Why We Buy

by Paco Underhill

  One hotel I visited had progressed to using small circular check-in islands in the lobby, where guest and clerk can sit side by side at the computer terminal. That’s a start, but some hotel is going to score huge points with business travelers by taking it further. Then there will be a check-in section of the lobby consisting of some comfortable easy chairs. When a clerk sees you sit there, she or he will come over with a portable, palm-sized computer, a credit card reader, a room key and your choice of beverage, and the paperwork will be handled in that civilized way.

  SIXTEEN

  Magic Acts

  In the science of shopping, to the extent to which there is magic, to the degree to which there are tricks, it’s mostly all in what we call merchandising. The rest of this book concerns itself with sensible subjects such as ergonomics, anatomy, kinetics and demographics. This chapter is all about getting products to jump up and hit shoppers in the eye.

  The world of merchandising breaks down into two distinct aspects. One is the effort to get products off the shelves, where they are forced to compete on equal footing with their competitors. Who wants to settle for that? So a great deal of effort and money is expended on finding ways of getting products out on their own. Shelves are fine for libraries, everyone agrees, but elsewhere they are to be avoided if at all possible. And in fact, in a bold move in the late 1970s, the Baltimore library system tried displaying some books face-out, and borrowing increased dramatically. This is now standard practice for many bookstores and libraries. There’s a lesson in there for bookstores, which do a fairly uninspired job in the display department, at least for the majority of titles. The downside would be a big decrease in the number of books available, which would no doubt raise a cry from woebegone authors and publishers.

  The other aspect of merchandising is the subtler art and science of adjacencies—how placing one item next to another creates some spark and sells more of one or even both. Part of what adjacencies attempt to deliver is add-on sales. Sometimes this is just the typical cash register impulse buy, like the box of tangerine Altoids or pack of batteries tossed into a shopping basket at the last second. But add-ons can happen anywhere in a store. Retailers pay too little attention to this, in my opinion, and their businesses suffer as a result. Because add-ons typically have a high profit margin, they can make the difference between a store that just gets by and one that prospers. They can make a failing store into a success. At the New York bar I used to co-own, the proceeds from the jukebox, cigarette machine and coin-operated video games covered the rent. Retailers must accept the fact that there are no new customers—the population isn’t booming, and we already have more stores than we need. The usual figure is that 80 percent of a store’s sales will come from 20 percent of its clientele. So if stores are to grow, it will be by figuring out how to get more out of existing customers—more visits, more time in the store, more and bigger purchases.

  It isn’t just a clothing issue either: New computer mouse? Try this mouse pad. New car? Try this stylin’ floor mat. The Gap now sells fragrances and candles. Victoria’s Secret sells cosmetics, reasoning (wisely) that women will shop for makeup wherever they are, especially if they’re already in a store designed to enhance their comeliness. The U.S. Post Office branch in the Mall of America sells USPS-branded toy mail trucks, leather jackets, teddy bears in mailman uniforms and other related items, and while they don’t make money delivering mail, the retail items carry a healthy markup. Someday that’s what will keep the whole system afloat.

  Another good example of this is in my favorite bookstore, BookPeople, in Austin, Texas, which sits across the street from the flagship Whole Foods. BookPeople is a happy store filled with lots of personality, and it delivers the unexpected, starting with good, cheap visual effects. An old stove anchors the cookbook section. The seating, scattered throughout the store, reflects what’s being sold; the sports and technology sections have old barber chairs, and aging Barcaloungers are used judiciously. Around the store, the owners have added merchandise categories themed to each particular section—puppet hats and masks in children’s books; relevant clothing, jewelry and candles in the spirituality section—and even the stairs are lined with wrapping paper and gag gifts. The checkout area has “Keep Austin Weird” T-shirts, unusual confections and BookPeople-branded chocolate bars. This store isn’t just selling books—it’s selling to people who like books. At heart it’s still a serious place that, among the tchotchkes and kitschy humor, has reinvented categories and subsections. For example, the Insurrection and Conspiracy section sits next to the Journalism shelf, and there’s a pair of stuffed roosters flanking Homesteading & Farming—a nice touch.

  Yet another admirable example is the Apple Store, which lays out impulse products at their cash/wrap that cost upward of a hundred dollars: a cool game, a designer backup hard drive, a great-looking USB hub. Placed in various locations, these good-looking inessentials fly off the shelves. It’s like selling you accessories for your new car. The company figures that if you’re spending thousands of dollars, what’s another couple of hundred when you already have your wallet open?

  Let’s say we have a clothing store where the typical sale is a $30 shirt. If you can convince that typical customer to also buy a $6 pair of socks, you’ve just increased sales by 20 percent. Not too shabby! If she takes a $20 belt, sales just rose by 66 percent. You’re a genius! Now you just have to figure out how to make it happen. One good way is to gently suggest to the shopper that she is not buying enough for her purposes, and doesn’t she need a mousepad to go with that mouse? Another good way is just to place the mousepad next to the mouse so that the juxtaposition does the talking for you. A lot of this is as simple as can be. Where do belts go? Near trousers. How about socks? Near shoes. (But where do shoes go? On your feet.) Tomato sauce? Near the pasta. Department stores do well selling neckties on the ground floor, mainly to female shoppers. But ties also have to be near suits and sport jackets, and surprisingly, they often are not. That’s a big mistake, because sometimes you need to actually see and touch that amazing Technicolor tie to imagine yourself in that somber gray suit. And anyway, nobody wears just a suit—you need the shirt, tie, socks, shoes, cuff links and belt before you can leave the house. So why sell the most expensive part of the package in such unnatural isolation? Computer stores make an even bigger botch of this. Typically, they’ll display the computers themselves in one section, the printers elsewhere, the furniture in a different spot and then the accessories, from cables to wrist rests, in yet other places. Could anyone devise a less sensible, less inviting display system? That organizing scheme is right for the warehouse, not the selling floor. It all needs to be shown as people use it—computer, monitor, printer and accessories, all hooked up, plugged in, turned on, and placed on furniture so that a shopper can sit down and give it a test-drive.

  There’s a similar issue back in the supermarket, starting with this urgent question: Where do we put the taco shells? With the rest of the Mexican food? That’s how it’s usually done. Not near the ground beef? It might require the combination of tacos and meat to trigger “fiesta” in the mind of a shopper wondering what to make for dinner tonight. How about stocking taco shells in both places? And while we’re at it, how about just over the meat counter also being a good place for bread crumbs, steak sauce, tenderizer, peppercorns, sea salt and fresh herbs? In Italy we tested an urban supermarket that was organized by meal groups. Breakfast ingredients here, lunch stuff there, dinner makings over there. A concept made possible by two innovations—the energy efficiency of small refrigerated units and a redesigned store that put electrical power everywhere you looked. In many cities across the world, both the rich and the poor shop one meal at a time.

  What about something truly tricky—say, packaged cake by the slice? You could decide to stock it in the cake section, but why would anyone looking for a whole cake buy just one piece, and vice versa, for that matter? It could go with other refrigerated desserts, such as pudding,
in the cooler. But how about if a slice of cake could be found by the salad bar, as a reward for choosing an otherwise virtuous meal? Such placement alone would identify the cake as something other than the stuff for callow kiddie palates over in the cooler. In chapter 12, I discussed how name-brand aluminum foil makers have a tough time convincing shoppers to spend the extra money on better quality. One way to get around this is by merchandising it better—in summer, for instance, supermarkets could sell charcoal, barbecue sauce, funny aprons and aluminum foil all from the same fixture, somewhere near the meat counter. Men especially would be likely to grab the whole kit at once rather than have to assemble it aisle by aisle. And in this context, the superior strength of the name-brand foil might seem relevant.

  In a drugstore, where do the books about vitamins and dietary supplements go, with books or with vitamins? It’s easy to say both, but at some point your store is going to run out of room. And all those multiple placements are pointless if they don’t increase sales. Also in the drugstore, and on the subject of multiple placements, where do you stock the sample sizes of shampoo, conditioner and so on? Typically they get their own display case, but they really should be sold from the same shelves as the full-size products. That may be all it takes to get you to try a new product, something you wouldn’t attempt if you had to buy the big bottle just to see if you like it. Common sense says that if I hit the shampoo shelf first and buy my usual brand, I’m less likely to pick up something new when I arrive at the sample shelf.

  Adjacencies are also about order—coming up with a sensible sequence of things. We once were hired to study how potato chips are sold in employee cafeterias. In one, the rack of chips and pretzels was positioned at the head of the line, right where you picked up your tray. In another, the chips were down at the end of the line, just before the cashier. Did it make much of a difference? When the chips were near the end, sales were dramatically higher than at the head. How can you decide what kind of chips you want before you’ve chosen your sandwich? What goes with pimento loaf and Swiss on white, corn chips or barbecue-style potato chips? Similarly, one December we studied a department store where a Christmas wrapping paper fixture was positioned just inside the entrance, and it wasn’t selling much because nobody buys the paper before they buy the gifts. It was moved so that it was one of the last things shoppers came upon, and sales went up. Supermarket planograms are designed to make the most of adjacencies, the thinking being that if a popular item like Corn Flakes is positioned correctly, at the bull’s-eye, it will help sales of other Kellogg’s products arranged around it. Because most shoppers are right-handed, the best spot should be just to the right of the bull’s-eye, to make it as easy as possible for the quick grab.

  Sometimes, though, it’s the irrationality of combinations that provides their power to grab our attention. Consider how expensive chests are sold in a furniture store as opposed to how they’re sold in a newfangled home and hardware store. In the former there were dozens of chests neatly lined up, nothing but chests, one after the other, chest chest chest, with all the charm of a warehouse sale. In a Restoration Hardware store, the chests were treated like furniture, placed next to a chair, or in a corner, with a lace doily or a picture frame or a mirror on top. Sitting on one chest was a big old-fashioned glass jar containing chrome-plated ball-peen hammers, of all things. So maybe the jar or the shiny hammers caught your eye, and you picked one up, and suddenly you noticed the chest, really noticed it, and you realized it wasn’t just there to hold the hammer jar but it was actual merchandise, with a discreet price tag hanging from a drawer pull. You didn’t feel overwhelmed by forty similar pieces of furniture to study. You could actually see how the furniture would look in a home as opposed to a showroom. And the fact that you could start out looking at hammers and end up considering furniture satisfied your love of discovery—it kept you on your toes. Anybody can sell furniture to people looking for furniture; it takes a little ingenuity to sell it to people who aren’t. I’d wager that more than one doily shopper has gone home with a new maple dresser.

  You can figure out intelligent adjacencies just by standing near one thing and asking yourself, what else is on my mind here? In the paint section, there should be some cross-selling of power tools, even if it’s only a poster or some literature or a chain saw just lying on a table—who could resist picking it up? As I discussed earlier, in the bookstore we advise clients to group sections by the gender of their likeliest readers, meaning that computers, sports and business books should flow from one to the other, as should self-help, diet and nutrition and health and home. We were consulting on how to sell computer printers and advised the retailer that maybe they should be grouped by manufacturer—Hewlett-Packard here, Epson there. Then we saw that shoppers don’t buy that way; they’re more interested in comparing all $300 printers than seeing what one manufacturer is offering, so we quickly changed our recommendation. Golden Books, the children’s book publisher, was organizing its sections by price point until we saw that with such inexpensive goods, price doesn’t matter to anyone, and that the books should be grouped by character—little ponies here, teddy bears there.

  How’s this for a bright merchandising idea: We’ll take pantyhose and sell them in plastic eggs! Pretty weird, I agree, except that this signature package turned L’eggs into the country’s number-one brand in its category. Famously, blind tests were run in which women preferred the No Nonsense brand, which is usually sold right next to L’eggs. Still, L’eggs rules, which makes it a true merchandising victory, since, in theory, any fool should be able to sell the superior brand.

  If you’re not involved in retailing, you might not be aware of the size and scope of the industry that provides all the in-store merchandising materials—signs and display cases and impulse goods fixtures and all the rest. From supermarkets and drugstores to home centers and auto showrooms, what became known as the point-of-purchase business—PoP for short—has come a long way in a short time. PoP materials have existed since forever, of course, going back to the first cigar-store Indian or red-and-white-striped barbershop pole. But since the early ’80s, PoP has really become a player, and it now commands a seat at the selling table right next to marketing’s.

  Until then, though, merchandising was the stepchild of the marketing trade. The marketing geniuses called all the shots for how a product would be presented to the world, and the boys in merchandising were left to work out the petty details of how it would work at the retail level—the in-store signage and displays. Then the two sides began to change places. Suddenly, retailing realized that to a growing extent, shoppers were making their buying decisions on the floor of the store. As was noted elsewhere, surveys showed that more than half of all supermarket purchases were unplanned. And this all happened as marketing’s influence was coming down from its peak—the monolithic TV networks gave way to many viewing options, and consumer devotion to brand name yielded to a more skeptical, independent-minded shopper. That all added up to more of a dependence on merchandising, which led the industry to grow from a $5-billion-a-year pushcart to a $35-billion-a-year roller coaster almost overnight. Traditionally, it’s been a business of smallish (and now some not-so-small) family-owned firms, meaning it’s been short on sophistication and long on guts, verve and energy. It’s a cowboy business, and I mean that in the best way. Owing to its youth, there are still lots of lessons its practitioners are learning, and they have to learn as they go. In fact, a great deal of our work in the past two decades has been just in testing and measuring the effects of in-store signage, fixturing and display systems, trying to figure out what works and why.

  Here’s a good example of the terrible magic that smart merchandising can perform. I once heard a talk given by the vice president of merchandising from a national chain of young women’s clothing stores in which she deconstructed a particular display of T-shirts. “We buy them in Sri Lanka for three dollars each,” she began. “Then we bring them over here and sew in washing instruction
s in French and English—French on the front, English on the back. Notice we don’t say the shirts are made in France. But you can infer that if you like. Then we merchandise the hell out of them—we fold them just right on a tasteful tabletop display, and on the wall behind it we hang a huge, gorgeous photograph of a beautiful woman in an exotic locale wearing the shirt. We shoot it so it looks like a million bucks. Then we call it an Expedition T-shirt, and we sell it for thirty-seven dollars. And we sell a lot of them, too.” It was the most depressing valuable lesson I’ve ever had.

  Car dealerships aren’t anyone’s idea of how merchandising is supposed to work, which makes them good lessons in what not to do. We studied a foreign car dealership that was practically a college course in itself. The salespeople would load shoppers down with literature but fail to give them folders, so you ended up walking around that showroom, arms burdened with pieces of paper. There were plenty of brochure racks but no brochures, which is a problem, not because shoppers love pamphlets so much, but because empty literature racks give shoppers the (correct) impression that the details don’t get taken care of in this place of business. One-sided posters were taped to exterior and interior windows, meaning that shoppers frequently found themselves staring at blank white rectangles. In one dealership, as I mentioned earlier, we saw a sign heralding the new cars—the previous year’s new cars. The signs that did receive prominent placement were “awards” to the dealership from the car manufacturer—just the kind of thing to leave shoppers yawning. The display that showed buyers available colors was a real mess—the spiral-bound portfolio was held together by duct tape. And instead of being able to see a picture of the car in each color, shoppers were given a tiny swatch book more appropriate for choosing drapes. Signs meant to hang over cars were placed on tables instead. Some favorable auto reviews were clipped from newspapers, but they were simply taped to walls rather than displayed properly. Some of the articles had begun to yellow and curl up. And all this to support merchandise costing $20,000 and up!