Retail Psychology: How Understanding Consumer Behavior Can Boost Your Retail Store’s Sales

Why do buyers act the way they do?

It is a question which has plagued entrepreneurs and business owners alike for decades.

It’s easy to rationalize purchasing things like water, food, and other things needed to fulfill basic physiological individual needs. But what about buying something for the sake of just wanting it? That is where things get somewhat more complicated.

For retail shop owners, understanding the origin of why people make certain decisions about buying–known as customer psychology–can unlock insights that will help boost sales, build customer loyalty, and much more.

Additionally, it is safe to say that COVID-19 has had quite an effect on how people spend their money. For that reason, it’s even more important to understand how your customers think.

Trying to get inside your customers‘ minds might appear overwhelming or impossible. But we are here to show you how you can develop meaningful connections and curated experiences for them with customer psychology–if they are shopping on your physical store or online.

Belowwe dive into the principles of consumer psychology and how you can use it to grow your company.

What’s consumer psychology?

Consumer psychology is the study of how consumers behave. The American Psychological Association puts it this way:”Consumer psychology applies theoretical psychological approaches to understanding customers.”

“Consumer psychology is the study of how consumers behave.”

Consumer psychology examines questions like:

  • How can shoppers choose companies, products, etc.?
  • What motivates customers to purchase or choose one product over another?
  • How can companies use marketing to attain their ideal customer?
  • What demographical, environmental, or psychological factors influence purchasing behavior?

The list goes on. These kinds of insights assist entrepreneurs and business owners learn about their customers so that they can better connect with them.

It can be useful to consider consumer behaviour in the context of inspiration to discover the answers to those questions. In the psychology world, motivation is divided into two classes: intrinsic motivation and extrinsic motivation.


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What is the distinction between intrinsic and extrinsic motivation?

  • Intrinsic motivation is when folks make decisions based on their personal wants and needs.
  • Extrinsic motivation is when folks make decisions based on external factors.

By way of instance, let us say Customer A and Customer B are both in the market for a new pair of sneakers to prepare for an upcoming marathon. Client A selects the set in their price range that feels the most comfortable, whilst Client B selects a pair depending on the brand and style without caring as much about knee and foot support.

So, which client is intrinsically motivated?

Customer A.

That is because Client A chosen for a pair of shoes that work best for them and will make their training experience more pleasurable. Client B was extrinsically motivated since they picked a pair of shoes based on manufacturer recognition over relaxation.

“People buy luxury brands as it indicates to others, and themselves, in their status,” states Tracey Wallace, Director of Marketing in MarketerHire.

“People buy facial masks [the skin care kind] because it indicates to others, and themselves, they care about their skin and self-care. What we buy, and what we do not, says just about everything about who we are.”

“What we buy, and what we do not, says just about everything about who we are.”

The role of consumer psychology in advertising

Since psychology is used to examine the human mind and its capabilities, it only makes sense that understanding consumer shopping behaviors on a mental level might help meet sales and marketing goals.

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Consumer psychology can be used in a variety of ways in a marketing and sales circumstance by:

  • Developing a sense of urgency
  • Influencing arts and branding
  • Collecting (and Implementing ) social proof
  • Building strong customer support experiences

The thing is, consumer psychology is a moving target. Shoppers’ expectations vary alongside changes in culture and technology, making it even more important to understand how to leverage your customer insights.

“Consumer psychology is a moving target… which makes it even more important to understand how to leverage your customer insights.”

A real-time instance of the human mind’s evolving character and related behaviors is the direct effect COVID-19 has had on shopping and purchasing.

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Based on McKinsey & Company,”Private disposable income isn’t expected to regain pre-crisis amount until Q2 2024 in the usa.”

What is more, consumers have increased the amount of shopping they do online and have changed to shopping at stores closer to home.

Getting into your customers’ minds can allow you to craft memorable shopping experiences that keep them coming back again and again, regardless of what is happening in the world.

Before we jump into how you can leverage customer psychology to your brick-and-mortar business, let us take a look at the fundamentals.

How can consumer psychology play a part in the buyer travel?

Buyer motivators are the factual and emotional factors that affect behaviors around buying. Think of these as both subconscious and conscious tick boxes clients move through as they enter various phases of the buyer travel.

There are many different buyer motivators, and they are organized into two classes:

  • Product motivation. The elements that induce a customer to select a particular service or product over other choices.
  • Patronage motivation. The elements that induce a customer to select a product from a particular brand over others.

Now, here is where things get somewhat more complicated.

These classes can each be broken down into two additional categories, psychological and rational:

  • Emotional merchandise motivation. When a client is driven by feelings, such as perceived standing or impulse, to get a product, typically without logic or reason.
  • Fair product motivation. When a client is driven by logic or rationale, like security or survival, to make a purchase.
  • Emotional patronage motivation. When a client is driven to complete a purchase from a particular brand without logic or reason.
  • Rational patronage motivation. When a client is driven to complete a purchase from a particular brand using logic and reason, like purchasing from a sale or after doing research.

Now, let’s dive into how purchaser motivators play a part in the purchaser’s journey.

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The awareness stage is when clients become aware of a issue, a need, or a desire. Once that consciousness is recognized, the client will prioritize this issue and conduct their research so.

By way of instance, a customer is searching for new skis for a ski trip next year. The priority of this problem is a lot lower in May and June than it’s in December.

At this time, our customer will probably start her search for a new set of skis with a Google search. She’ll begin to appear at different brands, learn about the differences between all-mountain skis, powder skis, and twin-tip skis, and find out all she can about what kind might best suit her needs. This client cares about finding the appropriate skis for her trip, skill set, and price point.


At the consideration phase, clients know they have a problem, want, or need to resolve and have taken steps to discover a resolution. In this phase, clients will be equally comparing and narrowing down their choices.

Clients are also doing things such as mining client testimonials, feedback, and social proof and hearing opinions from close family and friends with relevant experience.

With customer testimonials, opinions, and social proof playing a substantial role in the purchaser’s journey, it’s ideal to leverage those insights wherever possible. In actuality, according to a poll from BrightLocal, the average customer spends about 13 minutes reading testimonials before making a choice.

Clients are also likely visiting shops in person, together with shopping on the internet, to collect additional information.

In the event of our ski trip client, she is closing in on a decision once she feels like she has enough info. Reviews such as this one on the Salomon site can help clients in the thought stage learn more about a particular product.

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Along with reading customer reviews, she is also visiting ski stores to find options in person and check a store associate.

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Once clients have reached this point, they’re likely prepared to generate a purchase. They have analyzed their findings and have landed on something that’s suitable for their needs.

A particular combination of buyer motivators–whether emotional or rational, merchandise or patronage–helps clients arrive at different purchase choices. In the event of our ski trip client, her specific motivators, like needing to get the most recent and greatest skis or wanting to purchase skis well within her budget, will influence her choice.

For brick-and-mortar companies, learning the motivators that drive your audience to buy will help you figure out how to assist them.

How do brick-and-mortar retailers leverage customer insights?

Direct-to-consumer manufacturers have troves of customer information, allowing them to create exceptional shopping experiences for their clients. But can brick-and-mortar retailers do the same?

Take Shopify merchant LIVELY, for instance.

LIVELY is a bra and panties retailer redefining lingerie by blending style with comfort.

In 2016, LIVELY opened its first physical shop to decrease the cost of digital customer acquisition. With Shopify, LIVELY assembled a distinctive online booking experience known as a”match sesh” that allow customers book a slot ahead of time to see the physical store for their appointment.

This in-store experience makes it possible for women to try on various matches and styles that work best for them, per the advice of a store associate.

Roughly 30 percent of LIVELY’s in-store revenue comes from those online-to-in-store bra fittings.

The kicker is that not only did LIVELY boost in-store earnings in a special way, but it managed to collect valuable insight into its customers’ behavior online vs. in-store.

LIVELY utilizes Shopify’s point-of-sale system (POS) across all its retail locations and also can see its average order value is between 60%–80% greater among clients who reserve a fit sesh in contrast to those who only walk into one of its stores.

“LIVELY utilizes Shopify’s POS across all its retail locations and can see that its AOV is between 60%–80% greater among clients who reserve a healthy sesh.”

This is just 1 example of how physical retailers can discover innovative ways to learn about their clients.

“The information is there–brick-and-mortar stores will have to put it all together themselves,” states Adrienne Barnes, founder of ANB SaaS Consulting and Content Marketing.

“So knowing what products are selling the best, what pricing works the best, add that information to’Why did our clients buy from us’ ‘Why did they buy this product?’ Set your hard data with your qualitative information –meaning those chats with your clients –and you can have the insights.”

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Some Other methods brick-and-mortar businesses can use to collect customer information include:

  • Surveys and feedback forms
  • Talking to clients in person
  • Social networking
  • Focus groups
  • Exclusive mini-product launches

“Small brick-and-mortar shops, like boutiques or family-owned businesses, have the added bonus of being local to the community,” says Barnes. “Show up on your community and take every opportunity you need to chat with your clients. The better you understand who your client is, what motivates them to buy, and what their needs are, the better you can serve them.”

“Small brick-and-mortar shops have the bonus of being local to the community. Take every chance you need to talk to your customers.”

4 ways you can leverage customer psychology to boost your earnings

Even tiny changes to your in-store experience can significantly affect your sales, brand awareness, and customer experience if you are strategic about it.

Here are a number of tactics based on customer psychology you can implement to encourage clients to complete their purchase.

1. Boost your in-store experience

How do clients feel when they walk into your shop? Are they struck with your own brand? How does it feel to be on your shop? What is the aesthetic? These are questions that could help get the cogs on mind turning about improving your in-store customer experience.

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“Use customer psychology to comprehend the buying motives behind your product, and create a place that attracts that inspiration to life,” says Wallace.

“As soon as customers begin to envision themselves in the fact you have created, the more likely they are to get those products.”

A excellent example of a seamless in-store encounter is The Detox Market. In non-pandemic times, clients could visit one of The Detox Market’s six retail locations and reserve an ultra-personalized appointment with a sales partner. This curated in-store experience resonated well with The Detox Market’s customer base and has been a successful initiative.

When the pandemic hit, the fresh beauty collective constructed an online shopping experience that mirrors its in-store encounter.

Customers can shop almost via chat, and video, in addition to ask in-store associates questions in real time as though they were right there together.

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2. Leverage social proof

In accordance with BrightLocal, clients read about ten reviews before feeling like they could trust a company. What is more, a whopping 82 percent of clients read online reviews for local companies. To put it differently, social proof–testimonials, opinions, etc.–are crucial in your client’s buying journey.

There are plenty of ways to leverage social proof, like on your email advertising, on social networking, in-store, and needless to say, on your site.

This email from Everlane is an easy yet effective way to showcase social proof and invite users to navigate a shop or visit in-person.

3. Establish a loyalty program

Even though it might appear awkward to launch a loyalty program, there is a reason why so many manufacturers have themthey work! A loyalty program is a excellent way to turn first-time customers into lifelong clients.

Exterior collective REI runs the greatest example of a successful loyalty program. REI is a co-op–a company that’s managed and owned by people who use its services–which has been around since 1938 and has a dedication to the wonderful outdoors and people who love it.

For only $20, you acquire life access to the REI Co-op community, complete with a 10% member dividend, members-only special offers, and much more. This business model has proven to be an extremely effective way to construct brand and community loyalty.

4. Provide value through other channels

While encouraging customers to buy your goods, it is just as crucial to provide additional avenues of worth.

“When you understand why your customers behave the way they do, you are in a position to advertise, serve, and promote them in a more purposeful manner that meets their requirements, which in turn will help your company grow,” says Barnes.

Athletic clothing manufacturer, Outdoor Voices, understands its clients inside and outside, and because of this creates supplemental material that resonates with them through Outdoor Voices’ online zine, The Recreationalist.

From blog posts and interviews into a community forum and much more, Outdoor Voices knows the content its core audience cares about and has built a brand around those values.

Know your customers, know how to grow

You can learn a whole lot from observing your clients’ actions. But don’t worry: you don’t need to be a psychologist to understand consumer behaviour.

Knowing how your customers think, act, and make decisions is very valuable information to have, whether you are creating new products, launching new advertising campaigns, introducing new programs, or looking to sell more units.


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