This feature illustrates the money-spending effects of the following retail environments: Coffee shop, Supermarket, Clothing boutique, Car boot sale and Online shop.
What makes us spend?
Select from the images below to explore the ways in which shops make us part with our money.
A home from home
Coffee shops often aim to create a home-like environment. You will find an arrangement of upholstered sofas and chairs and, in the chain coffee shops, these are often offered in 'chocolatey'-coloured leather-effect washable material. Wood panelling hints at the dark interiors of 18th Century coffee houses and wooden flooring completes the look. Trendy independent coffee shops may have distressed or bric à brac furniture, stripped pale floors and quirky ornaments. Clusters of sofas, armchairs and low coffee tables create intimate spaces for larger family-like groups. Very often these are visible from the street to entice customers in.
However, coffee shops have to strike a balance between making it attractive to linger and the need for a fast turnover, so that they can sell more coffee per person. Lounge areas will be therefore be balanced by small café tables and less comfortable seats for one or two people. Other domestic touches are free newspapers, to convey the generosity of the owner; and the works of local artists on the walls to convey a community spirit.
At some time you may have been given a ‘loyalty’ card which is stamped by a cashier to encourage repeat custom. Sometimes you will receive a free coffee or cake for collecting a certain number of stamps. But at least two big high street coffee brands have decided to move away from the cardboard stamp system and towards the plastic electronic loyalty cards akin to supermarkets. To obtain one, you will need to provide identifying details, such as your email address, so that you can ‘benefit from special offers’ and be sent vouchers and so on. This is a great way for the shop to bombard you with marketing offers, reminding you of their brand and to help you form the view that you are a loyal customer who will want to return.
But where is the balance between the rewards offered to customers and the use the company makes of your data to increase their profitability? A recent test case showed that the coffee stamp card gives you proportionately five times the saving as a plastic loyalty card. Loyalty cards can make you feel as though you are getting a discount, but you may often save more money by shopping around to see if you can get a coffee for less than the tiny reduction the loyalty scheme gives on each cup.
A place to work
Coffee shops have adapted themselves to the needs of those who ‘work from home’ or need a temporary office away from home. They are also attractive to those who are travelling and need access to email or the internet. The availability of plug sockets for laptops and mobile devices as well as free wifi encourages people to remain longer and creates an alternative environment to the office or home. You will find people holding meetings in their local coffee shop as a way of legitimately being able to leave the office but remain at work - and with better coffee than they can get from the kettle in their own office! Coffee shops may be part of a culture where the boundary between leisure and work is less obvious.
A feast for the senses
Prominently placed, shiny Italian-made coffee-making machines create noise and steam and, together with the clattering of crockery, suggest the presence of a busy and efficient service. At the same time it creats an atmosphere reminiscent of an Italian cafe. Depending on the kind of shop it is, a background soundtrack, perhaps of Jazz music, encourages customers to imagine themselves as participants in a scene of mellow urban sophistication. There are no televisions or screens in these environments, unlike pubs.
Creating a brand identity for the shop means that owners have to do much more than think about making coffee and selling it. The building blocks of the brand are in all the small details: the logo, menus, counter furniture, lighting, service style, range of products and so on. You queue up to order and pay for your coffee, being forced to pass a counter full of tempting snacks and cakes. You can also buy the shop’s own coffee beans, ground coffee, branded mugs and other paraphernalia but often these are placed away from the queuing area to encourage free browsing. In this way, you are being encouraged to take a bit of the identity of the coffee shop away with you and into your own home.
Aroma and Authenticity
Freshly baked bread is an example of an essential everyday item that is often placed at the rear of the store. You need to walk through many enticing aisles in order to reach it! However, you may wonder how the smell could be so strong especially when the bread is cold, and there is no sign of recent baking in the oven area. Supermarkets have found a way of venting desirable smells, directing them through the store using the air conditioning system. This recirculates air from the baking section into the shopping aisles. In fact, most supermarket bread (despite being marketed as ‘just baked’) is cooked weeks or months before in a factory miles away. It is then sent frozen to be re-heated in the ‘in-store’ bakery.
Have you ever noticed that some shops give place names to their food stuffs? Like the use of baking smells to suggest the presence of a real baker, these names are designed to make us think the food we buy comes from an identifiable and specific location. This, in turn, makes us feel that the food is personally produced rather than being the product of an industrial process. However, Tesco’s ‘Willow Farm’ chicken gets its chicken from all over the UK, and M&S’s ‘lochmuir’ salmon does not come from a special farm on a Scottish loch but from farms all over Scotland. These often 'rural' and 'nature-related' names are brandnames for products built on fictitious places.
Product layout and pricing
You will often find low-cost products, such as sweets and magazines, neatly displayed by till points. Magazines are attractive if you are bored from waiting in a queue, and if you are about to spend £100 on groceries, a few more pounds may seem negligible. The most profitable brands are placed at eye level (or children's eye level if they're targeted at them). However, profitable goods tend not to be the best deals. Supermarkets know that shoppers form their impression of whether a chain offers good value on a few staples, such as bread or milk or apples. Those ‘price-sensitive’ lines appear cheap and pull you into the store, often in the belief that everything else is equally as cheap. But supermarkets hike up the prices on other items, operating an internal subsidy. So, the price of specialist bread will be much higher while the standard white loaf will remain low in price. This will also fluctuate within shops in the same chain – supermarkets are allowed to use ‘dynamic pricing’ so that they will charge more where they can get away with it. For example, ciabatta bread may cost more in a Chelsea branch of Tesco than in Clacton!
Supermarkets love to put organic and fair trade products on their shelves as these items retail for a premium price. Supermarkets expect to make a profit margin of at least 36% on anything they sell, the higher the price the more profit they make. The placement of products is not random, it has been thought through by market researchers, accountants, interior designers and psychologists. Ever wondered why fruit, vegetables and flowers are by the entrance? It’s supposed to make (particularly) female customers feel healthy and wholesome – if they stock up on this first then they won’t feel guilty about buying the less healthy stuff later. Big name brands are positioned in the middle of aisles so that you have to pass everything else on your way, and likewise ‘destination’ goods such as milk and eggs are often hidden at the back of the shop.
In almost every supermarket you will see signs – often red or orange and on a ‘gondola end’ – advertising multibuys such as ‘3 for the price of 2’ or ‘buy one get one free’. Sometimes you will find ‘special promotions’ advertised through the use of '£1' stickers on products. Under the Consumer Protection from Unfair Trading Regulations Act, the lower price sale should not last longer than the time the higher price was available. But there is plenty of evidence that supermarkets regularly flout this. Do you have the time and commitment as a consumer to play the supermarket game? Can you become knowledgeable about the price over time of products so you can avoid being out of pocket?
Whether discounts are really a bargain depends on whether you know the normal price of these goods. Supermarkets use arbitrary pack sizes so it can be difficult to tell if the pack size has been reduced. This can result in you paying the same price by weight as before while thinking you have bought yourself a bargain.
Some shops are using ‘discounts’ to ease in and mask inflationary price rises; that is, the brands return at a higher price once the promotion draws to an end. In general, sales goods are often poorly organised, with unclear pricing and layout. This presents a barrier to customers who would ideally want to spend time working out if there are real benefits to buying them. They are more likely to impulse buy and just take the signs for granted rather than investigate further.
The shopping trolley or cart allows you to move large quantities – up to 240 litres – of consumer goods from store shelves to checkout to the boot of your car. Trolleys belong to the era of self-service shopping, which the supermarket invented. Rather than relying on the product expertise of the grocer salesperson, information is communicated via the product itself, in the words and colours of its packaging, branding and display. With the elimination of the counter and the free movement of customers along aisles and shelves, the amount that was bought began to increase. Trolleys created new consumer habits, encouraging you to think of a ‘weekly’ rather than ‘daily’ shop. Perhaps the trolley has something to do with the fact that a staggering 40% of all food in the UK is thrown out uneaten, as we end up buying far more than we actually need.
Baskets were first given to self-service shoppers in the 1920s, but shopkeepers noticed the constraint that the size of the basket put on the volume of purchases. One shopkeeper’s early solution to this was to offer the customer a second basket while keeping the first behind the counter. In the 1930s, the trolley was invented and became, after a few hiccups, wildly successful. Store owners had to use pretend customers to walk the floors with the trolleys because shoppers were resistant at first. Women thought that the trolleys were like prams, another thing to push around; whereas men felt it emasculating to rely on wheels rather than carry their shopping.
There were earlier, unsuccessful attempts at creating wheeled containers, such as a store in the US that had a raised track fitted with rails which ran along the shelves, carrying baskets with tiny wheels. However, shoppers were forced to walk down the aisles following the tracks, often moving at the same pace as their neighbour. More like the car than the train, the modern shopping trolley allows full mobility for the shopper to work the shelves at his or her own pace, as an individual.
Supermarkets often play soft tempo music with no vocals, so there is no distraction from lyrics. You will have noticed a seasonal dimension throughout the year, for example, from mid-November onwards, Christmas songs are played continuously. Despite many complaining that this ‘drives them mad’ when shopping at Christmastime, all the evidence points to the desired outcome - inducing such madness by creating a frenzied shopping atmosphere that typically results in good sales. The hypnotically regular beats and circuitous tunes of Christmas pop songs played at high volume excites the flow of adrenaline, raising the speed of the heartbeat, and producing a 'flight or fight' syndrome. Therefore, music is a key contributor to the consumer aggressiveness that is Christmas shopping. It tempts people to depart from their shopping lists and lose their normal sense of self-control.
Music was first made available in shops in 1920s US where a way of piping music into shops using a telephone system was devised by a company that became the Muzak Corporation, now known as Mood Music. The company had psychologists and musical experts on their staff and discovered that specific types of music have psychological effects: slower, more relaxed music makes people slow down and browse for longer. They also discovered that when shops play French music, sales of French wines rise and when they pipe German music, shoppers buy more German wines. The term ‘musak’ though once a brand has now become a generic noun to describe any background music that is ‘easy listening’. It has a simple melody so that it can be unobtrusively looped back to the beginning. A key feature of musak is that it appears to come from no one source. It feels as if it's coming at you from every direction; no one seems to control it or has any responsibility for it. This is unlike other shops where it is important for the brand that the shop assistants express their own individuality through music.
Have you ever reflected on how you relate to shop assistants in different kinds of clothing shops? When you enter high-end clothing boutiques, you are likely to be welcomed and asked whether you need any help. Assistants really are acting as assistants to the customer, and are not there to simply stock the shelves, or stand in rows behind a large counter (as is common in some larger chain stores). Assistants appear to be almost as interested as you are in finding that illusive item you’ve been searching for, and will encourage you to try on clothes as soon as possible. They will demonstrate their knowledge of the clothes, how they reflect current trends or how they represent an innovation in the shop’s own clothing lines; that is, the materials they are made from and how you can put clothes together to make an outfit.
It is hard not to try on clothing once you have established a relationship with the assistant who appears to have invested him- or herself in your clothing decisions. And you are one major step along the process towards making a purchase if you can proceed to the changing room.
Displays and interior decor
The boutique as a whole – its layout, lighting, use of furniture and display methods – creates a distinct image and personality for the product and an identity for the customer. Boutiques typically convey a feeling of spaciousness and sense of luxury. They do this by adopting a free-form layout so that customers meander around the perimeter of the shop – the whole store can easily be viewed as one space. This is in contrast to the cluttered ‘pile them high’ approach of the larger chains, with their many aisles of densely packed clothing that emphasises huge quantity and choice of styles to suit different kinds of people. While national chain stores are about low price, achieved through bulk buying and spending as little as possible on ‘extras’ like interior décor, boutiques need to impress you with the high quality of their finely selected clothes. Often, each garment in a high-end boutique has had far more labour expended on it and is made of superior quality textiles. You are addressed as a discerning customer who knows why you have chosen this shop and the items it specialises in. So it is assumed you don’t need to be presented with the large range of the chains.
The impression of personally chosen items for display is conveyed by making most of the clothing visible, and displaying it in unique ways. No standardised lines of deep racks used here; rather, sweaters might be folded and stacked on an antique mahogany desk. A retro light might stand on a side table next to a long mirror, to mimic your bedroom at home where you will dress for that special night out. A dresser might have its top drawer open wide to show smaller products, such as accessories. Comfortable, deep chairs allow you or friends to linger or rest. The place where sales transactions take place is often discrete so there is no imposing ‘shop counter’. Instead, a desk or an antique chest of drawers in keeping with the shop style is used. It’s all about creating a relaxed and intimate mood so that the buyer perceives unique added values.
Shop assistants' clothing
Shop assistants present themselves as individuals; there are no identical uniforms as there are in the larger chains. While they may wear clothing of their own choice (in keeping with the shop’s brand), it is more likely that they will wear the shop’s own clothes. Their clothing will however be muted and not extreme; they are not expressing themselves, so much as the values of the shop. This gives them some authenticity when dealing with their customers as they are walking manikins, demonstrating the clothes to their aspirant customers.
Assistants who have the wrong accent and body size, or who are the wrong age (whether too young or old) are likely to be filtered out in the applicant process because they need to be able to match the demographic and self-image of their target customer. This is not so important in the chain shops where the relationship between the customer and the shop assistant is not critical to the brand or to the ability to sell merchandise.
In larger chain stores there is often a shop assistant who gate keeps the changing room, checking how many items you have and issues you with a plastic sign. On the whole they will not help you with any kind of personal service, such as fetching different sizes. Boutiques operate very differently. You are expected to try on your highly expensive purchases, so the changing room is designed as a 'proper' room, which is easily visible from the main shop area. Large boudoir-like changing rooms circle around a main room area with sofas and armchairs for friends or family and multi-mirrors. This contributes to a womb-like and relaxing atmosphere. In very expensive boutiques, there will be a personal assistant on hand for each customer who will make suggestions or collect clothes so that the customer does not have to leave the changing room. Lighting will be as naturalistic as possible – no fluorescent lights, no green- or yellow-toned lighting as it doesn’t flatter. Flooring will be ‘natural’ or ‘luxurious’ – either carpet or wood flooring, not the linoleum or harsh tiles of the chain shops.
Some boutiques play no music as it is considered at odds with the need to establish a quieter, refined environment. However, if there is music it will not be ‘musak’ invisibly piped through the shop, but carefully chosen and targeted to the demographics of the shop's customers. There might be a high-quality hi-fi system in the corner of the room so that it comes from one identifiable source. The music is low though, so as not to interfere with the need for customers to communicate with the shop assistants. The kind of music chosen in upmarket clothing boutiques will be used to create a feeling of sophistication and relaxation. It will not be fast tempo; it may be classical but not ‘difficult’; if popular music it won’t be chart music, but mellow, slightly romantic-style female vocalists such as Dido.
Car boot sale
Selling in bundles
Often, stall holders will sell large bundles or groups of things for one price; for example, 10 pence for one bag of mixed items or a basket of different items all priced the same. This may reflect the fact that the vendor sources a lot of his or her merchandise from one place, including taking on some much cheaper items as part of a deal. Selling lots of things cheaply at the front of the stall creates a sense of generosity and entices the customer in.
Haggling with stall holders
For the customer, the car boot has a less anonymous, more social atmosphere. There are no extra or hidden costs such as marketing, advertising or packaging. The transactions are not formal and the prices are fluid, so it is entirely up to the stall holder what he or she sells and at what price. Negotiating with customers emphasises the importance of the relationship with stall holders. Many participants feel the need for a ‘bargain’ and will make a point never to pay the asking price. Prices may fluctuate over the course of a session and deflate towards the end of the day.
Positioning of goods
Plentiful toys and very cheap items placed at or near ground level can easily attract children to the stall. And where the children go, the parents often follow.
Savvy stall holders and canny customers
At car boot sales you see a diversity of goods including ‘new/unused’ branded goods, such as toothbrushes and shampoo. The latter will only sell if the asking price is lower than the retail price – shoppers know how much these items cost in the shops and will not pay the same in a car boot context. Accordingly, vendors will have very tight mark-ups and a bottom price beyond which they will not go.
Some vendors may specialise or sell collectable items, for example guitars, tools or retro furniture, and provide useful information about the item that is ‘added value’ for the purchaser.
The fun of the unexpected
Going to a car boot is not like buying in a shop. It has the thrill of the unexpected – customers go with the anticipation of finding a bargain and a chance psychologically to sidestep shop prices. But, at the same time, they don’t know in advance what exactly they will come find, if anything. It has a childish, treasure-hunt aspect. Barriers to entry are low; anyone can be a vendor and a great many stall holders are regulars and get to know each other over the years. Stall holders are also often obsessive car boot buyers, buying up the merchandise of other stall holders to sell on at a lower price. This is a cash-only economy, with no credit cards.
'Add to basket'
Is virtual shopping anything like shopping in a physical shop? This ‘Add to basket’ function allows the customer to take a serious step towards buying, without ultimate commitment. As long as you have created a login username and password, you can pursue many separate browsing episodes that result in you putting items in your basket. Plus, the system remembers your selection for when you return and login again. In this way, virtual shopping was invented as an environment that would mimic being in a physical shop. It creates a staged approach to commitment, putting items in your basket one at a time. However, you can easily remove them if you change your mind before you get to the checkout.
In the early days of e-commerce, companies such as Amazon had ‘point-of-action assurances’ to reinforce the idea that ‘adding to basket’ did not mean you were at the point of no return - ‘you can always remove it later’. Later on, Amazon and other companies downgraded the ‘Add to basket’ step so that now the ‘buy straightaway’ option is equally visible.
Have you noticed how easy it is to purchase items online? Payment options include those that are instantaneous and require minimal effort on behalf of the customer. Amazon developed the first ‘one-click’ payment: by storing your payment card details, if you are logged into the website you do not need to re-enter them. This concept has reached its zenith in PayPal, a global online money transfer and payment company which is available in 103 countries and 16 currencies.
In 2002, eBay bought PayPal and has over one million users. Now 90% of sellers state that they prefer you to pay with PayPal as well as making it the default payment option. Free to the buyer, once you set up your PayPal account, you can make secure payments from a variety of sources (credit card or bank account) to a variety of recipients (such as eBay, online stores or your landlord) without sharing your financial information. The recipient never sees your account number or banking information and once you have entered those details to PayPal, you don’t need ever to re-enter them. PayPal brought about a speedier process in which there is less time to stop and reconsider, and where there is hardly any time lag between wanting something and having it.
Embedded marketing is a way of customising and personalising your shopping experience through tailored recommendations. The items on offer appear to be chosen just for you based on some knowledge of your shopping preferences. It’s called ‘embedded’ as they are not a separate adverts, but a method of building into your shopping process a relationship to you and your online customer history. In this way, companies such as Amazon proactively encourage customers in a further purchase when they next login.
These recommendations also show you what other customers who bought the same products as you went on to purchase. This makes you feel you are part of a social community, a network of people with shared tastes and similar minds.
Online supermarkets automatically create a shopping list with items that reappear, based on what you routinely bought before – milk, bread and so on. That way, your time and effort is reduced and you are relieved from the burden of having to make so many decisions about what to buy.
The most effective use and placement of adverts have been thoroughly researched by marketing companies. Examples include a pop-up you have to click on to close before proceeding, or an animated banner advert you need to click on to view. The ‘click-through’ rate, the amount of times someone actually clicks on a banner advert – the most widely used measure of online advertising effectiveness – has declined rapidly. But research shows that adverts can have an impact on consumers even if they don’t click through. You may not remember seeing the advert but familiarisation with it over time creates a more positive attitude to the product afterwards – is called the ‘mere exposure’ effect.
There are a number of systematic methods by which advertisers implement online targeting. One ‘static’ approach places adverts related to the content types of web pages. For example, in the banner space at the top of a financial services web page you will find adverts relating to financial products such as loans – regardless of who is using the page. But it is the dynamic targeting methods that are becoming increasingly used. These use information about an individual customer’s online browsing behaviour collected via data analytics. One such method is ‘user profile-based targeting’ which uses your profiles, such as membership information, subscription data and online survey results to select the adverts for an online user. So, if the data held about you indicates you live in Ibitha, when you surf the net you won’t see any adverts for fur coats!
Another method is ‘behavioural’ targeting based on user real-time behaviour, which companies placing adverts on Yahoo and Google will pay for. For the user, it means that adverts will come onto your screen tailored for you, based on a personalised profile the system has created of your interests from a variety of sources – prior search results, expressed interests, demographic and geographic information. For example, if you have previously used a search engine to find clothing from an online shop, when you next conduct a search into something quite different, you will find related products from that shop placed next to your search results.
Facebook and other social network sites are now partnering with data vendors to match data from consumer loyalty programmes (e.g. Tesco Clubcard or Nectar) with their own Facebook user profiles in order to target adverts by offline purchase habits. Email addresses or other membership information can be matched with the information in users’ Facebook accounts.
Review the brand
Have you ever posted a review of a product or service on a shop’s website, or been influenced by a review you’ve read? Shops opting for this kind of ‘user generated content’ are conveying the grown up relationship they have with their customers. You are encouraged freely and independently to express your views of a product. You find this function especially in online clothing stores, where reviewers supply a service to other customers by giving valuable customer advice about things like sizing accuracy or a good customer services department. Whether or not the reviews are good, the culture of reviewing helps to make a brand come over as honest. It acts counter-factually to the marketing. Studies have shown that consumer recommendations are the most trusted form of advertising.
n some online shops customers can also rate the reviews as to whether they are useful or not. At Amazon, reviewers are honoured for the ‘help’ they have given other Amazon customers via a peer-ranking system that awards them a yearly Hall of Fame recognition and a badge.
The series that inspired this feature
The series that lays bare the secrets of why we buy what we buy. Read more: OU on the BBC: The Men Who Made Us Spend