Putting an End to Customers’ Cherry Picking Ways
Editorial by Bill Bittner, President, BWH Consulting
A number of general merchandise retailers have begun altering return policies to address customers they’ve identified as chronic complainers. These are shoppers who return an unusually high number of products to the stores. Returned items cost retailers money and some have decided (wrongly or rightly) to institute policies that discourage shoppers from bringing products back to the store.
Hi-lo supermarkets have a nemesis of a different nature – the cherry picker. We all know they exist. They’re the shoppers who swarm into stores to stock up on sale items but are noticeably absent other than at that time. Is it time for supermarkets to identify these shoppers and find a means to putting an end to their cherry picking ways?
How would stores go about this and, more importantly, should they bother?
Theoretically, we can use frequent shopper data to identify cherry pickers. I’ve not heard, however, of much effort being made to stop them. Many ads include limits on the number of items that can be purchased, but I am only aware of them applying to a particular transaction. I am not aware of any retailers using their frequent shopper data to enforce the limits of numbers of items purchased over the length of the promotion.
Part of the reason limits are not enforced is technical. Frequent shopper data is often maintained on a central database to accommodate customers that visit more than one of a retailer’s stores. The data to update the database is forwarded with the POS sales data. It is often summarized, so depending on the level of summarization there may not be enough detail in the central file to identify individual participation (i.e. the central file may merely have “point totals”). New and faster networks, combined with overall implementation of messaging interfaces, has made it possible to exchange more data in real time so that it is now technically feasible to have the details on the central file.
I really don’t know whether the problem is big enough to warrant the additional data storage that would be necessary to prevent cherry picking. It probably depends on the philosophy of the particular retailer.
The other aspect is that it would be an operations nightmare and easily subverted. Operations would be forced to explain the whole thing when it went into effect and would suffer the consequences when customers refused to keep the items or walked out on an order. For hardcore cherry pickers, the policy can be easily subverted by applying for multiple cards. All-in-all, I think cherry pickers are just something supermarket operators running items at sale prices have to accept as part of doing business.
Moderator’s Comment: How big of a “problem” are the cherry pickers? Should retailers use frequent shopper data to limit customer purchases throughout
the length of the promotion instead of merely by transaction? –
Bill Bittner – Moderator
Cherry pickers are not the problem, they are the result. Any time a retailer offers a big discount on a needed or desired items without a self-serving covenant the opportunistic shoppers will take advantage of them. Is that a surprise??? The solution lies in marketing and merchandising processes that don’t have to appeal to loss leaders enticements. If a retailer can’t develop a better process for getting shoppers to come into their store, this “problem” will continue itself.
The problem with trying to eliminate cherry-picking is that it’s not clear what should qualify a customer as a cherry-picker. Is a shopper that buys 4 of an item when it’s on Buy 1, Get 1 Free a cherry-picker? Or are they simply “stocking up”? Where do you draw the line regarding who is a smart shopper and who is a cherry-picker?
I agree with many of the other comments that the key is not to focus on the customer, but instead to focus on the incentives the retailer is offering. Promotional offers are a common and effective method of drawing customers into the store. If those incentives result in so much discount-only shopping that the retailer loses money, then the obvious solution is to either limit availability or reduce the level of incentive.
Hmmm. Concerning Cherry Picking.
It surprises me that anyone has this concern in this day and age. Does anyone really have time to drive/walk around to various stores just to save a buck? I would be surprised if the majority of grocery shoppers are doing this.
Just my thoughts.
There are two extreme approaches: 1) Welcoming cherry pickers, which is basically what Save-A-Lot does… only it’s EDLP for lowest prices rather than promotions. 2) Discourage cherry pickers. Dorothy Lane Markets offers specials only to its card club carriers who are their best highest spending customers. There is no mass newspaper advertising of specials for cherry pickers to hone in on. Only customized newsletters with targeted specials to club members.
Lot’s of great comments on how retailers have created cherry-pickers and that it is a marketing rather than a systemic problem. But how about the flip side of this conundrum. Isn’t it time to do away with “loss-leader” pricing? Sure it still “works” to get customers in the store, but only because we are trained to wait for it. Consumers aren’t fooled by loss-leader pricing any more. That’s why we are discussing “cherry-pickers” in the first place. So let’s do the hard thing and try driving store traffic with our differentiating benefits such as superior perimeter departments, brand selection, service, or — to recall one of last week’s discussions — our own unique brand offerings.
If you don’t want Cherry Pickers in your store, don’t sell “cherries.” Really, the bargain prices are not always loss leaders. Markdowns bring out the Cherry Pickers too. It is a great way to dump stock.
Want to give your loyal and more profitable customers better “cherries to pick”? Offer them a deal when they enter the store, or a coupon (good on the next shopping trip) when they checkout.
Frankly, it is much better to make the offer via a coupon-printing kiosk when a loyalty card holder walks in the door.
I think the problem stems from retailers attempts to “Manipulate” shoppers and getting manipulated in return. This is what happens when a system moves from service to greed. Neither promotions nor discounts spring from the mind of the service oriented. They only become a part of the picture when greed becomes a part of the picture. It’s a quick fix technique that is based on nothing more than an appeal to the consumer’s tendency to buy a bargain! Want more customers, want a bigger share, want trial – want more, want more? Then give it away and pray they come back. If you are superior, you might develop a following. If you are average, you just mortgage business. Now to turn around and blame the consumer for doing what you spent millions training him to do is insanity. This is like a crack dealer criticizing his addicted customers for paying him with soiled money! Hey guys, this isn’t rocket science! If you want out of the “promotion cycle,” then make your store an interesting place to shop! When is the last time you had a demo, offered cooking classes, put together a Rachel Ray ingredients table for a 30 minute meal? It would seem that most are just too lazy or don’t have the imagination to run an attractive business.
Loss leaders, and the bargain hunters they attract, have been around for many years. They are nothing new and reflect the couponing craze of the 90’s, promotional incentives which started in the ’60s and the shift to “self-service” stores pioneered by Wal-Mart, Kmart and others. Everyone does this (even the clubs) and the goal is to draw in traffic. The longer a customer is in a store, the more items they are exposed to and the greater the likelihood that they will purchase something else which is not a loss-leader. The retailer usually make up for the loss leader in any incremental sales (both at the time of the current visit as well as future visits). These loss leaders test the volume to price relationship of a particular product, as well as the category in which it resides. It is critical to developing a stores clientele, its traffic patterns, and even impacts a store’s plan-o-grams. Coupons, loss leaders and their resulting “cherry picking” are necessary evils of today’s retailer.
Today, you’re in the supermarket and here’s the scenario. Imagine a cashier telling a customer with a cart of groceries, “I’m sorry, but you already purchased your share of Charmin for this week’s sale.” What do you think that the customer might do with the rest of the groceries in their cart?
Imagine the next customer coming through the line. First, they were irritated that they had to take special time to go to the service counter to get a card. Next they go through the checkout line and the cashier says, “I’m sorry, but you only bought specials, so you don’t qualify to get them at this price.” What do you think this customer thinks of your store? Imagine the impression that you have told this customer on their first visit to your store. Their comment back to the cashier might be something like this: “I’ve never shopped here before. I saw your specials so I thought I’d give you a try.” Think they’ll be back?
There is a huge difference between forcing a consumer to behave your way and influencing them to behave in a way that each visit is of value both to them and to you as the retailer.
Sure there are very effective ways to limit cherry picking: there are simple limits on sale merchandise; there are minimum purchase requirements; additional quantity pricing; and others. These are all very effective in minimizing loss. What’s troubling about the whole discussion is the retailer’s view that it’s the consumers fault.
As with this discussion and others that discuss loyalty programs, there is a real misunderstanding by retailers as to who really owns customer loyalty. To borrow a line from politics, it’s the customer…(insert your own derogative).
If the retailer thought, as I was taught, to identify these customers as ‘secondary shoppers’ rather than ‘cherry pickers,’ they might see them as an opportunity. Instead, they see them as a problem. I was taught to look for ways to convert them to a ‘primary shopper.’ There in lies the combination of both the challenge and excitement of retailing.
Cherry picking is a big problem and will continue to be as long as high/low retailers continue to offer key grocery items at extremely low prices. As a consumer, I would cherry pick a supermarket as long as the everyday prices remain uncompetitive with their competition. Also, until the manufacturer stops the game on their end, these types of retailers will continue to offer these types of programs. It can’t be profitable for the manufacturer, but they can’t get off the drug!!
I agree with previous comments – whenever the customer is seen as the source of the problem the business is on shaky ground – cherry pickers are behaving rationally given the choices they have before them. So, don’t make an offer to your customers and then bind that offer with complex constraints, and certainly don’t single-out specific customers for being savvy shoppers in your stores (though abusing returns is a different matter). Rather, the technology is available today to clearly identify promotions and other offers that generate incremental returns for the business vs. those that merely feed cherry-pickers. Savvy retailers (and their manufacturer partners) are leveraging this understanding to dramatically increase the efficiency and effectiveness of their merchandising and marketing.
To concur with many in the choir: cherry pickers are nothing more or less than what retailers have made them through years of behavioral conditioning. If they are indeed unprofitable (I’d challenge most supermarkets to show that they’ve even done the math), then we have a choice – “fire” them, retrain them, or keep them status quo.
Restructuring certain promotion practices might be part of the retraining solution. Modern POS systems can be programmed to subtract the multi-item discount only when the second (or third or fourth) item crosses the scanner. Stew Leonard’s in CT has been doing this for a decade – so the big chains have no excuses.
Properly managing promotion depth is another option. Repeated, over-deep discounts tend to teach shoppers that the everyday price is not “real,” lowering the perceived value. Soon they get into the habit of waiting for the sale to stock up on known-value items. Demand-based software applications can help retailers get a handle on this one.
Blunt disincentives to limit cherry-picking activities might indeed cause those shoppers to go elsewhere. But do retailers really know enough about their customers to distinguish between a habitual cherry-picker and a loyal, thrifty shopper? Could you design rules that would only vex the former but endear you to the latter?
In their efforts to earn loyalty, retailers must show loyalty by rewarding smart shoppers with a better overall experience. Supermarkets should not be making most of their margin off individuals who are too time-pressed, too lazy, or too dumb to pay attention to prices. Eventually, they’ll resent you for it.
Some NYC grocers limit cherry picking by enforcing a minimum purchase of non-sale items. Many place a quantity limit per item per transaction. The real problem is that many grocers cannot generate traffic without loss leaders. This problem can’t be solved with technology. It’s a marketing, merchandising, positioning problem going to the heart of the customer relationship. If ruinous bribery is the key method of generating volume, profitability becomes hard to sustain. Get out of the loss leader sewer or go down the drain.
If a store has a problem with cherry pickers then the problem is with the store and not the customer. Obviously, the customer who is a cherry picker is unable to see further value beyond the sale items.
Retailers typically put limits of one or two on deeply discounted sale items. This was to encourage the customer to make a return trip if they want more, hopefully buying other products as well. But with Aldi, Save-A-Lot, and Wal-Mart offering similar items at about the same price with no limits, many retailers are now having 10 for $X sales.
Putting limits or restrictions on sales are viewed as negatives and as the negatives accumulate, the weaker the business gets. Good retailers do not put negative signs all over such as, “No shirt, no shoes, no service, no checks, no food stamps, limits on sales item, limits on double coupons, no refunds,” etc. This is a sign of weakness and a lack of class. Stores should be sending out messages saying “yes” and avoid all the “no’s” as much as possible.
Totally agree with David and the trend of the other comments – excess cherry picking is a certain sign of ill health that can be quickly observed in the business.
A decade ago, it was still possible for a retailer to be profitable as the “secondary trip” store, and cherry-picking was an irritating result of the effort to drive traffic. With WMT and Costco as price reference points, many mainstream grocers are facing a world where the primary trip for consumables is already lost. The former main market basket outlet became the secondary outlet, and the former secondary outlet became completely irrelevant. This is precisely the path Albertsons followed.
Hi-Low supermarket strategies are dangerous and can be ultimately destructive as soon as a consistent EDLP price leader is in the marketplace. If the only draw is low price and the rest of the store isn’t compelling, you get cherry picking. Fix the store or be prepared to perish.
The very discussion to me is the issue. Stores should be run by “merchants” and when they are you get a Wegmans or a Stew Leonard’s. Too frequently, as we merge more, a greater percentages of business is being done by larger generic organizations. The “number crunchers” are getting involved in merchandising and marketing issues, thus creating discussions like this one. Winning retail organizations fill the store with fresh, sellable product and then get creative and interesting in presentation and marketing. This will happen in all price ranges and in all formats when merchants are in charge. If you run your store right, returns and “cherry picking” will be at acceptable levels and do not merit significant attention from management.