April 11, 2013
In a recent study, professor Sam Hui of the Stern School of Business and co-authors Jeffrey Inman at the University of Pittsburgh, Yanliu Huang of Drexel University, and Jacob Suher at the University of Texas at Austin, found that mobile promotions, which persuade shoppers to travel farther within a store, can significantly increase unplanned spending.
Retailers have long held the belief that encouraging customers to travel through more of the store will lead to increased purchases. One age-old example is how supermarkets stock milk at the rear of the store. But until now, that assumption has never been formally tested. In the first study of its kind, Hui and his co-authors used radio frequency identification (RFID) tracking to collect in-store consumer path data and conducted a field experiment to examine the effect of in-store travel on unplanned spending.
They found that, on average, shoppers travel approximately 1,400 feet in a grocery store, and that traveling an additional 55 feet generates around $1 per shopper in additional unplanned spending. Simulations based on the researchers’ estimates suggest that strategically promoting three product categories via mobile promotion may increase unplanned spending by more than 16 percent.
The research team conducted a field experiment to assess the effectiveness of mobile promotions and found that a coupon that requires shoppers to travel farther from their planned path results in a substantial increase in unplanned spending ($21.29) versus a coupon for a product near their planned path ($13.83). The paper, titled “The Effect of In-Store Travel Distance on Unplanned Spending: Applications to Mobile Promotion Strategies,” appeared in the March 2013 issue of the American Marketing Association’s Journal of Marketing.
“Retailers have the ability to target their promotions in ways that weren’t possible before, and our study provides a roadmap for mobile marketers who seek to increase unplanned spending in stores,” explains Hui.