At the Shelf Edge: Hunting Conversion in the Realm of the Irrational

It started – as many good things do – with a question.

What brings the greatest conversion at the shelf?

We know from sources like OgilvyAction that even when shoppers have planned from which category they’ll buy, 28% of those same shoppers make the specific brand decision in the store.   And that 10% of shoppers who came to the store with every intention of buying will leave the category empty-handed.

We know that at-shelf decision-making varies by industry segment and by merchandise category. According to Ogilvy, thirsty shoppers make the most decisions inside the store; in the soft drink and beer sections, almost 60% of selections are made right there and then.

But we don’t seem – especially, I would argue, in the retail technology community – to have any good data on what drives better or worse conversion at the point of decision.

Oh yes, we can list the technologies. Smart shelves and ESL and rich media signage and cameras that can capture sentiment.

But as good as they may be, technologies alone don’t drive conversion.

In search of answers, I’ve been searching the web and the shelves of my library.   Looking for studies from the worlds of retail and technology and marketing and academe.

And especially from the world of behavioral economics.

One of the most thought-provoking books of my professional life has been Richard Thaler’s and Cass Sunstein’s 2008 volume Nudge: Improving Decisions About Health, Wealth, and Happiness.

It explained the concept of choice architecture – of organizing the context in which people make decisions in order to guide (or “nudge”) individuals toward better individual and societal results.

As I read the book, I remember the sense of eyes being newly opened, and wide. But I also remember thinking (smugly) that retail had probably figured out behavioral economics long ago. What is store design and on-floor merchandising and promotion but a symphony of visual nudges that lead toward a crescendo of conversion? Why would the authors – in their very first example – cite insights from the grocery industry as applied to a school cafeteria?

But then -- as the years pass, you study the conversion numbers.

You see technologies that fail to move the needle.   Multiple smart shelf projects, abandoned in bloody pools of frustrated investment.

On the nightstand are such tomes as Thinking, Fast and Slow, by Daniel Kahneman. And recently, The Undoing Project, by Michael Lewis.

And then, in mid-February 2018, came the question. With critical clients behind it.

Followed, days later, by an article from McKinsey on the application of behavioral science in business.

A quick look at Thaler and Sunstein for retail industry references showed zero listings in the index.

The McKinsey paper (an edited transcript of a McKinsey podcast) noted that marketers have “nudging” consumers for a long period of time. But the paper focused on such topics as performance management, worker safety, financial trading, hiring, and the use of advanced analytics and machine learning.

And thus, I started a search – not just for proven merchandising and assortment techniques, not just for technology innovation – but for research at the intersection of it all.   Research, POC’s, and implementations that incorporate the best of the:

  • Store and shelf technologies of today – which run from today’s smart shelf concepts all the way to those used in sensing-tuned living-breathing autonomous-stores;
  • Analytics tools of today – used not only in the realm of assortment, adjacency, and compliance, but in the ever-deeper understanding of decision influence across the cross-channel journey;
  • Content creation theory and practice of today – the messaging that works in an era of ever-decreasing attention spans;
  • Content management delivery tools of today - driving ever-richer, ever-more interactive content to and through the screens of the cross-channel decision journey;

And, perhaps most important, the best of the:

  • Behavioral science of today as applied to retail -- from nudges to gamification to the countless “subtle interventions,” as McKinsey describes them.

Not finding much, truth be told.

But I’ve got to believe it’s out there. In retail and CPG labs. In marketing tests. In the academic centers of retail and consumer studies.

If you’re reading this, and can guide me (and others) to insights, please do so.

Or – I wonder -- is this an area we need to explore?

Let me know what you think.


Published on Categories RetailTags , , ,
Jon Stine

About Jon Stine

Global Director Retail Sales at Intel. Jon Stine leads Intel’s global sales and strategy for the retail, hospitality, and consumer goods industry sectors. His CV includes leadership of North American retail consulting practice for Cisco Systems, and a prior stint at Intel, where he founded the company’s sales and marketing focus on the retail industry. His perspective on technology’s value in the industry has been shaped by advisory and project engagements in the United States, across the European Union, and in India, Australia, and the People’s Republic of China, and from 15 years of executive sales and marketing experience in the U.S. apparel industry, working with the nation’s leading department and specialty stores. At Intel, his current areas of research and engagement include the future of the store in this new digital age; how and where retailers turn data into competitive advantage; the role of technology within the new cross-channel shopper journey, and, the critical business and IT capabilities that industry success will demand going forward.