Outdoor Retailer Magazine
January 2002

Retailers Can Profit by Studying Human 'Buy-ology'
By Sharon Leicham

How many retailers wish they could look into the minds of their customers to find out why they buy what they buy? Alas, technology can take us to the moon but can't read minds. But technology can at least give retailers clues to the psychology of their customers. Enter video consultants. These are companies with backgrounds in visual perception and spatial navigation that try to decode the psychology by videotaping consumers as they shop. Call it "buy-ology." Observing, videotaping and interviewing shoppers are not new ideas. Paco Underhill founded the company Envirosell more than a decade ago and enhanced its reputation with his well-received book on shopping psychology, Why We Buy.

Now, more buy-ology companies are surfacing. One is Merchant Mechanics of Lawrence, Mass., whose president, Matt Tullman, credits the difficult retail environment for an upswing in his business. "Retail has moved from being a business based on creativity and intuition to one driven by factual information and data," Tullman said. "They're very few ways information can be collected."

Seeing Patterns. Video research provides a retailer with empirical information of how people enter the store, where they go and what they do when they get there. By reviewing the tapes, a retailer can see if a customer reads the hang tag, touches the fabric or scrutinizes the color. It will show a retailer what point-of-sale element attracts the most customers. Movement patterns -- the path the shopper takes through store -- can help retailers decide where to place product for fast sales. "We're able to track patterns of behavior and the order in which things happen," Tullman said. "We can help a retailer make adjustments to the store to squeeze out an extra two to four points of profit."

Tullman once worked with a home furnishings client who installed color changing lighting to enhance displays. Once the leading was installed, store experienced a 22 percent increase in traffic and double-digit increases in customer interaction with the products -- but sales didn't budge. Only by reviewing videotapes did the retailer realize the new lighting was attracting teenagers, a demographic that was not interested in buying home furnishings. The retailer re-merchandised the product assortment and now is on track to reach a $4.5 million sales forecast, Tullman said.

Covert Ops. Grid2 International in New York offers videotaping along with design services. "The other companies offer customer behavior analysis. We offer retail behavior analysis," said company president, Martin Roberts. Grid2 watches customer movement in stores, focuses on the sales process with emphasis on the checkout, analyzes the results and makes design recommendations. The company also conducts customer interviews -- some covert, others overt. Roberts will sometimes have one of his researchers pretend to be a customer and strike up a conversation with a customer to gain shopping or product insights. "Sidling up to a customer and asking if they have ever tried this or that product can result in good insights," Roberts said. He said interviews with customers leaving a store also can prove valuable.

Pricing options. The cost to videotaping customers varies by the size of the store and depth of the research requested. Most companies charge a day rate of between $1500 and $4000 for two to four cameras. While research companies will do one day surveys, they recommend more extensive projects. They say it takes three to seven days to obtain a clear picture of how customers behave, and how, for example, weekend shoppers differ from weekday shoppers. A month to six weeks after taping, a retailer can expect to receive a comprehensive written analysis along with a videotape highlighting observed patterns.

If these prices scare off retailers, there are less expensive options. For $1250 a day, Merchant Mechanics conducts "critical point" customer interviews. These are very short five-question interviews for specific product categories. If, for instance, someone was looking at backpacks, a Merchant Mechanics researcher would ask five quick questions about the customer's perception of the packs and leave. "These types of interviews are always revealing," Tullman said.

Often stores don't know at what rate they convert shoppers to buyers. Video consultants can help. "Everyone is looking to get more sales out of the same store, same staff, same products," Roberts said. "The key is to turn browsers into buyers and get people to return to the stores." "Consumer behavior has changed," Tullman said. "The retailers who step up to the plate and utilize video research will have the competitive advantage."