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Coffee increases spending by 50%

Scientists gave free espressos (vs decaf coffee) to people entering stores. Customers bought ~30% more items and spent ~50% more, mainly on hedonic products.

Author

Thomas McKinlay
November 01, 2022

Topics: Retail store | Ecommerce
For: B2C
Research date: June 2022
Universities: University of South Florida, University of the Basque Country UPV/EHU, SKEMA Business School & 5 others.

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šŸ“ Intro

What happens if you drink a coffee before entering a store or when shopping online?Ā Does it change what you buy, or how many things you buy?

Researchers asked 101 people what they expected would happen. Only 28 guessed right.

Hereā€™s what a series of 7 scientific experiments in France, Spain, and the US found.

šŸ“ˆ Recommendation

Provide coffee or tea to customers before they shop with you.

You can offer it for free or make it easily available (e.g. coffee machine at your entrance, cafƩ on your premises).

Customers will buy more, especially if your experience or your products are fun and exciting (e.g. decor, fashion, travel, luxury).

šŸŽ“ Findings

  • People that consume caffeine (e.g. coffee, tea) before shopping spend more and buy more items.

  • As part of a series of 7 experiments, researchers:

    • Gave 145 customers of a home goods store in France either a caffeinated (100mg, a strong espresso shot), decaffeinated coffee, or a bottle of water. Those that drank the caffeinated coffee (vs decaf or water):

      • Spent more than double ($18.52 vs $9.06)

      • Bought 39% more items (1.50 vs 1.08)

    • Gave 221 U.S. students in a lab either caffeinated (34 mg) or non-caffeinated tea, and asked them how many items they would buy from a sample of a ā€œrelaxing giftsā€ page on Amazon. Those that drank the caffeinated tea chose 17.1% more items (3.83 vs 3.27)

  • The effect

    • Works mainly on sales of hedonic products, which tend to be exciting and fun (e.g. candles, home fragrances, plants). There is minimal impact on utilitarian products, which tend to be rational, planned purchases (e.g. insect-repellent candles, kitchen utensils, office supplies)

    • Is weaker on heavy coffee drinkers, who have more than two cups per day

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āœ‹ Limitations

  • In the study, people were given low to normal amounts of caffeine (30 to 100mg). However, very high doses of caffeine (over 300mg) may cause anxiety and nervousness rather than positive excitement. Does the effect hold in these cases, or does it backfire?

  • Researchers focused on peopleā€™s spending after they consumed caffeine. But could the smell of coffee - or just the thought of it - trigger a similar effect?

  • Caffeine was the focus of this study. But other drugs such as amphetamines and cocaine haveĀ some similar effects. As opposed to caffeine, these drugs impair cognition, but just like it they causeĀ impulsivity and loss of self-control. Do these drugs have a similar effect on spending? (Regardless, itā€™s probably not a good idea to give free cocaine to shoppers).

šŸ¢ Companies using this

  • Some retailers offer coffee in or near their stores, although it usually seems to be intended as a special benefit rather than a technique to directly increase sales.

  • Waitrose has experimented with giving free coffee to members of its loyalty program. Some other grocery stores such as Trader Joeā€™s and New Seasons Market have also at times given free coffee.

  • Non-grocery retailers such as Target, Barnes & Noble, Polo Ralph Lauren, Nordstrom, and H&M occasionally have in-store coffee bars.

  • Mercedes-Benz uses a ā€œBistro-Bar-Lounge-Showroomā€ concept which seems to haveĀ notably increased salesĀ - although it is unclear how much free coffee contributed to that.

āš” Steps to implement

  • Think of ways that you can integrate caffeine into your retail experience (mainly coffee or tea, depending on the culture you are operating in).

  • The beverages can be free, subsidized, or full price, depending on your cost-benefit analysis. Giving them for free or at rock-bottom prices may trigger beneficial feelings of reciprocity from customers toward you.

  • For example:

    • If you are a larger retailer, encourage a cafe to open within or near your premises.

    • If you are a small or medium-sized supermarket, place a coffee machine near the entrance of your store

    • If you are a premium retailer,Ā make it a ritualĀ to offer a beverage to your customers, before helping them with their purchases

šŸ” Study type

Lab and field experiments (in 3 different stores in France and Spain).

šŸ“– Research

Caffeineā€™s Effects on Consumer Spending. Journal of Marketing (June 2022).

šŸ« Researchers

Remember: This is a new scientific discovery. In the future it will probably be better understood and could even be proven wrong (thatā€™s how science works). It may also not be generalizable to your situation. If itā€™s a risky change, always test it on a small scale before rolling it out widely.

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