Researcher Profile: Dr. Collin Payne
Dr. Payne is an Associate Professor in the Marketing Department at New Mexico State University and the Co-Director/Co-Founder of the Consumer Behavior Lab. Part of the reason the Consumer Behavior Lab was established (2013) was to complement field research that was already being done in grocery stores. His work in Behavioral Economics began after a 3-year post-doctoral position in the Food and Brand Lab at Cornell University. Currently, the USDA funds his work regarding finding ways to help lower income grocery shoppers purchase healthier foods.
How did you initiate your partnership with your partner retail chain?
One day, I simply cold called them after hearing from a colleague that they are strategically positioned in lower income (and rural) neighborhoods. We told them from the beginning that we did not want to expose their profitability to things that would hurt their bottom line. At the same time, we did not want to increase lower income shoppers’ budgets. We worked to find mutually beneficial strategies for the retailer and lower income shoppers. From what we have done so far, our strategies suggest a purchase shift from lower margin food categories to higher margin healthier products
All of our studies have been conducted with our partner grocery chain, which has 150 stores across Texas, New Mexico, Colorado, Arizona, and Kansas. We have been really fortunate to partner with this chain and feel really blessed to work with an organization that cares not only about their bottom line, but their customers’ health as well.
Can you describe one of your favorite studies and the results that you got from the study?
We knew from existing literature that we needed to make sure that our nutrition interventions had at least three attributes: saliency, they were easy to understand, and that people could easily compare their own behavior to what was suggested. One great location to make sure all three of these attributes are being deployed is the shopping cart.
In one study, we placed placards in grocery carts detailing how many produce items were sold in a particular store as well as the most popular produce items. In another study, we knew that the “racetrack” of the grocery store was the most heavily trafficked route. We knew that if we put non-traditional in-store marketing (floor arrows) to direct people to the produce section with a reason to go in that direction, we might actually show an effect. In both cases (placard and floor arrows) produce purchases increased without increasing shopper budgets.
What type of sales data was the store willing to provide?
We were able to work with the store to get sales data by department—produce, dairy, markets, meat, and bakery. Now, they have given us direct access to their Point-of-Sale system. Soon, we will be able to have detailed reports, by item, regarding increasing or decreasing sales. We are extremely excited about this!
One thing that people ask is how long that behavioral economics interventions persist. Do you have any way to assess this?
When we first approached our partner retailer, this was part of the conversation. We provided initial testing at 2 and 4 weeks to examine the trajectory of sales. Then, once we are able to build a data tool, we will able to implement these strategies for a longer period of time considering we will now have the ability to understand profitability and feasibility with more fine grained data. We are currently waiting for potential additional funding to test these interventions over the course of a year for 50 stores. We want to see at what point does the efficacy of these times of interventions drop off—if at all. Do the interventions need to be changed frequently to help keep up increases in healthier purchases? We are really excited to get to this point in testing.
How do you balance store profitability with healthier choices?
The available evidence suggests that people generally come to the store with a fixed budget. They may not have a specific dollar value on paper, but they generally know about how much they want to spend at the grocery store. About half of this budget will be spent on unplanned wants while shopping. We target this 50% of the fixed budget for healthier purchases.
Produce has higher margins because of perishability. The grocery store really likes to increase turnover on produce to reduce spoilage and increase profits. Produce tends to be about 10-12% of most stores’ real estate within in the chain, which suggests a potential growth strategy for many chains.