Power Essay – Acting on impulse by Elie Milan

By Elie Milan, director, Publicis Media Commerce Middle East

What did you buy this week? Don’t just add up your big items;how many times did you make an impulse purchase? A candy bar here, a pack of gum there? How often do you pay without thinking about it? Shopper studies show that the average US consumer spends more than $5,400 a year on impulse purchases, most of which goes towards food and snacks picked up around the checkout counters of stores.
Such items – chocolate bars, for example – are rewarding for the consumer and the retailer alike: they’re not expensive to buy, consumed right after purchase and relatively high margin.
However, the traditional impulse purchase is at the tipping point of disruption. As purchases migrate to the online space and orders become more planned, there will be less time in a traditional store and even less opportunity for impulse purchases. While consumers are moving there, what has kept the impulse purchase out of the e-retail basket today? Simple cost per unit.
To put it in dollars and cents, it’s not practical to sell the classic single bar of chocolate online; the costs of storing, picking and fulfilling them simply do not make commercial sense, and demand for such products is not as high online.
Like all legacy industries of today, the impulse category is looking at how to best turn these challenges into opportunities, how to reimagine ways to grow. The first step is the hardest as it must begin with an actionable mindset shift within organisations – start thinking omni-moment and then omni-channel. This means shifting the focus towards creating opportunities that deliver on the impulse moment through a variety of channels. There is no silver bullet solution, so companies need to start experimenting to create a wider set of opportunities so they are equipped for the future.

Three simple ways that can help brands drive growth:

Maximizing the current online retailer opportunities: The relationship between the online retailers and brands needs to evolve. Deeper partnerships will be key for brands to navigate the online retail space. Areas like basic transparency are still not tackled in many instances, hindering the brands’ growth and leading to sub-par ROI. Data partnerships are also key for both parties, as both want to sell as much as they can.
Giving brands access to more data will allow them to optimise their presence, get more qualified potential customers and better adapt their product packaging for the online business. And, finally, retailers need to start helping brands work together, given their knowledge of the consumer basket: occasion packs and virtual bundling can be a big driver and can help move slow items.

Creating new opportunities today: Unlike offline retail, the online retail trade offers new yet smaller opportunities that can help drive growth. Partnering with large restaurant chains or food delivery players can be another way to recreate the offline checkout experience. Also, tech gadgets such as Amazon Dash are considered an impulse buy in this category when the person is craving a snack or a sweet treat. When it comes to the fulfilment side, we’re seeing closer delivery times with the likes of Amazon Prime Now and grocery aggregators, helping brands solve the immediacy dilemma. The biggest opportunity in this category revolves around going straight to consumers, obviously where brands have the right to win. This will help them retain their customers, improve their margins, expand and control their market reach and, finally, improve their customer data. Brands like M&Ms in the US have developed a direct-to-cus-tomer platform focused on gifting.
This helped the brand customise the experience, drive business and maintain client ownership while delivering growth.

Leaning into the near-future: With the advancement of technology and artificial intelligence, prediction is now a reality. A couple of start-ups began experimenting with mobile warehousing, where the orders are pre-loaded, allowing fulfilment to occur much faster. Finally, smart sensors will soon become a reality in this category; what is mainly used for temperature and humidity monitoring today will evolve to help deliver more innovation linking digital to offline retail.
The opportunity is now. Volumes are not yet there in most markets, but when you look at the consumer trends, technological advancement and the strong commerce players you’ll understand that if you fail to learn and partner now, you will be outperformed by both traditional and new players who are laying the groundwork today to take ownership of your category tomorrow