Impulse Items

This post originally appeared at Mine Your Own Business on October 23, 2006.
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We all know that grocery stores love to put high-margin impulse items near the cash register.  They know that, while you’re waiting in line, you’ll keep your mind occupied by looking over the merchandise that’s right there in front of you.  Most of us will be tempted by something, if not every time, at least enough times to pay for the shelf space. (Isn’t it ironic that the slower the service is, the longer you have to stand there and, up to a point, the more you’re likely to buy?)

This same psychology is used throughout the store.  The most profitable items are always located at eye-level, with the less profitable ones near the floor.  The higher profit may be in the form of larger margins, or it may be in the form of rebates from the manufacturer for the prime spots.  A successful grocery store will never put staple items like milk and bread in the front of the store.  Intense competition on these items makes them very low-margin.  If you’re going to buy them, you’re going to have to walk past other, more profitable areas of the store, much like the Las Vegas casinos make you walk past the slot machines to get to the cheap buffet.  There are many other ways that grocers, who work on razor-thin profits, use human nature to increase both sales and margins.

How about your store?  Have you studied your customers to see what areas of your store they naturally gravitate to?  If you haven’t, you should.  If you carry something that’s a staple, the equivalent of milk and bread, it should be at the back of the store.  High-margin accessory items should be displayed near the check-out just like the grocer’s candy bars and magazines.  This is also a good place to have an add-on item that the customer may not have considered buying when they came in.  And, in case they don’t have their glasses on, your staff should mention these add-ons to every customer.

I once managed an electronics store.  One year I had an opportunity to buy a pretty nice car ice scraper for 50 cents.  I marked them $1.99, stacked them by the cash registers, and paid my salesmen a quarter for every one that they sold.  We sold hundreds of ice scrapers that winter, at $1.24 profit each.  The customers were happy because they got a nice ice scraper that wouldn’t break off in their hand the first time they used it.  My salesmen were happy because they made an extra quarter, and sometimes more, on just about every sale (this was when a quarter was really worth a quarter) and my boss was happy because I was adding extra margin to almost every sale.

As we approach the busy Christmas season, it’s important that every square inch of your selling space generates the maximum amount of profit.  A little time spent analyzing customer traffic patterns and placing the most profitable items in the spots where they are most likely to sell could pay big dividends.

Dynamic Displays

Is your idea of an effective store display a stack of boxes with a sample item on top?  Does your sign shop consist of some 8 x 10 card stock and a black magic marker?  Do you light your store with whatever incandescent bulb happens to be on sale?   The last time you washed your store windows (outside and inside) did the Republicans have a majority in Congress?  If you answered "yes" to any of these questions, help is on the way.

Sharon Stevens and Betty Feather of the University of Missouri Extension Center have put together an excellent article, "Hometown Business:  Dynamic Displays."  The authors touch on every aspect of in-store merchandising from impulse item displays to the kind of lighting you use in your store. 

According to Stevens and Feather, there are five steps to making an effective display.  They are:

  • Attract attention
  • Arouse interest
  • Create desire
  • Win confidence
  • Motivate the purchase

Balance, emphasis, harmony, proportion, rhythm, and color all have an effect on how the consumer reacts to the merchandise in your store.  For example, some colors create a feeling of warmth, while others make the customer feel cool.  Strong, contrasting colors may attract attention to the display, rather than to the merchandise.  Lighter colors make a space look larger while darker colors have the opposite effect.

One area that we often overlook is lighting.  If they can’t see it, they won’t buy it.  Different types of lighting create different effects.  If the lighting outside your store is brighter than the lighting inside, glare on the windows may make it difficult to see in. 

One suggestion that I heartily agree with is this:  "When you consider your lighting needs, visit your local lighting retailer.  Ask about recent changes in the lighting industry, and look at what happens to color under different types of lighting." 

Those of you who are in the lighting industry will certainly support that statement.  There have been a lot of changes in lighting recently, with more on the way.  New types of lighting can make your store more visually attractive, and save energy and money at the same time.  If you’re in the business of presenting and selling merchandise, you owe it to yourself to illuminate your sales floor with the best lighting available.

Finally, the authors give some good advise on signs, including the use of color.  "Signs should look professional.  They must be clean and unblemished."  Excellent advise.

Don’t forget to check with your manufacturers for display materials.  Large signs, hang tags, and other materials available from your vendors at little or no cost will give your store a professional, uniform look.

By the way, don’t overlook your local university extension center as a source of information.  Most have web sites, similar to the University of Missouri (Go Tigers!), and also offer more personalized services.


Are You a “New Millenium Merchant”?

In previous posts, we’ve mentioned Bob Negen.  Bob and his wife Susan are what you might call retailing "gurus".  They have extensive experience in retailing, both at the chain level and at the "your-own-money-on-the-line", entrepreneurial, retail level.  Many of you have seen and heard Bob’s presentations at Baby Lock Tech and other industry events.

Bob and Susan have recently published a book called Marketing Your Retail Store in the Internet Age.

To quote from their web site, "This is not a rah-rah
motivational book filled with corny cliches, worn out platitudes, or
abstract theory coming from pedantic professors who have never spent a
day on the floor of a retail store. This book was developed by
retailers, for retailers."

I wouldn’t normally recommend a book before I’ve read it, but I’ve read enough of it to know that at less than $20.00, it’s a great investment.   I’m telling you about it now for two reasons.  One, it would make a great gift for anyone who’s in the retail business and you still have time to get it before Christmas.  Two, Bob and Susan are offering a bonus to anyone who orders the book before December 10, including a full year of WhizBang tips and several downloadable audio files.  For more information check out their web site.  Or, you can read two sample chapters here. 

Watch MYOB for a review of the book sometime next week.