The Cost of Shopper Behavior: How Retailers are Losing Avoidable Billions in Sales
According to a recent study by One Door and GlobalData, the U.S. retail industry is losing out on $125 billion per year due to poor visual merchandising standards.
(You can download the full report here.)
These visual and organizational deficiencies are responsible for direct losses in sales, like real-life cart abandonment.
However, it’s the indirect losses, like brand disloyalty, that could be the longest-lasting consequences for retailers whose stores aren’t up to shoppers’ expectations.
Take a look at how shoppers are responding to inadequate merchandising.
Store Abandonment
If a store’s visual merchandising is bad enough, shoppers will walk out without buying something they originally intended to purchase.
In the past year, nearly half of all consumers abandoned at least one store due to poor visual merchandising.
The impact varies across U.S. retail segments:
- Mid-market stores: About 26% of shoppers left, most often because they couldn’t find what they needed.
- Discount stores: Approximately 23% of consumers walked out, likely for the same reason — hard-to-find products.
- Needs-based stores: 21% of people exited, also mostly due to difficulty locating items.
- Luxury stores: About 16% left a luxury store, with messy, cluttered displays being the most common frustration.
Shortened Visits
Poor visual merchandising and inconvenience are costing retailers billions of dollars annually due to shortened shopping trips.
Shoppers across all retail segments have little tolerance for disorganization, causing them to spend less time in a store.
This leads to a significant impact on revenue for U.S. retailers:
- Mid-market stores: Around 27% of shoppers cut their visits short, resulting in an annual loss of $7.5 billion for mid-market U.S. retailers.
- Discount stores: Nearly 33% of consumers spend less time in discount stores, costing these retailers about $5 billion per year.
- Needs-based stores: 29.5% of shoppers left sooner than planned, leading to a $4.4 billion loss for grocers and similar retailers.
- Luxury stores: The same percentage of luxury shoppers — 29.5% — shortened their visits, translating to nearly $1.4 billion in lost revenue.
Smaller Cart Sizes
Whether rolling a half-empty cart, opting for a small basket, or grabbing just a few items by hand, shoppers limit their purchases when poor visual merchandising fails to make shopping easy.
- Discount stores: About 24% of consumers purchased less than they wanted to, costing discount retailers almost $4 billion per year.
- Needs-based stores: Over 26% of shoppers bought less than planned, leading to a near-$4 billion loss for needs-based retailers.
- Luxury stores: About 28.5% of luxury shoppers purchased fewer products than they intended, resulting in $1.2 billion in lost revenue.
Editor’s Note: Data for this particular shopper response (“I purchased fewer products than I intended”) due to poor visual merchandising was not applicable for mid-market retailers.
Reduced Spending
Retailers often incorrectly assume that the increased price per product can offset the decrease in the quantity of items purchased by shoppers.
However, a poor in-store shopping experience can lead consumers to reduce their overall spending:
- Mid-market stores: About 23% of shoppers spent less money than they intended to, costing mid-market stores about $7.5 billion annually.
- Needs-based stores: About 25% of shoppers reduced spending in needs-based stores, leading to an almost-$4 billion loss for grocers and similar retailers.
- Discount stores: 22.5% of consumers spent less money in-store, costing discount retailers $3.6 billion per year.
Editor’s Note: Data for this particular shopper response (“I spent less [money] than I intended”) due to poor visual merchandising was not applicable for luxury retailers.
Store Avoidance
Poor visual merchandising has many tangible, negative consequences, the worst of which is store avoidance.
When a shopper chooses not to return to a retailer due to poor visual merchandising, it results in significant lost revenue that compounds over time.
This is especially true for luxury and mid-market retailers, as these stores cater to window shoppers and emotional spending.
If shopping is not convenient or enjoyable, consumers have no reason to spend their disposable income, even if the products are worthwhile.
Around 23% of shoppers in both the luxury and mid-market retail segments have decided not to visit a store again due to poor visual merchandising.
This costs luxury retailers approximately $1 billion a year in lost revenue, while mid-market retailers lose a massive $6.5 billion each year due to store avoidance.
Discount and needs-based retailers aren’t exempt from store avoidance as a consequence of poor merchandising either.
Almost half of consumers who experience poor merchandising in these stores are unlikely to return, despite the necessity of their products.
The Cost of Poor Merchandising: The $125 Billion Challenge
Customers are actively responding to poor visual merchandising standards, and retailers are slow to respond.
To gain further insights into how in-store shoppers in your retail segment are responding, download GlobalData and One Door’s latest report, The Cost of Poor Merchandising.