Saturday, November 19, 2011

Consumer Urges

Ever wonder how you go to the grocery store with a list and come back with lots of unplanned purchases and a much larger bill? This really applies to any sort of shopping - clothing, electronics, toiletries, and souvenirs.

When my husband moved into my lovely DC share in Dupont Circle we talked about food shopping and budgets. He knew that grocery shopping ranked lowest on my list of things that I don't like doing but need to do in order not to starve. Yes, for me grocery shopping ranks below cleaning the bathroom. My husband had a brilliant idea, developing the grocery store map! Yes, it may seem funny at first, but hell it works. He scoped out my favorite grocery store, Trader Joe's - ah I miss it so - and created a map of the store based on the things that we usually need and buy. He spent a few hours compiling the map, but it made shopping a lot less excruciating and expensive. Each time we would go to TJ's we would create our shopping list on this map - putting fruit and veggie, hummus, and meat in the corresponding spots on the map. I mean, sure you still buy things impulsively, but mapping out your grocery list created big savings in time, stress, and financial management.

A whole science exists on how things are placed in your local grocery store. Store owners tend to place most expensive items at eye level, while less profit generating products at customers' feet and at tops of shelves. Store owners tend to group complementary products together as customers will buy more products - you know how salsa and chips always end up conveniently located next to each other? You know when you come into the store after work and you encounter that divine smell of fresh baked bread - yes, it makes you hungry and more likely to buy more food. Ever notice how staple goods like milk, cereal, bread and yogurt are at the back of the store - right, that's to make you walk through entire aisle's worth of stuff that you really don't need to get to the essentials. If you are a fan of Trader Joe's you will notice the kiddie sized shopping carts and the wonderful scavenger hunt offered for kids -  they entice pint size consumerism! My favorite is the selection of a variety of trashy and not so trashy magazines with gum and candy next to the checkout clerk, standing in line longer encourages a greater number of poor buying decisions. I mentioned a few strategies used in placing items in a supermarket, but there are obviously many more ideas on how to get consumers to spend more time and money in shops.

There are a few instances where I observed a number of really interesting business models of store managers/owners maximizing our instincts to shop. First, I have a friend from undergrad which loves and raves about this wonderful supermarket which she and her husband discovered in upstate New York. They live in the city, so driving to the supermarket is already a sunk cost. Once there, as a consumer, you will want to maximize your time and buy everything in one place. This supermarket had a snakelike layout. My friend raves about the fact that the whole store is made up of one winding aisle, thus relieving the anxious consumer of the stress of running between different specialty aisles. Brilliant! Consumer walks through and sees all the offerings of the store; not completing their trek through the store will mean that they will never get out. From the store owner's perspective, by forcing all customers to look at every item they have on offer will encourage a greater number of impulse buys, thus maximizing his/her return on investment. I don't feel its great for the individual consumers, but from a marketing standpoint, this idea is pure gold, ahem...literally.

Second, in Chennai, I have had to also stop and appreciate marketing brilliance of a retail business idea. Meet Anokhi, my happy place. This two story compound appeals to four shopping tendencies among young upper middle class women; clothing, home textiles (nesting), jewelry, and coffee/dessert. The Anokhi compound houses a clothing and home textiles store on the ground floor and a jewelry/tchotchke/cosmetics and coffee shop on the second floor. They have been expanding the ground floor for another retail venture, which I feel will just enhance the draw of the shopping compound. A deceptively simple idea shines in its brilliance. I mean think about it, you want to meet a girlfriend for dessert and coffee. Inevitably, one of you will be running late. Sure, there are newspapers at the coffee shop, but who will peruse the news if you can peruse the latest offerings in beautiful prints and organic cotton? Gotcha! The more late your girlfriend runs, the more likely you will buy something.

Alternatively, you are American and don't want to make your friend wait, so you arrive early. The clothing and textiles store is on the ground floor, thus you have to pass it on the way to the coffee shop, since you are early, why not stop and browse right? Lastly, on the way to the coffee shop you have to pass the tchotchke, jewelry and cosmetics shop on the second floor - who can have constant iron will not to want to spoil oneself just this once, right? I take my hat off to the designers of Anokhi, they definitely get what drives our consumer urges.

Friday, November 11, 2011

My Frenemy: the Auto(rickshaw)

Oxford dictionary defines frenemy as "a person with whom one is friendly despite a fundamental dislike or rivalry." Meet my ubiquitous frenemy - the auto and its fearless driver. You will find my frenemy prominently displayed above the text.

Things between Chennai auto drivers and I, are complicated. We maintain a symbiotic relationship - I use their driving services to get to places in lieu of safe public transport and the auto drivers try to skin as many rupees off me as possible. I am not saying Chennai auto drivers only try to skim as much as possible off my humble person: no, auto drivers tend to maintain democratic standards - they attempt to fleece everyone equally.  In the Lonely Planet's India country guide - Chennai auto drivers are affectionately described as sharks.

To be fair to these distinguished professionals - auto fares in Chennai are currently artificially low. The government has not allowed auto drivers to raise basic fares for many years, resulting in auto drivers negotiating fares in lieu of using their meters. Furthermore, recently petrol prices began to steadily increase as a result of the Indian government's removal of petrol subsidies, further reducing the auto drivers' profit margin. These circumstances lead to a unique challenge as a consumer of auto services - one must learn accurate fares for various destinations as quickly as possible. Failure to do so results in grossly overpaying and acquiring the reputation of a consumer that grossly overpays for auto services.

Over time my frenemy has developed an interesting business model of calculating fares. Each driver bases fares on answers to the following questions:

1. Does the potential passenger look like they come from Chennai? In my case, the driver assumes I am a tourist - the biggest prize to fleece. I do not blend in - making the case that I know fares and my way around this city - is particularly difficult.
2. Is he or she in a hurry? Showing stress, impatience, and fear will raise the fare accordingly.
3. Is it raining? Alternatively, is the potential passenger sweating profusely after spending a few minutes in the blazing sun? Fares fluctuate depending on the strength of the rain or heat/sun.
4. Does the passenger speak Tamil? Sadly, my Tamil skills melted into the haze, the only exception -  I am can still give directions and bargain in Tamil.
5. Are there other autos around? Fares fluctuate according to the number of other auto drivers hanging around. However, if other drivers decide to help their buddy negotiate, the passenger loses ground quickly.
6. Is it after 10 PM? Fares at night arbitrarily rise. If there are no other auto drivers around, your bargaining power does not exist.
7. Is the passenger a regular customer? A passenger that engages an auto driver regularly, contributes to the auto driver's income regularly, thus creating a disincentive to fleece more than acceptable.
8. Does the passenger have change? Lack of change will result in very expensive auto rides as, inevitably, no auto driver is willing to part with his change - most claim not to have any change even as early in the morning as 7:15 AM.

I generally like the auto guys that hang out across the street. We agreed on prices to my yoga place and work. The drivers at the auto stand down the block from our house will usually give us really crappy deals, thus I stay away from that auto stand. I usually return from work during rush hour with many autos passing my office-building and tend to negotiate with moderate success. To avoid very expensive auto rides, I've began hoarding change, which makes my wallet really full - even though I am not carrying much cash in terms of absolute value. I've generally failed at negotiating rides that take place less regularly even if I need to go pretty close to my house. Every new route, even if the auto driver I am negotiating with knows me and takes me somewhere on a regular basis, turns into an epic battle of the wills. Since I am usually in a hurry and running late, I lose.

I've recently noticed that I have a much less sunny personality when negotiating fares, but a girl must do what a girl must do, to get from point A to point B.

In the great words of Ostap Bender of The Golden Calf by Ilf and Petrov:

"Автомобиль не роскошь, а средство передвижения" = "The auto is not a luxury but a means of transportation"

Since we are still waiting for our car - rumor has it we will get it soon - I live to fight...I mean negotiate, another day.