Thursday, June 26, 2008

What is the Profit Maximizing Level of Aisle Clarity for Big Box Stores?

I received the following question in an e-mail from a student today:
Is it the intention of "big box" stores to make it difficult for people to find there way around the store? I have noticed that only major sections are marked in these types of stores. For example the signs will just say "Bath", "Outdoor", "Electronics". Is this because they want you to spend more time in the store looking around for what you want because then you might purchase more?
Hanging signs is costly so I agree that it seems unlikely this is an accident, but I don't know the answer. It is impractical to list everything in an isle, but not particularly helpful when it is so vague, so what is the profit maximizing level of clarity for isle labels of the big box stores?

Comments are open.


Matt E. Ryan said...

There's certainly two competing factors here--the store is helped by you wandering around trying to find things (you see and, presumably, buy more goods) yet hurt by the frustration in not being able to find what you want (you get pissed off and leave, and therefore buy less goods)-- implying that there is an optimal level of signage around a big box store. Wal-Mart keeps data on *everything* going on in their stores, I'm sure they've experimented with this as well.

Justin M Ross said...

I am thinking that sign detail is mostly a function of the physical length of the isle. They have competing incentives for whether or not they want to make you wander around the store. They clearly cluster items that are complements (spaghetti and pasta, fruits and vegetables) in the same or nearby isles. Yet they also put high frequency purchase items like milk in the back of the store so that you must walk through.

I think the sign detail does not play a roll in making you wander. The longer the isle, the more difficult it is to scan it for your desires. The longer this scan and snatch process takes, the longer before you make your next purchase. If time wasn't a serious cost for consumers, there wouldn't be convenience stores.