There’s been a fundamental change in buying behavior,” Martin said.
The shift will hit some chains harder. Electronics stores such as Best Buy are most at risk because it’s so easy to research gadgets online first, he said. Apparel chains like Limited Brands Inc. may fare better because even mission shoppers have to stick around long enough to try on clothes.
While retail sales may rise an estimated 2.8 percent this holiday, according to the National Retail Federation, they’d be stronger if more mission shoppers browsed, Martin said.
Retailers are being forced to adapt at a time when they’re closing stores and trying to attract consumers made cautious by a 9.1 percent jobless rate. The rising competitive pressures may accelerate an ongoing shakeout, said David Maddocks, who runs an eponymous consulting firm in Portland, Oregon.
“Most retailers are geared for people to come buy,” said Maddocks, a former chief marketing officer at Nike Inc. (NKE)’s Converse. “Retail has to start gearing itself to sell, to get more out of every person that walks through the door.”
Martin has been analyzing shopping patterns for the past 15 years. Typically traffic and sales growth rise or fall in tandem. Last year he spotted something new. Even as retail sales grew 3.5 percent, according to the NRF, traffic declined 0.5 percent, he said.
When the trend continued this year Martin didn’t know how to explain to clients what was happening, so he asked his researchers to dig for answers. They discovered Americans were turning into what he calls “surgical shoppers.”
Men were the original mission shoppers, and they adopted e- commerce first because it saved time. Faster Web connections and a better shopping experience drew in more women. This has accelerated change in shopping behavior because women outspend men and retailers have long focused their efforts on them.
‘Like a Man’
“Women now go into a store, hoping to go right to what they need like a man would,” said Delia Passi, CEO of Hollywood, Florida-based Medelia Inc., which advises companies such as Home Depot Inc. (HD) on how to appeal to female shoppers. “The science of retail shopping has changed, and unfortunately the retailer hasn’t.”
Retailers pay close attention to so-called conversion rates -- the percentage of people that actually buy something after walking in the door. As Americans make fewer trips to the mall, each shopper becomes more valuable and persuading them to buy more shirts, power drills and bed sheets becomes all the more crucial to retailers, says ShopperTrak’s Martin.
In the recession and its immediate aftermath, many cost- cutting retailers stopped refurbishing stores and put fewer salespeople on the floor. That made the Web even more appealing, Passi said. Now stores are hustling to improve the brick-and- mortar experience with upgraded technology, service and merchandising, the better to engage mission shoppers.
“The retailer has let the consumer get too far ahead of them and now they are scrambling to fix that,” said Tim Tang, who oversees retail technology solutions for Hughes Network Systems LLC, a Germantown, Maryland-based subsidiary of EchoStar Corp. (SATS) “This season retailers are playing catch-up.”
Teen clothing chain Pacific Sunwear of California Inc. (PSUN) equipped employees with Apple Inc. (AAPL) iPads to help customers assemble virtual outfits. Lowe’s Cos., the second-largest home- improvement retailer, has been adding wireless Internet networks to stores, and gave iPhones to associates so they can check inventory faster and spend more time helping customers.
In a return to old-world service, retailers are teaching employees to read body language to better assess whether they’re browsing or buying and respond accordingly, said Jill Puleri, head of International Business Machines Corp. (IBM)’s global retail consulting division. Chains also have added back store greeters to improve the shopper’s mood, she said.
Foot Locker, the largest U.S. sneaker chain, trained associates to ditch the traditional “how may I help you?” for “what kind of shoe are you looking for?” It’s a subtle change that’s more likely to start a conversation, said CEO Ken Hicks. The company also revamped the store layout -- putting shoes and apparel together -- in the hopes shoppers would buy outfits rather than single items.
Retailers have also resorted to in-store entertainment and pumping in aromas to keep shoppers in stores, according to Mike Gatti, who runs the NRF’s marketing unit in Washington. Jordan’s Furniture, a New England chain owned by Warren Buffett’s Berkshire Hathaway Inc., used 3-D movies, ice cream parlors, laser shows and trapeze lessons to boost traffic.
“They are doing everything they can to get customers to stop and smell the roses,” Gatti said.
Brookstone Inc., the closely held electronics chain, couldn’t add Wi-Fi and iPads to its 300 stores fast enough, said CEO Ron Boire. Next he wants hand-held checkout devices to emulate the Web’s simplicity.
Boire has been speeding ahead because he’s worried overall e-commerce will keep improving as stores get worse, and that will only accelerate the migration to the Web -- and more mission shopping.
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