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Thoughts on Dealing with Retailing Behavioural Disorders

posted 27 Jun 2011, 07:19 by Budd Margolis

 Interactive Retail and the impact of hoarding, obsessive collecting, shopping binges and compulsive over spending.

By Budd Margolis June 27, 2011

 There is a growing movement of conscientious consumers who believe that the impact of their activity can be guided to shape how companies deal with the environment and social issues.  Green retailing is more than a trend and the recession has shaped peoples purchasing behaviour significantly.  Today, the retail that still believes selling more in a world that wants less and less waste is going to fail.

 Conscientious retailing is not just about sustainable habits or programmes but about care for the planet, its resources and its people.  A growing number of companies are giving back and getting involved in their communities and this is a healthy, even holistic approach to building successful companies, communities and employees. 

 There are super customers who have an annual spend of tens of thousands of dollars and then there are compulsive shoppers.  What is at issue are those who spend beyond their limits and thus the quality of their, and their families lives. What is the responsibility of retailers in identifying and then dealing with those who have disorders? 

 “A 2006 Stanford University study has concluded that compulsive overspending or over shopping is a legitimate disorder that affects approximately 6% (17,000,000) of the U.S. population and that men and women suffer about equally” (Shulman, 2008).

 Some people are hoarders and could be classed as part of Obsessive/compulsive Disorder (OCD) but there is very little research available on the subject.  It is estimated that 1-2% of the population are hoarders while fewer than 5% are ever discovered or treated. There are as many reasons and opinions as to why people have this or that disorder as there are potential cures or treatments.

 Every retailer has “issue” customers some may try to defraud or have a high return rate.  This is part of the cost of conducting business but what this article focuses on are those customers who either have difficulty or can not control their disorders.  Counting statistics for all other retail consumer behavioural disorders, I think it is fair to say that as much as 10% of those buying from you may have problems.

 Just because someone collects items does not mean they have a compulsive disorder or are hoarders.  But many people are deluded in the belief that their activity is leading to wealth creation via eBay or that they have a healthy hobby. It is up to companies to make sure that they do not sell unhealthy messages to their consumers. That takes a level of respect in the corporate to consumer “trust proposition.

 Television shopping and eCommerce have been publicised as potentially dangerous places for compulsive spenders.  Mail order and home delivery does have one unique benefit and that is that this activity is carried out anonymously although companies do spot unusual trends.

 Tobacco companies have to issue warnings on their packages because there is a serious health threat to the use of such products.  Gambling and alcohol also carries serious warnings but retail is usually a necessary activity and we can not regulate and “nanny” hyper-manage every human activity from obvious or perceived problems.

 Shop channels and web sites regularly improve anti fraud measures and should be conscientious of unusual purchase activity to identify potential problems.  There should be plans ready to implement in order to deal with such issues.

Retail therapy or shop till you drop references are often seen as humorous tags of an unhealthy or inappropriate behavioural activity in our consumerist society but there is much truth here.  There are many emotions that are triggered with the acquisition process and possession of goods.  Most of what we buy we do not really need.  The pity is some of what we buy does not do what it purports and in some cases causes a negative impact on our health or the environment.

 I do not think regulating this area to extreme levels, as has been tried in some countries, will help solve or treat the disorder, but I do feel that companies should be more aware of and state their policy towards compulsive purchases.  It is a delicate area as your MVC or “most valued customers” are a small but very powerful and vital group of any retailers business.  Any harm to this group can backfire and cause a tsunami effect on your revenues.

 In a democracy, people have the right to behave as they wish as long as it is within the law and does not cause harm to anyone including themselves. And our society is only as strong as its weakest link so looking after the weakest provides many benefits for all of us.  It is only a small percentage of the consumer pool that has issues but they are as deserving of help as anyone with a disability whether it is physical or mental.

 Credit rating is one way to analyze a consumer’s credit health but there should be a list to identify consumers with retail disorders as well. One can either place limits or alerts or try to manage the problem in another clever way.  Cutting someone off so that they can continue their abuse with another retailer is not a solution for that individual or the industry.

 Profiling customers so that potential problems can be identified, confronted and hopefully avoided is a serious and important task. We must be aware of our rights to privacy and treat our customers with respect but showing concern is not a weakness and promotes a healthy society.

 I recall a shop channel that celebrated its best customer with free flights, first class hotel accommodation, wonderful hospitality, gifts, meets with the presenters and tour of the channel only to realise later on that this customer may have bought the most but also returned the most and actually cost them a great deal of money! They spent thousands celebrating a customer that cost them thousands. 

 We know that geographic data exists so that the general wealth or income of a person can be determined by their geographic location.  Adding in credit rating and purchase history we can build metrics to indicate potential problem issues.

 Another topic is the potential of convergent technology which provides ubiquitous access.  But with more access we also create new opportunities for fraud.  Trusted loyal customers will be higher valued in the future and should be treated as the greatest asset.

 By helping customers we can build greater trust and loyalty and that leads to higher spend, revenues, and if we manage efficiently, profits.