J.D. Associates Retail POS Solutions Blog

Understanding the Reluctant Consumer Behavior: I WANT IT vs. I NEED IT

  

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Much has been said about the effect that the Great Recession has had on consumer buying habits and consumer behavior.  Many experts feel the severe trauma caused by the economic collapse will have long and lasting consequences for retail.   Insecurity about the future has caused the consumer to think twice before making a purchase.  Frugality and discretion are the norm, and it appears they will remain entrenched in the consumer psyche for the foreseeable future.  So, as retailers, how do we adjust to the new economic reality?

Consumers make purchasing decisions based on two principles:

In pre-recessionary times, the line between these two principles was often blurred and unimportant to most consumers.  In fact, many consumers convinced themselves that they absolutely needed what they, in reality, only wanted. Today that line is much more clearly drawn, and consumers are carefully questioning most, if not all, purchases.  How does this increased scrutiny by the consumer affect today’s retailer?

Most merchandise carried in retail stores falls into the “I WANT IT” category.  Because the “I WANT IT” merchandise is now more difficult to sell, retailers must be much more discriminatory about purchasing the right mix of merchandise so they don’t get caught in either an overstock or understock situation.  Both situations can be costly and have a long-term negative impact on a retail business.   To maximize the turn of this merchandise, the “I WANT IT” items must scream value to convince the skeptical customer to open their wallet at the retail point of sale.

By categorizing merchandise into “I NEED IT” or “I WANT IT” groups, retailers can more easily make decisions on how to make the “I WANT IT” inventory more attractive to the ever hesitant customer.  Run some reports in your point of sale system that compares sales of “I WANT IT” merchandise prior to the recession and during and after the recession.  In the current economy, customers are still making purchases of items they don’t necessarily need but want.  They are just making fewer of them.  A carefully planned merchandise strategy is more important than ever to insure retail success.

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