The Psychology Behind the Convenience Store Display

As a benchmark store for the Japanese retail industry, 7-Eleven has been on the verge of bankruptcy and is now the number one in the world. What secrets behind its rise?

Thinking from customers psychology

The founder of 7-Eleven, Toshio Suzuki, believes that in an era of scarce supplies, we can only do business based on economic thinking; but in a consumer society with excess supplies, if you want to do business well, operators must not only understand the economy, but also to understand psychology.

1. Price Psychology: “Intermediate Price” Is More Popular
The so-called price psychology refers to how to use consumer psychology to set up price. 7-Eleven uses price psychology very cleverly when creating hot products. By displaying three similar products and making use of the price difference, we create a “mid-price” products and make them as hot-selling products.
Suzuki believes that “median prices” are more popular than “extreme prices”. For example, the same brand of depilatory creams are displayed in the store at 38 yuan and 88 yuan prices. Of course, the sales of 38 yuan depilatory creams are better than 88 yuan depilatory creams, but when we add 108 yuan depilatory creams, At that time, the 88 yuan hair removal cream became the best-selling of the three products.
In Suzuki’s view, when there are only two types of hair removal creams, customers cannot really realize the quality advantage of 88 yuan hair removal creams. When it is difficult for customers to compare the quality, they will naturally use the price as a measure, that is, the 38 yuan hair removal cream is cheap and the quality does not look too bad. But when the three hair removal creams are displayed together, customers can evaluate the value of the product through the two aspects of price and quality.

2. Consumer’s Psychology Behind the Data
7-Eleven is also different from the commonly used “ABC” taxonomy when doing data analysis. In the “ABC” taxonomy, Class A is “hot-selling” and Class C is “slow-selling”. However, this method is flawed. If the sales volume of X products is 100, the sales volume of Y products is 50, and the sales volume of Z is 30; from the perspective of “ABC” classification, X products should be hot-selling products. However, if Z’s stock is only 30 and sold out within a day, then the hot product should be Z.
Therefore, Mr. Suzuki believes that it is not easy to classify goods according to the “ABC” method. In marketing, we must understand the customer psychology and emotions behind the numbers. When analyzing whether a product is selling well, we must focus not only on the quantity axis but also on the time axis. From 7-Eleven’s POS system, we extract the specific time when each product is sold out and combine specific numbers, so that we can know which product is the real hot product.

3. “Single Product Management” — Supporting 7-Eleven Operations
7-Eleven’s stores all place orders based on assumptions, and then check sales through POS data to verify that the product sales are consistent with the assumptions. Through continuous assumptions and verifications, we can keep track of whether each product is hot or slow-moving, so as to improve the accuracy of ordering. This is 7-Eleven’s “single product management”.
The concept of “single product management” is the backbone of 7-Eleven. All systems exist for single product management. A certain branch established a certain hypothesis, the head office must be able to cope with the amount of a certain product to be ordered.
7-Eleven must ensure that the head office can quickly process the ordering information from the branch, the required materials and effective logistics, as well as continuous innovation. If the branch is in front of the scene, all the work behind the scenes is a prerequisite for achieving single product management. It can be said that “single product management” symbolizes the main valve of 7-Eleven, which is used to continuously respond to the rapidly changing customer needs.
In more than 10,000 stores across Japan, not only bosses, store managers, but also part-time staff perform “single product management”. This “single product management” made 7-ELeven strong.

4.Frame effect——–different forms of sales, different sales
The so-called “frame effect” refers to changing the expression and description of things, which may change the framework that people follow when making judgments and choices, and lead to different results.
The research found that for the same promotions, the same services, and the same products, as long as we understand the customer’s psychology and change the expression, we can discover the potential needs and desires of customers.
For example, 7-Eleven often implements “100 Yuan average price for rice balls” activities. In terms of discount performance, instead of using a form of price reduction, it is better to use “average price of 100 yuan” directly to attract customers. The description of the same kind of ground meat, “80% lean” and “20% fat”, although they are essentially the same, the customer did not hesitate to choose the latter when actually buying.
In the “cash back” activity, although “cash back” is equivalent to a discount in disguise, customers need to go to the cashier to pay the bill, and then return the cash at the counter of the special service. When there are many people, they have to wait in line. This is more complicated than direct discount for customers, but “cash back” is more attractive than discounts.

5. The significance of optimizing the shelves-the more selected, the less hesitant the customer will be when choosing
In order to make effective use of the limited space in the store, 7-Eleven will select the most popular ones from a wide variety of main products and implement the shelf optimization strategy to achieve higher turnover. Why is it important to optimize shelves? If a product can occupy enough space on the shelves, it can improve its own expressive power and exert more effective charm. In this way, each item can be seen more clearly, and it is easier for customers to find the item they want.
After being optimized, a hot-selling product that can be placed for more than 20 pcs on the shelvs, then it can be sold more than 10 or more. If it is not optimized, only three or four can be placed on the shelves. It is easy to be missed by consumers because of being inconspicuous and become unsalable.
For example, two shelves are set a long distance away in the store, one shelf is full of a full range of jams, a total of 24 kinds, and the other shelf only displays a selection of 6 kinds of jams. The results show that the number of people choosing from 6 kinds of jam shelves was more.
In Suzuki’s view, although the 24 kinds of jams displayed also include potentially hot products, they are dazzled by too many customers and the performance of individual products is insufficient. The vast majority of customers stay away from the troublesome “choice questions”, which ultimately leads to customer churn.