Focus on retail pt. II — The Diderot effect

Ever buy something, and because of that purchase, you make several more? Buy a house now; suddenly, you need furniture, appliances and decorative items. Buy a dress or suit; suddenly, you need shoes, jewelry, a tie or other accessories. It happens to all of us.

It's a social phenomenon related to consumer goods known as the Diderot effect, named after the French philosopher Denis Diderot, who first described the phenomenon in his essay.

Why is this important to you?

Large, national retailers know this effect and arrange their merchandise accordingly. Go into a large furniture store; rather than random couches and chairs, they are organized by rooms. Ikea has perfected this. Go into a sporting goods store, and you'll find items arranged by sport and so on. The question is, do your local retailers know this and practice this?

Stanford research suggests that "in-store layout" is a store's number-one driver of profitability. It is more profitable at driving sales than even advertising. In our quest to be a source of business intelligence and a resource to our local clients, sharing the Diderot effect and helping them organize their stores accordingly could help immensely.

Mcdonald's simple question: "Do you want fries with that?" increased their annual revenue by 15-40%. This is why fast-food chains now all sell bundled meal packages rather than just the burger — the Diderot effect.

Placer.ai recently published a new report, Retail Giants in 2023: Visit Patterns to Walmart, Costco and Target. In this compelling report, they share that in-store shopping has been in decline. If you'd like a copy of this report to share with your retail clients, email me here, and I'll send you a copy. The key takeaways that I'll be sharing with my retail friends are:

1. New Store Formats Offer Something For Everyone. Walmart and Target have been experimenting with their store formats. Target has both large and small-format stores, while Walmart is revamping the design and layout of some of its venues so every shopper can find a store to match their preferences.

2. Retailers Are Expanding Healthcare Options. With more people than ever seeking out affordable healthcare options, Walmart's health clinics are heeding the call.

3. Mission-Driven Shopping Returns. While inflation has eased, consumers are still feeling the effects of rising prices and are shifting their shopping patterns accordingly — visit frequency to stores is down, but shoppers are staying longer. The ongoing adjustment of these patterns is a crucial trend to track in the second half of 2023.

Our local retailers need all the help they can get. Sharing the Diderot effect and the Placer.ai report with them, helping them organize their store layout and helping them bundle or group similar items can help them dramatically increase the profitability of their stores.

And they would have you to thank for it.

Happy Monday!

Jeff Schmidt is the SVP of Professional Development. You can reach him at Jeff.Schmidt@rab.com. You can all so connect with him on Twitter and LinkedIn.