IMPACT OF STORE SIZE ON IMPULSE PURCHASE
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13-01-2011, 02:11 PM
Sumeet Gupta, Xu Heng, Vimal Sahu. IUP Journal of Marketing Management.
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Every store, whether organized or unorganized, attempts to entice customer towards its products and services. In-store stimuli, such as product display, product price, large variety, store ambience, etc., form the core reasons that influence consumers to purchase on impulse. Clearly, a large store must be able to attract more impulse purchases from a customer as compared to a small store. However, there is a caveat here. The impulse purchases made from a large store must be large enough to justify the investment and turnover of the store as compared to a smaller-size store. Therefore, in this research we study the influence of store size on impulse purchase. The study reveals that the impulse purchase as a ratio of total spending is high for the mid-sized departmental stores when compared to small-sized and big-sized retail stores.
Abratt and Goodey (1990) define impulse buying as a purchase decision made in-store with no explicit recognition of a need for such a purchase prior to entry into the store. In simple terms, impulse purchase or impulse buy is an unplanned or otherwise spontaneous purchase. One who tends to make such purchases is referred to as an impulse purchaser or impulse buyer.
The impulse purchasing habits are increasing among the consumers with an increase in organized retailing. Organized retail stores are designed in a manner so as to appeal to the senses of the consumers into making impulse purchases. Even the mom-and-pop shops are being designed with soft music and serene environment which appeal to customers' emotions. The increasing disposable income of the consumer is also adding to the increase in impulse purchases by the customers. According to the 1997 study (Mogelonsky, 1998) $4.2 bn annual store sale was generated by impulse sales of items such as candy and magazines. New technologies, such as teleshopping channels and Internet, act as catalysts of consumer's impulse buying behavior as they increase both the accessibility to products and services, and the ease with which impulse purchases can be made (Kacen and Lee, 2002).
Impulse items appeal to the emotional side of consumers as against a logical sequence of consumers' action. Some of the items bought on impulse are not considered functional or necessary to the consumers. Various in-store stimuli attract the mind of a customer to fulfill his various needs and fancies (Kollat and Willett, 1967). For example, marketers and retailers prominently display candies, chocolates, battery cells and other small ticket items to motivate the customers to purchase the goods, that they would not have otherwise purchased. Customers also purchase products which stimulate their interests. For example, a voracious reader might be attracted to books of his interest and purchase on impulse.
In-store stimuli are possible only for big and medium-sized organized retail stores. Small-sized retail stores, such as those mom-and-pop shops, are less capable of attracting impulse purchases. A prominent reason is that customers can choose the products themselves in a big store. Also, the big stores are quite spacious and well-lit to attract impulse purchases from a customer. This is particularly true in India where small-sized stores are not designed in a supermarket like manner and the store keeper fulfills the customer's order rather than allowing him to go inside and pick the goods for himself.
However, a problem with the big-sized retail stores is that owing to the heavy investment in the store, the turnover of the store (and it partially refers to impulse sales) must also be sufficiently high to justify the investment. In other words, as the store size increases, it becomes necessary that the impulse purchase also increase correspondingly to the turnover of the store. In the context of our research, the ratio of impulse purchase to the total spending should also be competitive as compared to a medium or a small-sized store. Therefore, we make an attempt to study the influence of the store size on impulse purchase. While there have been many studies (e.g., Kollat and Willet, 1967) on the influence of in-store stimuli on impulse buying, these studies do not consider how customer impulse purchase would differ across various store sizes. The study also contributes by identifying various insightful strategies for an organized retailer to attract more impulse purchases.
Impulse buying as a purchase decision is discussed in detail by Kollat, 1966; Kollat and Willett, 1967; Bellenger et al., 1978; and Abratt and Goodey (1990). Rook and Gardner (1993) identify two important characteristics of impulse buying, namely: rapid decision-making and a subjective bias in favor of immediate possession (Rook and Hoch, 1985; and Rook, 1987). The purchase is unintended because it is made while shopping, although the individual was not actively looking for that item, had no pre-shopping plans to purchase the item, and was not engaged in a shopping task, such as looking for a gift which satisfies the customer.
Due to prevalence of impulse buying in today's marketplace, academic research on impulse buying has increased during the last decade (Jones et al., 2003). Table 1 shows findings of a few prominent studies on impulse buying. While some of the studies (e.g., Kollat and Willet, 1967; Popai/Du Pont, 1977; Johnson and Williams, 1984 look into the influence of external stimuli (in-store stimuli such as product display), others (e.g., Rook and Gardner, 1993; Rook and Fisher, 1995; Dittmar et al., 1995; and Beatty and Ferrell, 1998) consider impulse purchasing as a buyer's trait for studying impulse purchase behavior. There are also studies which look into demographic factors for studying impulse purchase behavior (e.g., Bellenger et al., 1978).
A number of studies e.g., Kollat and Willet (1967); Popai/Du Pont (1977); Johnson and Williams (1984), confirm the role of in-store stimuli on impulse buying behavior. Popai/Du Pont (1977) study highlights the importance of displays in supermarkets in generating trial of products among consumers. Johnson and Williams (1984) study also highlights major differences between impulse purchases for various product categories.
Kollat and Willet (1967) study is important as it attempts to explain customer differences in unplanned purchasing behavior. However, these studies are concentrated on supermarkets and big-sized organized retail stores. In-store stimuli can also occur in a relatively small- or medium-sized store. Particularly, these days even small stores lay emphasis on attractive and elegant store designs. Therefore, in this research we study how the impulse purchase behavior differs across various store sizes. Owing to the high turnover in a big organized retail store, the impulse purchases must also be proportionately high. Therefore, we consider impulse purchases as the ratio of unplanned purchase to total purchase.
Literature provides two explanations of the impulse buying behavior (Abratt and Goodey, 1990), namely exposure to in-store stimul i and customer commitment. The exposure to in-store stimuli states that in-store stimuli produces impul se purchase simply because it acts as a reminder of the shopping needs. According to Kollat and Willett (1969), in-store stimuli assist in making purchase decisions and offer consumers new ways of satisfying needs.
Customer commitment hypothesis maintains that impulse buying is in part attributable to incomplete measure of purchase plans (Kollat and Willett, 1969; and Abratt and Goodey, 1990). Kollat and Willet (1967) concluded in a study of 600 supermarkets that some unplanned purchases were probably a result of exposure to in-store stimuli. Other unplanned purchases are actually not unplanned at all, but are caused by the way in which the behavior is usually measured. If this is accepted, then the results of various studies measuring unplanned purchases, using the interviewing technique referred by Kollat and Willet (1967) would be inflated to the degree to which the unplanned purchases made are not a result of exposure to in-store stimuli (Abratt and Goodey, 1990). In other words, the customer-commitment hypothesis explains that these stimuli play a vital role in reminding the consumer that certain products were (subconsciously) planned and should be purchased.
However, the two explanations support the role of in-store stimuli in impulse buying. Therefore, we consider that in-store stimuli influence
Role of In-Store Stimuli in Impulse Buying
In-store stimuli are promotional techniques employed to increase unplanned (or subconsciously planned) purchases. These techniques include in-store sitting, on-shelf positions, price-off promotions, sampling, point-of-purchase displays, coupons, and in-store demonstrations. Retailers try to increase the number of impulse purchases through store design, product displays, package design and sales (Hoyer and MacInnis, 1997).
Studies (Cox, 1970; Curhan, 1974; Wilkinson et al., 1982; and Limentour et al., 1984) report a positive relationship between the total unit sales of an impulse product brand having high consumer acceptance and the amount of shelf space given for that brand. However, no relationship has been reported between total unit sales of an impulse product brand having low consumer acceptance and the amount of shelf space given for that brand.
On-shelf position also influences unit sales of supermarket products (Sewell, 1984; and Abratt and Goodey, 1990). This is because the consumers have a natural tendency to focus and perceive at eye level. Displays can therefore, increase the rate of unplanned purchase in retail stores (Peak and Peak, 1977; and Quelch, 1983). Many studies have been conducted in an attempt to quantify the sales responsiveness of displays. All these found that the displays increased the sales of the items exhibited (Kennedy, 1970; Chevalier, 1975; Engel et al., 1978; and Wilkinson et al., 1982).
Store size plays an important role in determining customers' impul se purchases. For a small store, in-store stimuli would be relatively less (such as price promotions). A smal l store is designed to fulfill the basic needs of a consumer. Hardly, anyone would go to a mom-and-pop store for passing time. However, the small stores prominently display products, such as confectioneries in front of the customers as these attract impulse purchases. On the other hand, in a big-sized store, a customer can touch and feel the product for a long time, browse through variety and assortment of products, and choose the product of his choice.
In this study, we attempted to extend the findings of previous study by analyzing impulse purchase across various store sizes. Surprisingly, the impulse purchases contribute more to total sales in medium-sized retail stores rather than big-sized retail stores. Need of the hour was the main factor that contributed to impulse purchases in medium-sized retail stores, while product display and product prices were the major in-store stimuli in large stores. For small-sized stores, product price was the main factor that attracted impulse purchases. Also, the product categories that attracted impulse purchases were different in different stores. Surprisingly, store ambience had little influence on impulse purchases made by the shoppers.
One of the reasons for such a result could be that the customers perceive big retail stores to be costlier than small stores. Moreover, there is hardly any difference in prices of a big retailer and a medium-sized retailer, thereby inhibiting customers to purchase from a big retailer. And the convenience obtained in a big-sized retail store is available in a medium-sized store also. As consumers mostly go to these stores for purchasing groceries, big-sized retailers do not pose any special advantage over small-sized retailers. For products apart from groceries, even big-retailers do not keep as much variety as a specialized small- or medium-sized store. However, the results might be different if the same study is conducted in a big metropolitan city. The conclusions of the results provide insights for big-organized retailers establishing themselves in Indian semi-urban markets.
The study illustrates various interesting findings for practitioners, particularly the categories of products and demographics of customers that an organized retailer should look to entice customers into impulse purchases. The generalizability of the results of this study is, however, subject to its limitations. The study was conducted in a semi-urban market of India and hence, there might be some bias in the results. Future studies can examine the influence of store sizes across various urban markets. Secondly, the sample size was low as the time available for study was limited and Indian consumers in semi-urban markets are less amenable towards responding to such surveys. Lastly, the questionnaire was in English language which could have caused problem for respondents in understanding the questionnaire itself. It would be useful to replicate this study for a variety of firms implementing ERP so that the robustness of the results can be established.