Craft the Investment Appeal of Art Items

Who is the richest artist in the world?
     Bloomberg Businessweek says it’s Damien Hirst, and that the skilled retailing of Mr. Hirst’s artwork by dealers and then unskilled retailing by Mr. Hirst himself have greatly influenced the extent and limitations of his wealth.
     This BBW analysis of the fine art market yields tips for a range of retailers.
     Consumer researchers distinguish between arts and crafts. We value a craft product because of the beauty with which it performs some function, such as protecting the tabletop or holding the toilet paper. The value to the shopper of an art object arises solely from the emotional reaction generated by experiencing the object itself. The emotion might be joy or grief, but to meet the consumer researcher’s strict definition, the joy or grief would need to arise from more than thinking about how the art object will appreciate in value over the next five years or how little it’s worth now that it was damaged by last night’s house fire.
     In the real world, however, many consumers buy fine art as a financial investment. The BBW article reports that during the decade of the 2000s, the annual rate of return for contemporary art was about 13%. For the same period, the Standard and Poor’s 500-stock index dropped about 6% per year, on average.
     Here are seemingly opposite ways fine art can improve your profitability:

• Buy and sell scarce art objects, gaining a commission on each sale. It’s not unusual for a dealer to keep half the proceeds of a sale of fine art, although Mr. Hirst’s popularity in top demand years allowed his agent to negotiate the dealer’s cut down to as little as 10%. Tips for dealers include carefully tracking trends, learning to identify quality in each product category you carry, and negotiating sharply with suppliers. Those tips apply to retailing items well beyond fine art, don’t they? 
• Sell quantities of abundant fine art. Mr. Hirst maintains a factory to produce versions of his fine art works. This served him well in 2008 when at a Sotheby’s auction, he had 223 lots on the block. But in more recent years, there’s been a dramatic drop in the resale prices of Mr. Hirst’s work. BBW attributes it to flooding the market. As in other retailing endeavors, the key skill is maintaining the right level of abundance, which is a matter of timing. 

For your profitability: Sell Well: What Really Moves Your Shoppers

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Impact Shoppers with Creative Repetition

Hard to believe that it’s been almost eight years since Robert Kearns passed away. He’s the guy who invented the intermittent windshield wiper system. I’m told that at the funeral there wasn’t a dry eye in the place. Then there was. Then there wasn’t. Then there was.
     As with intermittent windshield wiper systems, repetition by a retailer is valuable. Repeat the benefits of a product to a shopper often enough and the shopper becomes convinced what you are saying is true. The effect is so well-established by decades of research that consumer psychologists use the term “truth effect” to refer to it.
     But unlike with the identical repetition of Mr. Kearn’s invention, the retailer’s repetition works best if the product benefits, selling points, or usage instructions are presented in different ways.
     If you deliver an identical message again and again and again, the shopper might come to believe it, but at some point, they also start disliking you and the product. Consumer psychologists have a name for this one, too: Wear out. Wear out is more likely when the shopper is carefully evaluating what you’re saying. That’s why many TV ads can get away with rote repetition: Nobody’s listening very carefully.
     When people shop together, their memories for what a salesperson tells them tends to be inferior to what they remember when they’re shopping as individuals. So repeat the information more often when selling to a group. Organizational researchers at Northwestern University found supervisors of employees over whom they lack formal power do best when keeping the message consistent and varying the modality of delivery—a conversation followed by an email.
     Research at Baruch College has refined some assumptions about what gives the best payback for a retailer’s advertising dollars when running a series of text ads: Each ad should show movement forward from the prior ad. This is more effective than a campaign that repeats all the same content in each ad. However, in each ad, use some of the same elements that relate to the theme of the campaign.
     Even lessons from foolish jokes are remembered better when variations on a theme. Want an example? Okay:
     When Larry LaPrise, who wrote the children’s dance classic “The Hokey Pokey,” died, things were more complicated than with Mr. Kearn’s passing. While transferring Mr. LaPrise to his coffin, they put his right foot in, and that’s about when trouble started.

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Repeat the Truth in Different Ways

Elucidate with Close Business Friends

It pays for your customers to consider you to have what University of Geneva researchers call a “close business attachment.” These customers develop personal bonds with the retailer and are comfortable exchanging information about family and friends. This goes beyond “secure business attachment,” in which the relationship is limited to depending on the retailer for quick answers to questions about purchases.
     Researchers at Nanyang Technological University in Singapore found that, in their studies, consumers who considered themselves to be close friends of a retailer were more forgiving of the retailer when the outcome of a transaction was unfavorable. The consumers gave higher ratings on fairness and satisfaction than when the retailer was considered only an acquaintance.
     But when serving customers who consider themselves to have a personal relationship with you, clarify expectations and obligations.
     Researchers at Lingnan University in Hong Kong and Chinese University of Hong Kong presented study participants with a scenario: You’ve asked the owner of a restaurant with whom you have a close business attachment to hold an ocean-view table for your birthday bash. When you arrive, the owner explains, with a tone of regret, that all the ocean-view tables are taken.
     Each study participant was asked what their reaction would be. Past research had indicated the restaurant customer would be empathic, since the owner was, after all, like a friend. And indeed, for many of the study participants, this was the reaction. They demonstrated understanding toward the owner. However, for others, the reaction was anger at being betrayed by a friend.
     What made the difference was whether the study participant, taking on the role of a customer, had clarified in advance their own expectations and obligations and those of the retailer. With this clarification for transactions based on a close business attachment, there was more likely to be customer empathy for the owner’s needs.
     Does it matter that all these studies were done with consumers in Asian cultures? Asians place higher significance on personal relationships with a merchant than do North American consumers. Still, researchers at University of Toronto obtained compatible findings. Respondents in their study who had a friend-of-the-family type relationship and donated one hour were more comfortable getting a $15 discount at a health club than an hour class. They thought that friends deserve to make choices. Those considering themselves to be no more than acquaintances were more comfortable getting the free class.

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Look at Sex to Curb Showrooming

Results from the “2012 Kellogg Shopper Index,” based at Northwestern University, indicate that your attention to consumer gender can help curb showrooming.
     Men who have achieved advanced education levels and earn higher incomes like the money saved by showrooming. They’ll come into your bricks-and-mortar (B&M) store, drain the brains of you and your staff for advice and training, and then leave your store to make the purchase online. Or maybe not even leave your store, but rather use a mobile phone to scan the UPC code from a package on your store’s shelves and place the online order while standing right there.
     The men’s preferences are not as sensitive to the quality of B&M customer service as are the preferences of women shoppers. The Kellogg finding is that, although female shoppers are also attracted by the price advantages of showrooming, they prefer the high touch atmosphere of B&M. It’s when they receive poor customer service that they abandon loyalty to B&M.
     Of the survey panel participants who reported having engaged in showrooming, 40% said they didn’t intend to do so when entering the store, but decided to do it after experiencing inadequate customer service and support. About 59% of all 1,900 survey panel participants said they’d received poor or average service.
     The implication for retailers is that you can achieve notable leverage in decreasing showrooming by determining how your female shoppers define customer service and support, and then delivering in full measure.
     How those women define customer service might differ from how you or your staff define it. Research at University of New South Wales indicates that retail staff have one or more of three sorts of definitions:

• Giving customers what they ask for in a minimum of time and with a maximum of courtesy. 
• Solving a problem with or for the customer so that a bond between the customer and the store is formed or strengthened, making it more likely the customer will want to return soon and often to the store. 
• Selling products and services. 

     The first two definitions sound fine, although the means to accomplish each could vary between the two. The third confuses ends with means. Employees who define customer service as meeting sales quotas might have low trust in store management. Or it could be that store management gives no more than lip service to delivering what shoppers consider to be good customer service.

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Wish Lists Build Sales

Make a wish for the holidays that your sales will increase as children include on their gift lists items your store carries. Then go beyond wishing to have it happen.
     By at least one measure, parents are more optimistic than their children about loot on the lists making it into holiday closet hiding: About 62% of kids ages 3 to 11 think they’ll get more toys if they’re well-behaved throughout the year. However, 78% of their parents say they’ll buy the same number of toys regardless of the child’s behavior. That’s according to the “Talking Holiday Toys Survey” sponsored by Walmart Stores and using the GfK Public Affairs & Corporate Communications KnowledgePanel.
     As for the holiday closet, it’s the most popular single hiding place, although with this one, the kids do outfox the parents: About 14% of the moms and dads say the kids found their gifts in advance, while 23% of the kids report having made early discoveries.
     What do the kids think maximize the odds of getting items from the list? Nagging. And the parents agree, calling the technique, “kids asking repeatedly.” So when kids and parents are in your store, provide places and opportunities for the children to emphasize their wishes.
     Your odds of building wish list sales are greater when you’re tracking trends in toys and games. Probably, the die has already been cast for you stocking on shelves the hot toy stocking stuffers. But whatever merchandise you have, you can aim to frame it to fit the themes of these trends, which kicked off last year at the Toy Industry Association trade show:

• Nonstop activity. Kids now like engaging in simultaneous independent play. It’s the difference between Scrabble and Bananagrams. Similar trends include multitasking instead of waiting your turn, cooperative play rather than independent play, and game rules which emphasize speed. 
• Internet influence. The tangible integrates with the virtual. More toys work with apps, and virtual world games allow for online links. Another strand is the increase in the number and variety of miniature versions, reflecting the consumer’s attraction to the portability associated with mobile electronics devices. 
• Exercise. Adults are listening to the warnings about childhood obesity and so want items which encourage physical activity. There are more sports, dance, and active role-play offerings. Still, brain exercise is all the rage, as well. Tell how your merchandise and services foster logic and strategic thinking. 

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Interpret Flawed Price Memory as Satisfaction

When your customers are highly satisfied, they’re more likely to say the price they paid was fair. It turns out that one reason for this could be that highly satisfied customers don’t remember well what they paid. Researchers at University of Mannheim, University of Nuremberg-Erlangen, and RWE Consulting GmbH say it’s a function of time since the purchase.

• Shortly after making the purchase, the consumer who experiences high satisfaction with the product and the retail experience might recall the price quite accurately. Then the memory of the precise price fades. 
• It’s the memory for the actual price which fades. The sense of whether the price was high, medium, or low, fair or unfair, stays much the same as the time between purchase and recollection increases. 
• With lower levels of satisfaction, any memory for the actual price doesn’t fade as much with the passage of time. 

     Putting this together, it appears that one indication customers are highly satisfied is that, when they return to your store, their memories for the precise prices previously paid for items is somewhat fuzzy. Customer satisfaction is, in turn, an opening for you to offer the returning shoppers upgraded opportunities to buy what will fit their needs. The fuzzy memory facilitates acceptance of increased price points and shopping basket totals.
     Satisfaction also increases the chances your customer will tell friends and family they should purchase the items for themselves at your store. In response, a question from these others could easily be, “How much did you pay for it?”
     Researchers at University of Alberta, University of Calgary, and University of British Columbia found that when people believe they might have been able to wrangle a better deal on a product or service, this conclusion leads to them feeling a threat to their self-esteem and their self-image. They fear not only that others will see them as being suckers, but also that they’ll see themselves that way. So they lie, intentionally or unintentionally.
     Since a natural follow-up question is, “Where did you get such a good price?,” you—the retailer—should expect people to come into your store expecting deals you’re not offering.
     How nice to have them come to your store! Be ready to turn the new shopper’s confusion about pricing into conviction to make a purchase from you. Show what you do have to offer, renewing the cycle of high satisfaction and fuzzy memories.

For your profitability: Sell Well: What Really Moves Your Shoppers

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