In a recent study published by the American Marketing Association, Professor Sam Hui of the NYU Stern School of Business and co-authors Jeffrey Inman at the University of Pittsburgh's Katz Graduate School of Business, Yanliu Huang at Drexel University's LeBow College of Business and Jacob Suher at the University of Texas at Austin, found that mobile promotions, which persuade shoppers to travel farther within a store, can significantly increase unplanned spending.

Retailers have long held the belief that encouraging customers to travel more of the store will lead to increased purchases. One age-old example is how supermarkets stock milk at the rear of the store. Until now, that assumption has never been formally tested. In the first study of its kind, Professor Hui and his co-authors used radio frequency identification (RFID) tracking to collect in-store consumer path data and conducted a field experiment to examine the effect of in-store travel on unplanned spending.

They found:

  • On average, shoppers travel approximately 1,400 ft in a grocery store.
  • Traveling an additional 55 ft in the store generates around $1 in additional unplanned spending.
  • Simulations based on the researchers' estimates suggest that strategically promoting three product categories via mobile promotion may increase unplanned spending by more than 16%.
  • The research team conducted a field experiment to assess the effectiveness of mobile promotions and found that a coupon that requires shoppers to travel farther from their planned path results in a substantial increase in unplanned spending ($21.29) versus a coupon for a product near their planned path ($13.83).

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    "As smartphones proliferate and apps, such as FourSquare and Local Response, become ubiquitous, marketers are seizing this moment to enhance their location-based mobile marketing strategies," Inman says. "Retailers have the ability to target their promotions in ways that weren't possible before, and our study provides a roadmap for mobile marketers who seek to increase unplanned spending in stores," Hui adds.