Published online: Nov 9th 2006

From The Economist print edition

How shops can exploit people’s herd mentalityto increase sales

1. A TRIP to the supermarket may not seem likean exercise in psychological warfare—but it is.Shopkeepers know that filling a store with thearoma of freshly baked bread makes people feelhungry and persuades them to buy more food than they had intended. Stocking the mostexpensive products at eye level makes them sell faster than cheaper but less visiblecompetitors. Now researchers are investigating how “swarm intelligence” (that is, how ants,bees or any social animal, including humans, behave in a crowd) can be used to influence whatpeople buy.

2. At a recent conference on the simulation of adaptive behaviour in Rome, Zeeshan-ul-hassan Usmani, a computer scientist from the Florida Institute of Technology, described a newway to increase impulse buying using this phenomenon. Supermarkets already encourageshoppers to buy things they did not realise they wanted: for instance, by placing everydayitems such as milk and eggs at the back of the store, forcing shoppers to walk past othertempting goods to reach them. Mr Usmani and Ronaldo Menezes, also of the Florida Institute ofTechnology, set out to enhance this tendency to buy more by playing on the herd instinct.The idea is that, if a certain product is seen to be popular, shoppers are likely to choose ittoo. The challenge is to keep customers informed about what others are buying.

3. Enter smart-cart technology. In Mr Usmani’s supermarket every product has a radiofrequency identification tag, a sort of barcode that uses radio waves to transmitinformation, and every trolley has a scanner that reads this information and relays it to a centralcomputer. As a customer walks past a shelf of goods, a screen on the shelf tells him howmany people currently in the shop have chosen that particular product. If the number is high,he is more likely to select it too.

4. Mr Usmani’s “swarm-moves” model appeals to supermarkets because it increases saleswithout the need to give people discounts. And it gives shoppers the satisfaction of knowingthat they bought the “right” product—that is, the one everyone else bought. The model has notyet been tested widely in the real world, mainly because radio frequency identificationtechnology is new and has only been installed experimentally in some supermarkets. But MrUsmani says that both Wal-Mart in America and Tesco in Britain are interested in his work, andtesting will get under way in the spring.

5. Another recent study on the power of social influence indicates that sales could, indeed,be boosted in this way. Matthew Salganik of Columbia University in New York and his colleagueshave described creating an artificial music market in which some 14,000 people downloadedpreviously unknown songs. The researchers found that when people could see the songsranked by how many times they had been downloaded, they followed the crowd. When thesongs were not ordered by rank, but the number of times they had been downloaded wasdisplayed, the effect of social influence was still there but was less pronounced. People thusfollow the herd when it is easy for them to do so.

6. In Japan a chain of convenience shops called RanKing RanQueen has been ordering itsproducts according to sales data from department stores and research companies. The shopssell only the most popular items in each product category, and the rankings are updatedweekly. Icosystem, a company in Cambridge, Massachusetts, also aims to exploit knowledge ofsocial networking to improve sales.

7. And the psychology that works in physical stores is just as potent on the internet. Onlineretailers such as Amazon are adept at telling shoppers which products are popular with like-minded consumers. Even in the privacy of your home, you can still be part of the swarm.