This week a client asked an interesting question, which made me stop and think:
“How could we articulate and provide proof that great services/experiential/ambience elements of a shopping centre have a direct positive correlation to driving traffic, sales, rental and valuation? We know it does from a gut feel perspective, but how do we measure and articulate it as more of a science to owners and investors?”
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To start with, the easier topic of service: From our retail consulting business we know that by implementing a training program, measuring the uplift in service quality by mystery shopping and then measuring the impact on sales, great service easily contributes to a sales uplift between 20-30%.
Now to the more complex question of the impact of experiential and ambience elements in retail: When customers walk past a retail store, the retailer has a maximum of three seconds to attract the customer in store (and the same applies to attracting a shopper into a certain zone in the centre) – it’s love it or leave it.
So what is this evaluation based on?
To understand this, we need to take a look into how a stimulus like a window display, ambience, lighting, or certain fragrance in the entrance area, etc, is processed by the consumer’s mind:
Source: RDG Insights Pty Ltd
In the very few seconds available, 95% of these stimuli are processed subconsciously in the consumer’s minds. There is no time for careful consideration or reasoning. The subconscious limbic system in our brain works 200 times faster than the conscious mind, so before we become aware, we have long walked away from a retail store or zone in the shopping centre or been drawn into.
If a retailer succeeds to attract more attention, and in turn traffic and sales, then this is because the ambience and experience stimuli have hit the mark with the consumer – that they have resonated subconsciously.
To quote Dennis Paphitis, founder of the very successful cosmetics brand Aesop: “There’s a direct correlation between interesting, captivating store spaces and customer traffic and interest within a store.”
But what is interesting, what is captivating?
The answer to what is interesting and captivating for a particular consumer lies in understanding their emotional needs, motives and drivers.
What might draw one customer into a store or centre, turns away another. The below examples of experiential retail designs illustrate how strongly the ambience impacts on consumer attraction:
Store 1 (Consumer attraction to different retail experiences,
Source: RDG Insights Australian Retail Consumer Study 2012)\
Store 1 caters to the emotionality of a consumer type called the Adventurer (Attraction Index: 130). Because of the high contrast, bold patterns and strong look they were strongly attracted into the store, whereas especially consumer types that seek harmony and balance were strongly turned away (negative Index for the Traditionalist, Harmoniser & co.)
Store 2 (Consumer attraction to different retail experiences,
Source: RDG Insights Australian Retail Consumer Study 2012)
Store 2 attracted strong traffic from Open-minded and Hedonists, which actively seek pleasure, fantasy, creativity and fun. The shown example of a Peter Alexander store caters to this subconscious motive structure and therefore proves to be successful with the respective consumer segment.
But of course, if asked, people couldn’t tell why. They simply navigate the shopping centre environment predominantly on ‘autopilot’: Their subconscious, limbic system tells them in split seconds where to go, what to love or what to leave, and where to spend their dollars.
Why is there truth in wine?
Now why would this blog be called ‘There’s truth in wine’? (With great respect to Pliny the Elder.)
Because a study by North, Hargreaves and McKendrick (1997) on the correlation of the stimulus music on wine sales makes the point about how the subconscious is putting the pieces of the puzzle together.
When a large supermarket played French music, the results showed that French wine outsold German wine 3:1. However when German music was played, German wine outsold French wine 2:1. When questioned, customers professed to being unaware of the effects.
Katharina Kuehn is director of RDG Insights, which provides retailers and brands with the missing link between understanding the real drivers of consumer behaviours and informing the strategic branding and operational implications at the point of sale.