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Understanding retail psychology to maximize conversions

Retail

Retail psychology looks at how consumer spending is influenced, so it is important to provide an in-store experience that is both on-brand and relevant to your audience. To achieve a good conversion rate, marketing needs to be targeted at the right audience so that potential shoppers expect what is being offered in terms of physical product and brand personality. By finding out exactly who your audience is, you can better influence their spending habits. Brand identity is therefore essential, and every element of a brick and mortar outlet contributes to this. Using a mix of the visual merchandising and sales techniques explained below, will help turn shoppers into lifelong customers.

Store design
The success of a shop largely depends on how the customer reacts to the sales environment and the products on display, so color, signage, lighting, smell and music can be used effectively in the marketing strategies for each area of a store. Customers buy more expensive items with bigger profit margins if they aspire to the lifestyle that is being portrayed by the retailer, so visual cues of comfort and beauty are used.

Dwell zone
The area inside the door of a department store, supermarket or large retailer is a fundamental influencer as it determines a shopper’s journey. It is often used for escalators, directories and seasonal promotions, whereas food outlets position quick purchase “distress goods”, such as flowers, newspapers, sandwiches and tobacco in the dwell zone.

Wayfinding
Payment registers are positioned at the back of the store, so that any queues are hidden (although food outlets differ). Remember that most shoppers will turn right when they enter a store (as the majority are right-handed), so any key campaigns, messaging or promotions need to be in the natural path of the shopper.

Destination goods
In grocery in particular, staple items e.g. milk and bread are predominantly placed at the back of the store to encourage multiple aisle browsing. The same goes for a fashion retailer’s basic range of everyday clothing. Fruit and vegetables are usually found at the front, as fresh produce exudes a clean and inviting environment that creates a sense of trust.

Merchandising strategies
Gondola ends are used as impulse buys to offer promotions and highlight familiar brands at the end of aisles, whereas longer ‘buy-time’ products are located in the center of a shop or aisle. This means the customer can peruse freely without feeling pressured or rushed into making a decision. In addition, placing associated items near each other results in further spending, while nostalgia and attractive packaging causes consumers to place less value on money. Key calendar events and the weather can also be a leverage to drive sales.

Shelf manipulation
‘Triangular balance’ is a technique used by retailers to arrange their products with the highest profit margins in the middle of each shelf, as the human eye naturally gravitates to the center. When you face the triangle, you are looking directly at the most expensive product, be it a luxury face cream or a bottle of premium wine for example. The cheaper, basic ranges are on the bottom shelf, away from eye-level.

Immersive personalization
Today’s customers often demand more than a simple transactional convenience. Buying decisions happen in the changing rooms, so they are an ideal location for clothing retailers to foster sales conversions with the help of human interaction. Customer assistants should strike up a friendly dialogue once shoppers have tried on their chosen garments. Expressing empathy and mirroring body language, while asking the reason why or why they did not like a particular piece of clothing, will mean they can upsell additional items or offer alternative product recommendations.

Pricing techniques
Scarcity is a retail method that helps increase an item’s perceived value and worth. Consumers rarely like to miss out, so end of season sales, and products that are limited edition or out-of-stock are looked upon favorably. Retailers also encourage us to increase our spend via their own brand items, which are often the same size and color compared to well-known branded products. Furthermore, lower price-points for example, such as $9.99 or £9.99, psychologically have the consumer thinking that a product is much cheaper than the next whole number.

Incentives
Incentives are an easy way to attract more sales conversions. Promotions that offer half price discounts, a percentage extra, or ‘buy one get one free’ etc are loss leaders, but they attract people who may not have spent money with the retailer otherwise. Loyalty cards and VIP clubs provide customers with reward schemes that make them feel special and appreciated. And vouchers, in-store events, sampling and ‘buy before you try’ are all methods of reciprocity, which is a powerful way of compelling the consumer to part with their cash in return for a freebie or enjoyable experience.

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