Photo: RetailWire
Can in-store coffee add pep to retail sales?
A new university study finds drinking caffeinated coffee leads shoppers to spend more and purchase more impulse items.
The international study, led by the University of South Florida, ran three experiments that consisted of setting up an espresso machine at the entrances of a retail chain and home goods store in France and a department store in Spain. Upon entry, more than 300 shoppers were provided a complimentary cup — about half offered coffee that contained about 100 mg of caffeine and the others decaf or water. The shoppers then shared their receipts with researchers as they exited the stores.
Shoppers who drank a cup of caffeinated coffee spent about 50 percent more and bought nearly 30 percent more items than shoppers who drank decaf or water.
Caffeine also impacted what types of items they bought. Caffeinated shoppers bought more non-essential items, such as scented candles and fragrances than non-caffeinated shoppers. Minimal difference was found between the two groups when it came to utilitarian purchases, such as kitchen utensils and storage baskets.
“Caffeine, as a powerful stimulant, releases dopamine in the brain, which excites the mind and the body. This leads to a higher energetic state, which in turn enhances impulsivity and decreases self-control,” said lead author Dipayan Biswas, a marketing professor at the University of South Florida, in a statement.
A fourth experiment in a lab exploring online shopping showed similar results.
The study noted that the retail industry has increasingly been adding coffee bars near entrances. Among U.S. retailers, Target stands out for having a Starbucks-licensed café at the entrances of most of its larger locations.
Bob’s Discount Furniture appears to be the rare retailer offering free coffee, as well as cookies, candy and ice cream, to in-store browsers. Trader Joe’s was known for free coffee, although their sampling stations haven’t returned since the pandemic. Williams-Sonoma also frequently offers free coffee to support in-store promotions.
The research came with a warning about the “unintended consequences” of being hopped up on caffeine while shopping. Prof. Biswas said, “Consumers trying to control impulsive spending should avoid consuming caffeinated beverages before shopping.”
Discussion Questions
DISCUSSION QUESTIONS: Does it make sense that caffeinated shoppers are bigger and more impulsive spenders? Should retailers be investing in complimentary coffee, at least during key sales periods, or adding in-store coffee bars?
Poll
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While the results are indeed interesting, the wannabe but completely untrained data scientist in me can’t help but wonder if caffeine may be a correlation rather than a cause of the higher spend. One could suggest that people who drink decaffeinated coffee and water, tend to be more practical people, no? I also can’t help but wonder (slightly tongue in cheek) that if lowering inhibitions before shopping is the goal, perhaps offering margaritas and martinis on the way in is a more scientifically-proven direct line to higher spend?
Should retailers be investing in complimentary coffee? Why not, if it can add to sales even in a small way. Customers may appreciate the cup. Anticipate the bathrooms to be a little busier and make sure they are clean.
I am sure there is some truth in this. However caffeine can’t make up for a poor retail offer. And the reason Target does well goes way beyond having Starbucks in the entrance.
Target has always had a food element near the entrance, because that was always part of their Dayton’s DNA. As a kid I remember the McGlynn’s Bakery – cookies as a treat for being good during the trip, cinnamon rolls for later. (I suppose they served coffee too, but I was too busy looking in the display case to notice.) They’ve gone through different iterations over the last 50 years, but the partnership with Starbucks has definitely performed well.
On the one hand, I know coffee’s effect on me – it definitely makes me more “high energy,” enthusiastic and, consequently, more inclined towards spontaneous behavior like impulse purchasing. I’m also inclined to think well of a store where they are concerned enough about my shopping experience that they provide me with refreshments. On the other hand, I might take exception to a company I knew was intentionally drugging me to encourage spendthrift behavior.
I lke coffee and it doesn’t matter if I am in a Target or Kroger, I am going to get coffee. Once I get my coffee, I get the other things I came for and I am out of there. So for me, I’m not inclined to buy more, I just like coffee…
It doesn’t make sense to me about caffeinated vs. non-caffeinated. I do, however, think shoppers greatly appreciate free treats and coffee. I also think they like seating areas, great lighting, amazing music, clean spaces and nice staffs.
The origin of Target’s partnership with Starbucks wasn’t the desire to caffeinate their shoppers, but the huge added foot traffic that Starbucks brought into their stores. I’ve seen numbers as high as 300 more people per day coming into the store because of the Starbucks counter. At the same time, I think anything you do to make shoppers feel more comfortable and appreciated offers similar benefits.
We did a study last year on what would drive more foot traffic to physical retail and food and drink were at the top of the list. Besides, we already know this works, right? Ever get a Starbucks and grocery shop? It definitely works.
Is it the caffeine or the hospitality? Likely it’s both but it is reminiscent of Neiman Marcus and its InCircle parties, which were private shopping events in the evening which included cocktails and hors d’oeuvres. The uptick in spend at those events was sizable and of course, continue to this day for good reason.
Caffeine jolts us into action. It makes sense that in-store coffee can invigorate our visits and fuel spontaneous purchases.
Stores that accommodate consumers’ coffee habits encourage bigger baskets and more frequent visits. Right now, retailers need all the revenue drivers they can find, including rent from in-store coffee bars.
Yet, free coffee works, too. The generous hospitality behind complimentary coffee can trigger consumers’ desire to reciprocate by spending more.
Assuming they like coffee and enjoy the boost of caffeine then why not treat customers to some “joe.” I love the warning — beware of coffee while shopping, you might blow your budget or buy items you really don’t need. Thus, the reason why it is a good idea to never go to the grocery store when you are hungry and likewise make a shopping list before entry.
While the results are interesting and even compelling. I’d like to know more about the research, controls, and comparisons.
My conclusion is “it doesn’t matter.” Any retailer who offers coffee or another treat at the door will attract more customers and make them feel like the retailer is a good and welcoming neighbor.
The value of this is less about “caffeine” than about how customers like to shop. Nothing makes shopping more comfortable than a warm drink, kids with a treat, and only making one store visit instead of two (one to get your drink separate).
For years we’ve shopped at a Target with a Starbucks inside. Saturday morning trips became more of a ritual than they would have been without that cuppa joe.
It makes some sense, but I don’t think it will be a game changer one way or the other.
My feeling is this is likely an example of spurious correlation: people who drink a lot of coffee are probably different from non-drinkers in many ways … coffee or not. And this study seems to ignore all the potential negatives (like spilled coffee spoiling merchandise).
If a large store like Target wants to have a coffee bar fine … whatever the impact on other spending at least they’ll have the coffee sales themselves; other retailers not so much. Concentrate on your product, not becoming a substitute barista.
I think having food service in the store like coffee helps drive traffic to the store. Even if the person isn’t planning to shop, by walking into the store and buying coffee it triggers potential purchases. I have seen coffee shop colocations with banks, supermarkets, and other retail format and it is generally synergistic.