Planning for Unplanned Purchases
It never fails. Even when you painstakingly make a list before going into the grocery store, something else always finds its way into your shopping cart. Traditionally, those "extra" purchases have been considered things outside of a shopper's budget. But Marketing professor Kirk Wakefield discovered that those unplanned purchases are really planned by consumers.
Wakefield and his colleagues at the University of Pittsburgh knew that most shoppers have a mental budget when they walk into a store. They theorized that, even if shoppers have a list, written or in their mind, they also have room in their mental budget for additional non-list items.
"We came up with the term ‘in-store slack" to describe the additional money people spend," Wakefield said. "They know they'll spend it, but they have no clue on what."
For their study, Wakefield's team sent researchers into H-E-B stores in and around Waco, Texas. They met shoppers as they entered the store and asked them about their budgets and what they planned to purchase. They recorded the number and brand of items that consumers planned to purchase, then gave them scanners to record the sequence of the items they put into their baskets.
Wakefield found that even though shoppers, on average, purchased far more than they had on their lists, the total amount of money they spent was about what they had anticipated.
For example, if a shopper planned to spend about $60 during that trip, approximately $40 would be spent on items on the list, and around $20 would be spent on items not on the list.
"So, what we found is that in-store slack really is built in to a budget," Wakefield said. "People stay within five percent of their total mental budget."
Generally, there are three reasons people allow themselves in-store slack, Wakefield said. Forgotten items (seeing items in the store that are needed but not on the list), wanted items (impulse purchases) or price-oriented (an item is on sale so the shopper purchases items not on the list, or more of the item than originally planned).
In-store slack items also tend to come from the same categories. "Slack is usually spent on items for fun, or self-indulgent purchases," Wakefield said.
The categories most often bought with in-store slack were things like candy and gum; ice cream and other frozen desserts; cookies; shelf-stable juices and juice boxes; packaged breads, rolls, bagels and muffins; crackers; baking mixes for cakes, cookies and brownies; ketchup, mustard and other condiments; salad dressing and mayonnaise; and canned fish (such as tuna and sardines).
More necessary items tend to be planned and purchased: pet food, fresh milk, fresh fish and seafood, eggs, soft drinks, laundry detergent, yogurt, paper goods, bottled water, and fresh baked-goods from the in-store bakery.
Wakefield also found that if shoppers did exceed their in-store slack, it was usually at the end of their shopping trip, and occurred more often if a shopper spent a longer time in the store.
"Those unplanned purchases tend to come at the end of a shopping trip, when shoppers are tired or wanting to reward themselves," he said. "That is when people are more susceptible to going over their in-store slack."
People who shopped most aisles of the store were most likely to go over their in-store slack, while shoppers who shop in three or fewer aisles rarely go over their budget.
Wakefield found that there was little difference in the purchasing habits of men and women. Both were equally likely to stick to their mental budgets, and neither showed a tendency toward more impulse buys.
Income also did little to change how people met or exceeded their mental budgets. It did, however, show a difference in how people used their slack.
"Income levels did show a moderate effect," Wakefield said. "Higher income shoppers tended to stockpile. If they found an item on sale, they purchased more of that item than they originally intended. Lower income shoppers tended to upgrade. For instance, if they had planned to purchase a store brand, but when they got to the store found that the name brand of the same item was on sale, they tended to opt for the name brand."
Wakefield's papers on the findings, "Spending on the Fly: Mental Budgets, Promotions, and Spending Behavior" and "Planning to Make Unplanned Purchases? The Role of Discretionary Budges in In-Store Decision Making," both coauthored by John Jeffrey Inman and Karen M. Stilley, were published in the Journal of Marketing and the Journal of Consumer Research, respectively. The findings have several implications for retailers.
First, shoppers who save on their planned items, are likely to stockpile things on their list only if their slack has not been used up. If they save on planned items, they are also more likely to exceed their budget with unplanned items only after their slack is depleted. Therefore, retailers may be wise to place items that induce stockpiling (like buy-one-get-one-free promotions) at the beginning of the shopping pattern, and focus those promotions on items that tend to be planned purchases (like bottled water or laundry detergent). Displays of items that are unplanned might also be placed near the promotional items at the end of the shopping pattern.
Also, since higher income households tend to stockpile planned items before their slack is depleted, while lower income households switch to higher-tier brands, retailers might consider running promotions of high-tier brands that would appeal to higher-income shoppers. Lower-tier brands might consider marketing their product in ways that would encourage lower-income shoppers to think in the long term so that they will stockpile the item.
Wakefield hopes to continue this stream of research, which he has been working on since 1992, to look at other questions.
"It would be interesting for retailers if we could see whether consumers whose slack is spent primarily on ‘forgotten needs' are more influenced by promotional savings than those whose slack is spent primarily on ‘unplanned wants,'" Wakefield said.
He would also like to look at how non-price marketing features, like the amount of shelf space an item has and how it is displayed, might influence people spending on planned and unplanned purchases.
Wakefield is also curious to see how his findings would translate to grocery stores nationwide, and to non-grocery retailers.