Retail Shopping Behavior/ Reason for Retail Shopping Behavior

Before understanding consumer behaviour let us first go through few more terminologies:

Who is a Consumer?

Any individual who purchases goods and services from the market for his/her end-use is called a consumer.

In simpler words a consumer is one who consumes goods and services available in the market. 

Example - Ram might purchase a cycle for (his son) Mohan might buy a shirt for his father. In the above examples, both Ram and Mohan are consumers.

What is consumer Interest?

Every customer shows inclination (disposition) towards particular products and services. Consumer interest is nothing but willingness of consumers to purchase products and services as per their taste, need and of course pocket.

Let us go through the following example:

Both Maria and Sandra went to the nearby shopping mall to buy dresses for themselves. The store manager showed them the best dresses available with him. Maria immediately purchased two dresses but Sandra returned home empty handed. The dresses were little too expensive for Sandra and she preferred simple and subtle designs as compared to designer wears available at the store.

In the above example Sandra and Maria had similar requirements but there was a huge difference in their taste, mind set and ability to spend.

What is Consumer Behaviour?

Consumer Behaviour is a branch which deals with the various stages a consumer goes through before purchasing products or services for his end use.

Why do you think an individual buys a product?

• Need
• Social Status
• Gifting Purpose

Why do you think an individual does not buy a product?

• No requirement
• Income/Budget/Financial constraints
• Taste

When do you think consumers purchase products?

• Festive season
• Birthday
• Anniversary
• Marriage or other special occasions

There are infact several factors which influence buying decision of a consumer ranging from psychological, social, and economic and so on.

The study of consumer behaviour explains as to:

• Why and why not a consumer buys a product?
• When a consumer buys a product?
• How a consumer buys a product?

During Dashain, the buying tendencies of consumers increase as compared to other months. In the same way during Valentines week, individuals are often seen purchasing gifts for their partners. Fluctuations in the financial markets and recession decrease the buying capacity of individuals.

In a layman’s language consumer behaviour deals with the buying behaviour of individuals.

The main catalyst which triggers the buying decision of an individual is need for a particular product/service. Consumers purchase products and services as and when need arises.

According to Belch and Belch, whenever need arises; a consumer searches for several information which would help him in his purchase.

Following are the sources of information:

• Personal Sources
• Commercial Sources
• Public Sources
• Personal Experience

Perception also plays an important role in influencing the buying decision of consumers.

Consumer Behaviour

As a consumer we are all unique and this uniqueness is reflected in the consumption pattern and process of purchase. The study of consumer behaviour provides us with reasons why consumers differ from one another in buying using products and services. We receive stimuli from the environment and the specifics of the marketing strategies of different products and services, and responds to these stimuli in terms of either buying or not buying product. In between the stage of receiving the stimuli and responding to it, the consumer goes through the process of making his decision.

Buying decisions of consumers also depend on the following factors:

• Messages, advertisements, promotional materials, a consumer goes through also called selective exposure.
• Not all promotional materials and advertisements excite a consumer. A consumer does not pay attention to everything he sees. He is interested in only what he wants to see. Such behaviour is called selective attention.
• Consumer interpretation refers to how an individual perceives a particular message.
• A consumer would certainly buy something which appeals him the most. He would remember the most relevant and meaningful message also called as selective retention. He would obviously not remember something which has nothing to do with his need.

Stages in Consumer Decision Making Process

An individual who purchases products and services from the market for his/her own personal consumption is called as consumer.

To understand the complete process of consumer decision making, let us first go through the following example:

Tim went to a nearby retail store to buy a laptop for himself. The store manager showed him all the latest models and after few rounds of negotiations, Tim immediately selected one for himself.

In the above example Tim is the consumer and the laptop is the product which Tim wanted to purchase for his end-use.

Why do you think Tim went to the nearby store to purchase a new laptop?

The answer is very simple. Tim needed a laptop. In other words it was actually Tim’s need to buy a laptop which took him to the store.

The Need to buy a laptop can be due to any of the following reasons:

• His old laptop was giving him problems.
• He wanted a new laptop to check his personal mails at home.
• He wanted to gift a new laptop to his wife.
• He needed a new laptop to start his own business.

The store manager showed Tim all the samples available with him and explained him the features and specifications of each model. This is called information. Tim before buying the laptop checked few other options as well. The information can come from various other sources such as newspaper, websites, magazines, advertisements, billboards etc.

This explains the consumer buying decision process.

A consumer goes through several stages before purchasing a product or service.

NEED
↓
INFORMATION GATHERING/SEARCH
↓
EVALUATION OF ALTERNATIVES
↓
PURCHASE OF PRODUCT/SERVICE
↓
POST PURCHASE EVALUATION

1. Step 1 - Need is the most important factor which leads to buying of products and services. Need infact is the catalyst which triggers the buying decision of individuals.

An individual who buys cold drink or a bottle of mineral water identifies his/her need as thirst. However in such cases steps such as information search and evaluation of alternatives are generally missing. These two steps are important when an individual purchases expensive products/services such as laptop, cars, and mobile phones and so on.

2. Step 2 - When an individual recognizes his need for a particular product/service he tries to gather as much information as he can.

An individual can acquire information through any of the following sources:

• Personal Sources – He might discuss his need with his friends, family members, co-workers and other acquaintances.
• Commercial sources - Advertisements, sales people (in Tim’s case it was the store manager), Packaging of a particular product in many cases prompt individuals to buy the same, Displays (Props, Mannequins etc.)
• Public sources - Newspaper, Radio, Magazine
• Experiential sources - Individual’s own experience, prior handling of a particular product (Tim would definitely purchase a Dell laptop again if he had already used one)
2. Step 3 - The next step is to evaluate the various alternatives available in the market. An individual after gathering relevant information tries to choose the best option available as per his need, taste and pocket.

4. Step 4 - After going through all the above stages, customer finally purchases the product.
5. Step 5 - The purchase of the product is followed by post purchase evaluation. Post purchase evaluation refers to a customer’s analysis whether the product was useful to him or not, whether the product fulfilled his need or not?

Reason for Retail Shopping

Marketers spend millions of dollars trying to understand why people buy products and services. Sometimes it seems that there is no reason for a purchase, but in reality there is always a reason.

1) They Want Convenience

Sure, shopping from your office or couch is convenient, but sometimes you need something faster than overnight (or even same-day) delivery can provide. If a customer in the middle of a plumbing repair needs a part, she’s not going to go online to order it.

Make your store even more convenient. Upgrade point-of-sale systems with current technology or use mobile payment systems to take payments anywhere in store. Make sure your store is listed on local search directories so people can easily get driving directions.

2) They Want to Test the Merchandise

Of course, one big reason consumers still visit physical stores is to touch, try on or test products.

Make sure you have a variety of products in stock. If you sell 10 types of toasters, have them all on display. Put out testers of cosmetics or lotions. Have salespeople demonstrate or highlight features customers might not notice on their own. Take advantage of the tactile nature of a store: use music, lighting and scent to enhance the experience.

3) They Want Help Making a Decision

Sometimes, especially for complex or major purchases such as technology or appliances, the sheer volume of online options and opinions gets overwhelming, and customers need expert guidance in making a choice.

Make sure you have well-trained salespeople who can sort through the fluff. A customer might dither for weeks over ordering a dishwasher online, but make a decision in minutes once an experienced sales rep shows her various models and explains the pros and cons. When customers come in with their eyes glazing over from reading online reviews and ratings, you and your staff can act as curators, helping them decide what matters most and making the right choice.

4) They Want Inspiration

Plenty of people shop to get ideas, pass the time or just see what’s new. Hitting the mall to check out the latest fall fashions or visiting a home store to get decorating ideas are examples of this type of shopping.

Make sure your store is merchandised for discovery. Get creative with window and in-store displays and change them frequently. Simply moving merchandise to different parts of the store will expose shoppers to products they may not have noticed last time. Alert customers via email, social media or direct mail when you get new shipments or when seasonal products arrive.

5) They Want Emotional Gratification

Plenty of people shop when they’re bored, lonely or blue.

Make them feel better. Impulse buys — affordable items at the point of purchase or near the front of the store — let shoppers treat themselves without breaking the bank. Friendly salespeople who start chatting with your customers will lift their spirits and keep them coming back. If the salesperson remembers the customer’s taste, suggests add-on purchases and lets him or her know when favourite items come in stock, so much the better.

6) They Want to Have Fun

Consumers often shop as a way to socialize with family and friends or as entertainment. Or they may be in a mall or shopping centre to dine or see a movie and add shopping into the mix.

Make sure your store has an enjoyable atmosphere. Events like musical performances, poetry readings, children’s craft days or cooking demonstrations are all ways to attract passers-by and keep customers in the store longer. Cheery decor, lively background music and a sociable staff contribute to the party atmosphere.

Why do customers come to your store?

Many factors are involved in a customers’ buying decision, any one of which can become the deciding factor, such as:

·        Conspicuous consumption:

Lavish spending for the purpose of displaying wealth or social status; preference for buying increases with price.

·        Snob effect:

Desire to buy something nobody else has; preference for buying increases with rarity or scarcity.

·        Bandwagon effect:

Desire to buy something everybody else is buying; preference for buying increases with perceived popularity.

·        Economic-

To enhance their lifestyle or to fulfill two of Maslow’s needs: physiological (food, shelter) and Safety and Security.

·        Psychological-

This is the study of how people interact with their environment, products are consumed to enhance their well-being, for example air fresheners, furniture and convection ovens.

·        Sociological-

The study of the thoughts, feelings, and behaviors of group interaction, especially in a social setting. People want to feel accepted and loved by their peers and they need to consume products that will appeal to their chosen groups. For example a consumer wants to join a kayaking team would have to purchase the proper gear, clothing and maybe even music genre in order to fit in with the group.

·        Practical-

Consumers purchase products because they need them to survive, such as shoes and medicine.

·        Impractical-

It is the opposite of practical, purchasing products that are not necessary.

·        Rational-

Purchases are made with logical, thought out reasoning.

·        Irrational-

Products are purchased for foolish or absurd reasons.

·        Factual-

Purchasing products based on researched reports.

·        Emotional-

Purchasing products based on feelings

·        Buy to satisfy a need (for a reason).

·        Buy to satisfy a want (desire).

Why do people buy?

To Increase

·        Sales.

·        Profit.

·        Satisfaction.

·        Confidence.

·        Convenience.

·        Pleasure.

·        Production.

To Protect

·        Investment

·        Self

·        Employees

·        Property

·        Money

·        Family

To Make

·        Money

·        Satisfied customers

·        Good impressions

To Improve

·        Customer relations

·        Employee relations

·        Image

·        Status

·        Earnings

·        Performance

To Reduce

·        Risk

·        Investment

·        Expenses

·        Competition

·        Worry

·        Trouble

To Save

·        Time

·        Money

·        Energy

·        Space

Types of Retail Operation

   Retail Operation and its types (Retail Outlets)

• Market - Any system or place where parties are engaged in exchange of either goods or services is called as market. The parties are often called as buyers and sellers. The seller offers his goods or services to the buyer who in return purchases it in exchange of money.
• Goods - Tangible (things which can be seen and touched) physical products which are transferred from a seller to the buyer (consumer) to fulfil the latter’s need are called as goods.

Jack owned two laptops which he sold to Mike. In this case Jack is the seller while Mike is the buyer. Laptops are the goods which were earlier in Jack’s custody and now belong to Mike.

What is Retail? 

Retail involves the sale of goods from a single point (malls, markets, department stores etc.) directly to the consumer in small quantities for his end use. In a layman’s language, retailing is nothing but transaction of goods between the seller and the end user as a single unit (piece) or in small quantities to satisfy the needs of the individual and for his direct consumption.

Let us understand the concept with the help of an example.

Tim wanted to purchase a mobile handset. He went to the nearby store and purchased one for himself.

In the above case, Tim is the buyer who went to a fixed location (in this case the nearby store). He purchased a mobile handset (Quantity - One) to be used by him. An example of retail.

The store from where Tim purchased the handset must have shown him several options for him to select one according to his budget and need.

From where do you think the store owner (also called the retailer) purchased all the handsets?

Here the manufacturers and the wholesalers come into the picture.

The retailers purchase goods in bulk quantities (huge numbers) to be sold to the end-users either directly from the manufacturers or through a wholesaler.

The Supply chain

Manufacturers	........................	Retailers	................	End User (Consumer)
	Wholesalers

• Manufacturers - Manufacturers are the ones who are involved in production of goods with the help of machines, labour and raw materials.
• Wholesaler - The wholesaler is the one who purchases the goods from the manufacturers and sells to the retailers in large numbers but at a lower price. A wholesaler never sells goods directly to the end users.
• Retailer - A retailer comes at the end of the supply chain who sells the products in small quantities to the end users as per their requirement and need.

The end user goes to the retailer to buy the goods (products) in small quantities to satisfy his needs and demands. The complete process is also called as Shopping.

• Shopping - The process of purchasing products by the consumer is called as shopping. However there are certain cases where shopping does not always end in buying of products. Sometimes individuals do go for shopping but return home empty handed. Such a shopping is merely for fun and is called window shopping. In window shopping, individuals generally go to the market, check out various options and their prices but do not buy anything. This kind of shopping helps to break the monotony.

Types of Retail outlets

• Department Stores

                                                                      

A department store is a set-up which offers wide range of products to the end-users under one roof. In a department store, the consumers can get almost all the products they aspire to shop at one place only. Department stores provide a wide range of options to the consumers and thus fulfill all their shopping needs.

                                         

Merchandise: 

Electronic Appliances
Apparels
Jewellery
Toiletries

• Cosmetics
  Footwear
  Sportswear
  Toys
  Books
  CDs, DVDs

Examples - Shoppers Stop, Pantaloons

Discount Stores

Discount stores also offer a huge range of products to the end-users but at a discounted rate. The discount stores generally offer a limited range and the quality in certain cases might be a little inferior as compared to the department stores.

Wal-Mart currently operates more than 1300 discount stores in United States. In India Vishal Mega Mart comes under discount store.

Merchandise:
Almost same as department store but at a cheaper price.

• Supermarket

A retail store which generally sells food products and household items, properly placed and arranged in specific departments is called a supermarket. A supermarket is an advanced form of the small grocery stores and caters to the household needs of the consumer. The various food products (meat, vegetables, dairy products, juices etc.) are all properly displayed at their respective departments to catch the attention of the customers and for them to pick any merchandise depending on their choice and need.

Merchandise:
Bakery products
Cereals
Meat Products, Fish products
Breads
Medicines
Vegetables
Fruits
Soft drinks
Frozen Food
Canned Juices

Friends Supermarket, Ghorahi, Dang..

• Warehouse Stores

A retail format which sells limited stock in bulk at a discounted rate is called as warehouse store. Warehouse stores do not bother much about the interiors of the store and the products are not properly displayed.

• Mom and Pop Store (also called Kirana Store in Nepal)

Mom and Pop stores are the small stores run by individuals in the nearby locality to cater to daily needs of the consumers staying in the vicinity. They offer selected items and are not at all organized. The size of the store would not be very big and depends on the land available to the owner. They wouldn’t offer high-end products.

Merchandise:
Eggs
Bread
Stationery
Toys
Cigarettes
Cereals
Pulses
Medicines

Speciality Stores

As the name suggests, Speciality store would specialize in a particular product and would not sell anything else apart from the specific range. Speciality stores sell only selective items of one particular brand to the consumers and primarily focus on high customer satisfaction.

Example -You will find only Reebok merchandise at Reebok store and nothing else, thus making it a speciality store. You can never find Adidas shoes at a Reebok outlet.

• Malls

Many retail stores operating at one place form a mall. A mall would consist of several retail outlets each selling their own merchandise but at a common platform.

• E Tailors

Now a days the customers have the option of shopping while sitting at their homes. They can place their order through internet, pay with the help of debit or credit cards and the products are delivered at their homes only. However, there are chances that the products ordered might not reach in the same condition as they were ordered. This kind of shopping is convenient for those who have a hectic schedule and are reluctant to go to retail outlets. In this kind of shopping; the transportation charges are borne by the consumer itself.

Example - EBAY, Rediff Shopping, Amazon. Nepbay.com, kaymu.com

• Dollar Stores

Dollar stores offer selected products at extremely low rates but here the prices are fixed.

Example - 99 Store would offer all its merchandise at Rs 99 only. No further bargaining is entertained. However the quality of the product is always in doubt at the discount stores.

Difference between Departmental Store and Supermarket

Departmental stores and supermarkets are two large retail shops that offer customers a wide range of choice. However, departmental stores and supermarkets are not the same. The key difference between departmental store and supermarket lies in the type of products they stock; departmental stores stock a variety of products including clothing, jewellery, accessories, cosmetics, toy, stationery, etc.

Supermarkets stock food items and other household items.

Definition:

Departmental Store: A department store is a large retail store offering a variety of merchandise and services and organized in separate departments.

Supermarket: Supermarket is a large self-service retail market that sells food and household goods.

Size:

Departmental Store: Departmental stores are larger than supermarkets.

Supermarket: Although supermarkets are large stores, they are typically smaller than departmental stores.

Floors:

Departmental Store: Departmental stores have many floors.

Supermarket: Supermarkets usually have only one floor.

Products:

Departmental Store: Departmental stores stock a variety of products.

Supermarket: Supermarkets do not usually stock clothing, jewelry, and hardware.

Fresh Products:

Departmental Store: Departmental stores do not usually stock fresh produce or meat.

Supermarket: Supermarkets stock fresh produce, dairy, and meat.

Ownership:

Departmental Store: Departmental stores are not typically owned by corporate chains.

Supermarket: Supermarkets are owned by corporate chains.