Mark Mechelse of the VP Insights has just recently published the Linkedin article Reinventing Retail: Average is Over!
Key takeaway: the gap between traditional retailers and customer expectations is not closing but on the contrary, widening. While the retailers (mostly grocery super and hypermarkets) are still struggling with the constraints of the pre-internet times, the customers’ prevalent mode is multiple options and discovery.
I agree. Though the supermarkets provide more options than ever, the experience became an almost extinct animal in the traditional retail formats. Let’s give this somehow paradox gap between the offer and expectations a closer look.
THE OPTION PARALYSIS
At any given moment an average supermarket holds up to 50.000 different products. In the pre-internet times, the sheer number of options provided an experience for the customers. It worked like a magnet with people indulging in browsing. But in the new reality, the choice turned into its opposition – the option paralysis.
My observations made during our on-going research about shopping behavior (using radio signals to measure shopping paths in supermarkets) provide further evidence on how much of the customer shopping time is just autopiloting between one routine task and the other. Especially, on packaged goods shelves.
Such habituation might serve as a kind of a defence from the option paralysis. Back in the 1950s the cognitive psychologist Miller has pointed out the limits of our capacity for processing information. The number of objects an average human can hold in working memory is 7 ± 2. The short-term memory could be seen as a kind of glass. When we increase the number of options, the glass fills up – and then it comes to overspill.
Another observation might be in close connection to this. Product displays set in the vicinity of the complex categories, with many options to choose from, have low engagement levels.
Also, cues – the messages, the displays, the shelf talkers etc. – that once worked are now more and more going down the cognitive drain. The communication noise is inflating.
HABIT VS. INFLATION OF OPTIONS
To put in another perspective. In the world of inflated options, people still buy only 200 – 300 products. Not monthly but yearly! And this “chosen 300” set the frame of the valid options which is only occasionally open for new entries (regularly not brands but new, niche categories!).
Says Siemon Scammell-Katz in his book The Art of Shopping:
“For low-involvement categories – those categories that we shop for quickly and are perhaps not that interested in – 69% are repeat brand purchases.”
With this in mind, and from the customer’s point of view traditional supermarkets couldn’t be seen as spaces that provide 50.000 options (or opportunities for discovery) but places where 49.700 redundancies stand on a path to achieve shopping goals. Just by the way, the discounters like Aldi and Lidl are heavily capitalizing on the overflow of options turned into redundancies. With less than 2000 options (and emphasis on different categories like sheep and goat milk) they have made the shopping of the “chosen 300” bearable.
In these habitual shopping patterns, the grocery shoppers are actually resembling the cashiers who absent-mindedly pass the products over the code readers. Logically, the cashiers are fast substituted by the self-checkout machines. But if it continues like this – who will substitute the shoppers?
BRING BACK THE EXPERIENCE
In this environment where the minds of the customers, us, all, have been changed already – it’s the time for bringing back the experience and reformat the physical spaces. Eataly with its food hall and stalls concept definitely sets the trend in a new direction. If you want to show the new face of the retail you shouldn’t miss that.