Why We Buy (22 page)

Clothing retailers have learned a trick or two about placing goods on display without allowing them to be abused in the process. Let's go back to that beautiful Armani store on Madison Avenue, for instance. You've got shoppers whose hands have been who knows where, and they're groping costly Italian adornments like they already own them. Would you feel at ease knowing how many fingers have already had their way with your suit sleeve? Here's one strategy: If a suit comes in several colors, the store will place the dark shades down where they can be reached easily and display the beiges and pale grays and off-whites up high, where they can be seen but not touched. If a sweater displayed on a table comes in several shades, you'll always find the lighter ones on the bottom and the dark on top, where they'll be rubbed and grubbed, but who will know?

 

Selling is the main reason for making merchandise as available as possible to shoppers. But it's not the only one—there's also selling up. If you have no real basis for comparing one product to another, the normal instinct is to buy what's cheaper. But if a store sets itself up to educate shoppers, even just a little, a certain number of them will spend more than what is absolutely necessary. If given a choice of three brands, or three models, and given the chance to pit one against the others, the
shopper will at least have a sensible reason for choosing the better item.

This is an issue for just about every product we've mentioned so far—men's underwear and coffee and stereo headphones and sweaters and skin cream etc. In mattress stores, too. There, typically, you find a whole field of undressed beds awaiting inspection. Some are cheaper than others, but it's just as expensive to stock and maintain the $1,500 mattress as it is the $4,000 one. So if you can get just one customer in five to start out trying the cheap number and work up to a better one, you're doing pretty well.

And how, aside from trial, can that be made to happen? Clearly, no other way. And the beds are all out there, ready for you to recline, isn't that right? Well, kind of. You really need to feel comfortable to try out a mattress. It's a vulnerable position to take in such a public space, in front of strangers. You may even wish you didn't have to lie down while the salesman stands there, looming over you. (He, of course, is afraid that if he backs off five feet and stops sending you telepathic “Buy this mattress now!” messages, you won't purchase anything.) And you're on a mattress that has been helpfully positioned in the front of the store, where your supine form can be seen easily through the front window, and where, if you are a woman in a dress or skirt, your modesty will be severely tested. How much worse can this experience be made? How about no sheets on the bed, so you never even see how it will feel if and when you get it home, and no pillow either, so you get no idea of the comfort this baby will (or will not) provide?

It seems that if the better mattresses were positioned away from public view, maybe even partly partitioned, to give the experience a little of the feel of a dressing room, maybe shoppers would be encouraged to upgrade their bedding desires. More thought is given to the trial experience when you're buying a pair of $40 jeans than when you're buying a $4,000 mattress. We did a study of mattress retailing, during which we asked a manager whether pillows of various thicknesses and firmness could be provided, along with freshly laundered pillowcases, for mattress try-outs.

“But we don't
sell
pillows,” was his flat rejection of the idea. Never mind that pillows have a much higher margin than mattresses even, or
that selling pillows was a way of adding on accessories to a product that had few opportunities for such novelties.

Similarly, at AT&T phone stores, the focus was on selling the main product; almost as an afterthought, they sold a dopey little item called the SoftTalk phone holder. It was a soft plastic cradle designed to make it more comfortable to keep your phone jammed between your neck and shoulder. The thing didn't look like much of anything, but once you tried it you learned that it was ingenious and truly effective. Without trying it, however, it looked pointless, and because none were on display there was no easy way to actually try it, and thanks to the sales staff's lack of effort nobody ever did. Sure, it was only a $5 or so item, but the margin on it, as with most accessories, was obscenely high—the most profitable thing in the joint. We computed that if every third customer bought one, the profit would cover a store's monthly rent.

Another glaring example is wireless services, where customers can compare the costs of handsets and services online. It is a very competitive market where margins are small and where the money is made by selling accessories, from ringtones to carrying cases. Best Buy, for example, has struck a deal with Liz Claiborne to develop slick cell phone and laptop cases. At one recent store opening, they staged a fashion show exhibiting carrying cases for phones, computers and digital cameras. None of them were cheap. Great idea. I just wish they'd been smart enough to realize that if you want to sell high-priced laptop bags, you also need mirrors. In Japan you can “tattoo” your phone or iPod—you pick out the skin and for about $40, someone carefully applies the decal to cover your phone. Add to that spare batteries, a charger for your car and a hands-free device, and the transaction is that much more profitable.

There's one final issue regarding the sensory and tactile nature of shopping. Oddly, it involves letting shoppers know that it's
all right
for them to touch. At Hallmark stores we studied, some front-end Christmas ornament displays were so artfully designed and painstakingly constructed that shoppers didn't know if they were supposed to take or just gaze adoringly. Bookstores, too, sometimes run into the same problem when tabletop displays show a little too much effort. People know how hard it is to get anything looking nice, so they can be reluctant to undo
somebody's hard work. We ran into this while helping Einstein Bros. Bagels test-drive a prototype restaurant in Utah, of all places. A brilliantly anomalous decision, by the way, inventing a new way to sell bagels in a place where there is no bagel culture to speak of—if you can get it working there, it'll work anywhere. At this store, a wall rack holding bags of variously flavored bagel chips was positioned so that customers standing in line to pay would be able to reach out and grab something on impulse. The problem was that the bags were stocked so neatly, and with such an orderly eye, that customers were never quite sure if they were meant to touch the thing. The solution was to have an employee come out every so often and mess the shelves up, pull a few bags out so there would be obvious gaps.
Then
the customers touched. (People are awfully polite in Utah, aren't they?) Actually, the clerks would create a total sensory experience by grabbing a bag, ripping it open and proffering it to those waiting in line, as a way to introduce the locals to the wonders of jalapeno-cheddar whole wheat bagel chips. Which may sound like a joke, but don't laugh until you've tried them.

I
've got a brilliant idea: Let's save money! We're in charge of merchandising and display for a chain of stores here, so let's make an executive decision to replace our expensive old wooden shelving with a cheaper new wire grid system. The difference in cost goes directly to the bottom line. There. Done. Next?

What? Oh. Well, look at that. Yikes. Who knew? The wire shelving seemed perfectly beautiful and functional—until actual product was placed on it. At that point (or minutes after, I should say) the main drawback to the wire grid became clear: Every time a customer touches something, it tilts. Sometimes, to be honest, nobody touches a thing and it tilts. I think the damn boxes may be tilting each other. And you look down the long expanse of wire grids and every fourth or fifth thing has tipped, and it looks like hell, I'll be the first to agree, so somebody needs to go straighten it. The boys over in Operations are screaming like wet chimps: We're now paying people $8.00 an hour to straighten boxes. On a busy Saturday night, as the lines grow long, we're talking an hour or
more per store of wasted labor. How many stores? How many hours? How much did we save? Uh-oh.

And that's not a hypothetical scenario, either—it's verbatim from the Envirosell playbook. It illustrates one of the most important principles of shopping. Retailing 101 starts with the notion that a store has three distinct aspects: design (meaning the premises), merchandising (whatever you put in them) and operations (whatever employees do). These Big Three, while seemingly separate, are in fact completely and totally intertwined, interrelated and interdependent, meaning that when somebody makes a decision regarding one, a decision has been made about the other two as well. In this particular instance, the mistake was one that's made all the time: Display designers never go into stores to see their creations in action, so they don't have a firm grip on what happens in the real world. The larger lesson here is that if one of the Big Three is strengthened, it takes some of the pressure off the others. If one is weakened, it shifts a greater burden onto the remaining two. This is not a good thing or a bad thing—it just is. It's the geometry that rules the shopping universe.

Here's an example. The Gap's trademark is that you can easily touch, stroke, unfold and otherwise examine at close range everything on the selling floor. A lot of sweaters and shirts are sold thanks to the decision to foster intimate contact between shopper and goods. Obviously, that merchandising policy dictates the display scheme (wide, flat tabletops, which are easier to shop than racks or shelves). But it also determines how and where employees will spend their time. All that touching means that sweaters and shirts constantly need to be refolded and straightened and neatened. That translates into the need for lots of clerks roaming the floor rather than standing behind the counter ringing up sales. Which is a big expense, but for the Gap, it's a sound investment—the cost of doing business. The main thing here is that it was a conscious decision.

Sometimes it's not a decision so much as a response to a fact of life. Revlon's merchandising must work in a variety of settings—mass merchandisers, cosmetics specialty stores and drugstores. In the latter,
typically, the aisles are narrow and jammed with stuff. Because of that design reality, the dreaded butt-brush factor—the fact that women don't like to be bumped from behind while shopping—comes into play. Revlon's drugstore merchandising must be clear, bold and direct, so that women can spot the brand name, find what they're looking for and be on their way as quickly as possible. If the signage and displays were more subtle or oblique, those women would have been butt-brushed out of the aisle before they chose a single thing. This issue comes up all the time because the people who design packaging and merchandising materials don't spend enough time in stores, visiting their creations where they live. For instance: We all know that college-educated shoppers tend to read everything that's printed on a package. That's how they prefer to info-load before deciding whether to buy. So a company selling herbal remedies should instruct its package designers to incorporate a fair amount of text on those bottles. The designer follows orders. But small type is hard to read for older shoppers, who are a prime market for vitamins and herbal supplements. And these products tend to sell well in drugstores, where aisles typically are narrow, which discourages shoppers from reading any package for very long. That's how a good decision (adding more information to a package) results in a not so good effect (no one can read it). In Chapter 17, I'll explain a potential solution to the small-type issue.

The point here is that whenever a decision is made, it should be examined closely for all its farthest-reaching implications. In real life, however, it doesn't often happen that way. It doesn't happen in small firms, where a few people are run ragged making all the decisions. And it especially doesn't happen in big firms. Frequently, we'll go into some company's conference room to deliver our findings, and chiefs of Store Design, Merchandising and Operations will be present. Sometimes, it's clear that they barely know each other. They may even be based in different cities. The suspicion, hostility and turf-warring can actually seem palpable. The executives either don't know what the others are doing or don't care to know. As a result, a lot of shortsighted decisions get made.

Here's a good example. In a big, famous department store, the boss
of ladies' shoes decided that he needed more display space and that he'd get it by shrinking the register area. As a result, the clerks who once used the counter for bagging had to start placing the bags on the floor and lowering the shoes in. This added several steps to the process and made ringing up sales more arduous for the clerks, who usually wore pretty fancy shoes themselves. By the end of a day these women were hurting and dragging—and a little bitter, understandably. As part of our research we trained video cameras on the register and then, back at the office, we timed transactions with a stopwatch; at 4:30 p.m., it took almost twice as long to ring up a sale as it did at 11:00 a.m. Shrinking the counter space also added to the general clutter, making transactions less crisp. The overall result was that a mild improvement in merchandising required a change in design, which hurt operations quite a bit. In order to show off a few more shoes (like maybe a dozen pairs), transaction time grew longer, customer patience grew thin and employee energy and morale grew short. Considering that employees sell shoes better than any display, this was a very bad decision—all because someone who should have known better forgot that when you change one thing, everything changes.

Another client, a video chain, made some interesting decisions about how its stores would look. The dominant color would be a deep burgundy. And the lighting motif would be rows of lightbulbs, such as movie marquees once employed. It all looked good on the drawing board, maybe, but then real life happened. The burgundy kept getting scuffed and dented and chipped, meaning the store got dingy-looking fast, meaning the painters were spending an awful lot of time on the premises doing touch-ups. That's usually the fate of any surface painted a rich, dark shade—every scuff shows. Also, the dark walls and display racks required quite a bit more illumination than off-white would have needed. Which was expensive just for the electricity, nevermind the fact that all those lightbulbs had the habit of burning out, which meant they had to be replaced at once or risk looking like something from Times Square—the old Times Square. In the end, bad design decisions added quite a bit to the chain's overhead and maintenance, which came right out of the bottom line.

Relations between the three aspects of retail are under a fair amount of stress today for one main reason: Most North American businesses are constantly looking to save money on labor. From the businessperson's point of view, this falls under the heading of operations. From the shopper's perspective, it means service. Retailers try to maintain service while cutting labor, which is usually impossible to do. Back when stores were properly staffed and employees were encouraged to stay in their jobs and learn their business, the demands on design and merchandising were few and simple. A store could even be cluttered and disorganized, because there was always a clerk available to help, and he or she always knew where everything was kept.

Today, when many retailers underpay and undervalue their sales staff, the opposite is true. The burden falls on design and merchandising, which are sometimes up to the job, but not always. For example, retailers try to make up for staff cuts by using interactive computerized fixtures to answer shoppers' questions. The only problem is that the fixtures are frequently badly designed—they're confusing, or don't answer questions fully, or are so slow that you'd think they stopped working. So what do shoppers do? We've seen lots of them give up and walk away grumbling. Some just grab a salesclerk and drag him or her over to figure out how to use the thing. That's some labor-saving device.

At a department store we studied, the beleaguered staff saved time by overstocking the fixtures—jamming more clothes onto the racks than they could comfortably handle. Some shoppers didn't even bother trying to extricate garments, it was such a struggle. Customers who did wrestle a hanger out invariably pulled other garments along with it, dragging them to the floor. And whose job was it to pick them up, dust them off and rehang them? The time saved by overstocking was wasted in maintenance. Even worse, while the clothes lay on the floor no shopper would touch them. You should have seen the lingerie section—would anyone buy underwear off the floor?

But it is possible to use design and merchandising to save operations some work. One example comes from the United States Postal Service. A few years ago we tested prototypes for their new post offices. In one
of the “stores,” the self-serve section—you buy stamps and envelopes from machines, weigh your own packages and apply your own postage—was positioned beyond the traditional counters staffed by postal workers. In another configuration, the self-serve was right inside the entrance, beyond which were the counters. The first store had a fairly low rate of self-serve; people who were used to dealing with clerks just got in line and never saw the machines in back. The second prototype had a much higher self-serve use—customers would enter fully intending to stand in the teller lines, then see people quickly taking care of things on their own. Banks find the same pattern—if ATMs and automatic deposit machines are in view of the teller lines, full-service customers “migrate” over to the automated side.

The second example comes from a giant drugstore chain. Pharmacies have changed a lot in the past two decades, but one thing remains constant: the large burden on staff to stock all those little bottles, jars and boxes in perfectly straight rows in aisle after aisle of shelving. Every time a customer picks something up to read the label, you're guaranteed that the thing needs to be straightened or turned so it faces front. It's a lot of work. Not long ago, Wal-Mart tried an experiment: It began replacing traditional shelves with a system of bins. Instead of a shelf facing of six little aspirin bottles, say, the shopper would see a blow-up of the aspirin label. Under that blowup was the bin, into which the aspirin bottles had been dumped.

This made an enormous difference. First, it solved the problem of stocking—a clerk could just roll a trolley of merchandise to the aisle, open the bin, dump in the goods and move on. No more straight lines. The shoppers liked it better, too—instead of facing a row of bottles with tiny print, they saw a large, easy-to-read version of the label. It was much easier on the eyes, especially for older shoppers, who carry a lot of weight in drugstores, as you can imagine. Wal-Mart's main concern in making the change was whether shoppers would perceive the bins as being somehow cheaper and lower in quality than the shelves. In fact, just the opposite was true—shoppers interviewed said they thought the bins were an upgraded display system. A very elegant solution. The next
problem was who would pay for the new system—the store chain or the vendors whose product was being sold? A big fight ensued and the system wasn't implemented. Two years after we did the study I saw the identical system used with great success in Auchan, the French hypermarket chain.