Group Buying In Stores – Experiential Shopping Idea

Micro-Blue Hours – This is just a retail footfall driving concept I thought I’d share: If your retail store is having difficulty driving footfall (which drive revenue), it’s worth exploring the K-Marts Blue Light special concept. This marketing gimmick was intended to keep shoppers engaged. Basically, the way the Blue Light special worked is that suddenly of the intercom the store manager would say “attention K-Mart shppers” and a blue light would point to a product that was then massively discounted in the K-Mart store at random times of day; making the shopping experience fun and an activity all its own is novel. Everyone loves a bargain.

I think that group buying in stores is an interesting way to draw customers to your store. The twist I would add is to imagine customers coming to the store at a specified time: 6pm let’s say. Customers are offered a free orange juice and then those customers vote on the items they strongly want discounted today, be it diapers or groceries whatever. The store manager has a iPhone app where customers vote, and then there is a 1 hour window in which all customers in the store or arriving at the store can get a 50% discount on upvoted items. Crazy right?

Step 1: Customer Votes Are Aggregated So That Those With The App Can Get A Discount

 

Step 2: Voting Has Ended, Count-Down for Most Voted Item Starts

 

 

 

 

Step 3: Countdown Clock for the Next Hour, Using the App, Customers Scan for A Discount (Making Shopping Unpredictable & Fun)

Possible Draw Backs to This Idea

  • A) What if customers routinely vote up an item but are overruled by other shoppers? This “never getting your way” problem explains exasperated political disenfranchisement…But my answer is, it’s better than the store dictating based on inventory or internal drivers. Let the market democratically determine what items people want discounted.
  • B) if everything in the store is discountable, then the frequency of discounts in high value items will drive the economic value of the given items down over time. The Groupon effect is where the discounts actually lead the company to discount their own efforts relating to delivering the service, and also prevent product discounts that are believe the average variable cost for housing the items because they want the customers without the “marketing spend” which is in effect a discounting spend. The danger is that the price point will reach a new equilibrium where customers consistently co-ordinate for diaper discounts for example.
  • C) Finance and accounting considerations are not central to this marketing campaign but are the most important considerations in terms of profitability. I haven’t run the math for how this group discounting would be operationalized but the most powerful department in any organization nonetheless. These folks would need to be compelled with the “Micro-Black Friday” logic of enhance short-term earnings; a new tool in the earnings management toolkit.
  • D) Customer engagement risk is considerable.  Customers might not dig this concept. If they knew that they and their friends could artificially drive down the price of goods in exchange for their footfall, they may well try to game the system. Coupon and other models like the original Blue Light specials at K-Mart might be easier to operationalize but why not test this idea, if customers go to the store when they want.
  • E) Competition is between retailers and online options, the market is consolidating into giants like Amazon and Wal-Mart. That battle is being waged online, the management of Wal-Mart is unlikely to want to innovate on their home turf.

General Thoughts

My general thought is, first, is this sustainable? Just because they stopped doing it doesn’t mean it didn’t drive additional footfall. Of course, it’s hard to determine causation without A/B testing. It might make sense to have a Blue Light special on low volume days; perhaps Mondays or Tuesdays. Can you imagine your mother going to K-Mart to participate in a specific timed special? Presently,

Where Blue Light sales a bad idea? So, one criticism of business schools is their emphasis on winners. Everyone loves to study brands that succeed. Unfortunately, 20 years ago, many of the companies that were studied just aren’t around anymore. Hilariously, we look at Wal-Mart and love to speculate on their future. K-Mart is disappearing, but it doesn’t necessarily mean that their failures and successes should be disregarded.