Saturday, April 26, 2014

Gift Shops: How to stock to meet customer purchasing patterns

If you currently operate a store or website that sells wedding gifts, you’ve probably noticed a pattern in the gift selection your customers make.

If you’re thinking of opening a retail store or site and considering offering gifts, there is a pattern in the purchases people make of which you should be aware.

According to research published in 2013 in the International Journal of Electronic Marketing and Retailing, how you select stock price points effects your overall success.  If you think, "I'll offer both expensive and inexpensive gifts," you're on the right track, but you should consider how people purchasing off of gift registries behave.  It's a little more complex than just expensive and cheap.

According to a statistical analysis of the gift "fulfillments" at 500 online wedding gift registries, “wedding guests are caught between a rock and a hard place when it comes to buying an appropriate gift for the happy couple.”

The rock is the desire of some guests to gain some social benefit with the newlyweds (or perhaps their families) by purchasing an expensive gift.

The hard place is represented by the guests who wish to “enhance their relationship" with the newlyweds while at the same time saving money.

The researchers, based both in South Korea and the U.S., make this observation:
  1. Very expensive gifts ~ very few purchasers.
  2. Higher than average priced gifts ~ purchased by those seeking the greatest social benefit 
  3. Average-priced gifts ~ very few purchasers.
  4. Lower than average priced gifts ~ purchased by those hoping to save money
  5. Very low-priced gifts ~ very few purchasers.
Suggested reading
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This insight should help anyone who sells gifts in their business or who offers a gift registry service: primarily provide gifts that will appeal to those gift-givers in categories two and four, with a minimum of gift options in categories one, three and five.  Gifts in these "bracket" categories appear to be points of reference for the gift giver who is thinking either I want these people to think well of me and so don’t purchase the most expense gifts nor the least expensive – and also pass on the average priced gifts.

For you, the retailer, it should be obvious that you will reap the best return by investing in inventory that meets the needs of both the people who purchase from category two (somewhat expensive) and four (lower-priced by not cheap) with a minimum of inventory in categories one, three and five, again to provide your customer a point of reference.
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Story Source:  Materials provided by Inderscience Publishers. Yun Kyung Oh, Ye Hu, Xin Wang, William T. Robinson. How do external reference prices influence online gift giving? International Journal of Electronic Marketing and Retailing, 2013

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