The Back-end of Retail

What Affects YOUR Purchase decisions?

11 Oct 2016, Fanny Siltberg & Johanna Bjarsch Follin

The Back-end of Retail

Advertising and commercials have long since become stapleware in our modern consumption society, and even though we practically take it for granted, we are still affected by it. This might be an obvious statement to most of us, in the same way that we have all heard that the reason why milk is always placed at the inner corner of the supermarket is for us to pick up some extra goods on the way there. The same goes for those tempting sweets that are always conveniently located right by the check-out, which makes it so easy to sneak a chocolate bar into the cart just before it is time to pay.

So store layout and advertising affect our purchase decisions on a daily basis. But what about everything else? Just as there is no coincidence that milk and sweets are strategically placed in the supermarket, there is a strategic thought behind everything that involves our shopping experiences. The how, the what and the when - nothing is a coincidence in retail.

In this feature we dive into the back-end of retail and take a closer look at the companies behind some of our purchase decisions, and give an update on fresh research findings on the area. Who and what actually affect what you buy? As it turns out, delivery method, packaging and lighting all have a lot to do with it.


SIGNED, SEALED, DELIVERED

Long gone are the days when you ordered clothes from a catalogue, then waited for weeks until you finally received a pick-up slip and could make your way to the Post Office to collect your delivery in great anticipation. Only to find out that the sweater you bought was too small, or the shoes the wrong colour. Today, this process has been shortened considerably, it usually only takes a couple of clicks. One of the companies responsible for that is Urb-it, a Stockholm born company that has developed a new way of shopping in the urban landscape.

“We enable consumers to get their online purchases immediately, either through our app or through our integrated retail partners,” Sara Ek, Head of International Expansion tells The Link.

Urb-it’s business model is centered around the idea of being able to buy things on a whim. Customers use the app or a retailer’s online store to buy something, a pair of shoes for example. But instead of ordering it home, or visiting the store to pick it up, Urb-it works with crowdsourced “Urbers”; people who pick up the order by foot, bike or by using public transport. Then they simply deliver it to where you are. In that sense, Urb-it is not so much of a delivery method, as a shopping experience in its own right according to Ek.

“We are a smart shopping service that you can use when you don’t have the time or energy to go shopping, when you forgot something or when you just want to treat yourself to some extra convenience,” she explains. “This is something that none of the traditional shipping alternatives can do, hence Urb-it is not a shipping method, but a complete shopping experience“.

Sara Rosengren is Associate Professor at Stockholm School of Economics and Head of Research at their Centre for Retailing (CFR), where a large part of the retail research in Sweden is conducted. She agrees that shopping as an experience is a more widespread phenomenon today. In the nineties, the so called experience economy was established more firmly, predominantly in the service sector through restaurants and museums and the like, while retailers kept doing things the way they always had. It is as the threat, or challenges, from the internet have become more prominent that the retail industry has started to adopt the concept.

“Retailers have developed more experience based content, for example through add-on services to their products,” Rosengren tells the Link.

It is exactly that kind of service that Urb-it provides. Ek thinks that it will become even more important for stores to sell an experience rather than a product in the future.

“Urb-it contributes to this by being the extension of the store and bringing the brand all the way to the consumer in a personal and convenient way,” she says.

But their service also has bearing on the actual purchase process of the consumer. Ek explains that many customers today abandon their shopping carts because the retailer doesn’t offer enough delivery alternatives for example, a scenario where the convenience of a service like Urb-it arguably is hard to beat. Ek also describes a different scenario that most of us can probably relate to - the “should I, or shouldn’t I buy it” conundrum:

“Imagine that you try something on but you aren’t 100% sure if you want to buy it at the moment. So you leave the store and then you regret not buying it. In that case, with Urb-it, you could just pick up your phone and buy the product from our app,” she tells The LINK.

Another shift that is becoming increasingly apparent in the retail industry, is how informed the customer is before buying a product. Ek explains how the traffic to physical stores has decreased over the last year while the retail sales levels have remained the same. It has to do with the fact that the purchase decision has, to a higher extent than before, already been made before entering the store.

“People are referring to ROBBIS - Research Online but Buys in Stores, unplanned purchases decrease as the consumers do more research online and the retailers need to affect the consumers earlier and find new interaction points”, Ek tells The Link.

This is something that is also echoed by research. Ten to fifteen years ago, a shop was a means for the customer to understand the supply and actually choose a product. Today, consumers arrive to the physical shop setting with an informed plan on what they are buying, the options have already been scanned online.

“The customers of today have grown considerably more informed and knowledgeable of the products that they purchase, as the internet and other sources of information have allowed them to do so,” Rosengren explains.


PACKING IT RIGHT

In the 60’s, Andy Warhol made a name for himself by turning plain soup canisters into art. The mundane red and white aluminium suddenly became something valuable in their own right, something worth throwing a second glance at.

Since then, a lot has happened, and turning packaging into an art form is far from something that is reserved only for the avant garde. The packaging of a product is one of the most important branding outlet for retailers today and it is something that Swedbrand, a Swedish packaging company, has built their business around since 2006. Swedbrand is today a global company with headquarters in Shanghai and offices spread across the globe. The core of the business however, is universal; to strengthen the brands they work with, both in packaging and in the retail environment they operate in.

“We turn complex projects into easy processes for our clients, integrating contemporary design with the highest quality production,” Chris Magnusson, founder and Director of Swedbrand tells The Link.

It is a service that is in high demand. Many of Swedbrand’s customers work actively to develop their packaging in order to drive traffic towards their brand.

“For some brands, unique packaging is everything, and it is what consumers think of when relating to that particular brand,” says Magnusson.

Sara Rosengren at Stockholm School of Economics agrees that packaging has a large impact on consumer behaviour, especially in the Fast Moving Consumer Goods market.

“The lion’s share of purchase decisions are made in the actual store when it comes to consumer goods and in that scenario, packaging becomes an important communication channel for the suppliers to stand out and be chosen,” she says.

In this respect, packaging can be seen as a communication channel for companies, an extension of their graphic brand and identity. But Magnusson knows that even though looks go a long way, the functionality of packaging also has a strong impact on the consumer.

“Great design not only graphically but also structurally is essential. Packaging needs to not only look pleasing to the eye, nowadays it also needs to serve a function to stand out,” he explains.

Simply put, it is not just the look of a box that matters, it is also what the box can do that can tip the scales in favour of a purchase. One of Swedbrand’s business areas, Swedbrand Innovations, solely focuses on these issues. In order to achieve growth, the ability to innovate is essential, and the goal is to launch one to two new patented technologies each year.

The latest outcome from Swedbrand Innovation is the Topflow technology, a mechanism that quite literally puts everything about wine box packaging on end. A plate in the bottom of the box is attached to a spring that pushes the wine towards the top. In this way, all the wine can be squeezed out of the bag to the last drop, and the glass can be put directly under the nozzle.


Fagerhult lights up Monsoon

LET THERE BE LIGHT
In the winter of 1943, Bertil Svensson’s mother was struggling. As the Nordic nights grew darker in the town of Fagerhult, she had a hard time knitting once the sun had set, and it bothered her. Luckily, Bertil was not slow to come up with a solution, and he built a lamp for his mother to sit by as the natural lights grew dim. A new Swedish company was born and in 1945, the first factory was opened in Fagerhult.

Today, the Fagerhult Group is one of Europe’s largest light manufacturers, producing professional lighting systems for public environments, both indoors and outdoors, with more than 2,200 employees in 22 locations around the world.

Anyone who has ever stood in a changing room cursing the unflattering beams of fluorescent lights, knows that lighting can make or break a shopping experience.

Daniel Swannack, UK Retail Sales and Marketing Director at Fagerhult Group is well aware of the power that lighting possesses in the retail setting.

“Lighting design is a key factor in creating a brand’s desired look and feel throughout a retail space. For instance, the lighting within a changing room can be key to ensuring a customer looks and feels the best they possibly can. Lighting, if done correctly, can have a positive effect on the sales within a store and has been proven to increase the browsing durations of customers,” he tells The LINK

Store lighting is the kind of thing that is most successful when it feels so natural that you don’t have to pay it any mind. But as with both packaging and delivery methods, it still affects us greatly when we shop, and when used correctly it can even tell us what to do.

“Lighting can be used within a store to aid navigation and to draw the customer’s eyes onto feature products and displays,” Swannack explains.

One example is the Monsoon store in Westfield shopping centre in West London, where Fagerhult is responsible for the lighting. The end result is achieved through a careful process of technology and experimentation.

“There are many factors to consider when designing a scheme for retail; each aspect of the light should complement a brand’s image, colour pallet and store design. To achieve a fully tailored lighting design we need to carefully select the colour rendering index and correlated colour temperature of our LEDs before implementing techniques to create contrast and suitable light levels throughout,” Swannack says.

There are those who argue that there is no such thing as free will, and given the intricate mechanisms in retail, when it comes to our shopping, perhaps there isn’t. When it comes to what makes us buy, there is always more to it than meets the eye. So the next time you give into the craving of buying that little chocolate bar by the till, don’t be so hard on yourself - blame it on the back-end of retail.

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