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Costco shoppers come for the bargains -- and the samples
Nataly Gold, Sivan Gold, and Anna Rodriguez shop at a Costco store.
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STEVE CHIOTAKISHere's a marketing tactic big in supermarkets and at the warehouse clubs: food that you can try before you buy. But when some people eat those free samples, they're not thinking about buying the product. They're thinking about having a second helping.
From Denver, Zachary Barr has the story.
ZACHARY BARRThere's so much free food at Costco, it helps to go in with a strategy. Here's Matt Hannan.
MATT HANNAN: Start with the meats and cheeses and work my way down to the drinks.
Hannan's at the rotisserie chicken and provolone cheese cart. So I assume this is his first stop. I tell him that clear on the other side of the store, there's free jello.
HANNAN: Already had some.
And then he tells me about another spot he's already visited:
HANNAN: There's a fella over there with some kind of soda that is really good. So I'll probably wander back for some of that.
You see, Hannan's well into his sampling circuit. He says he routinely circles the store, eating seconds -- and thirds. But he doesn't stop at every station.
HANNAN: I'm not a very picky eater but some of the stuff in the health food section I'll avoid.
Kay Wilson runs the food demo program for Colorado Costcos. She says people do like the junkier foods best, cookies and candy in particular. And for very hungry shoppers like Matt Hannan -- she has a message.
KAY WILSON: We want them to have all they want. There's no overindulging. If you're going to buy 10 pounds of something, you want to make sure it's something you're going to consume.
Giving out samples is part of Costco's business model, says supermarket analyst David Livingston. He notes other profitable grocers do it, too.
DAVID LIVINGSTON: There's just a high correlation with successfully run supermarkets and sampling.
Livingston points to Whole Foods and Trader Joes.
LIVINGSTON: And these two chains are probably two of the highest sales per square foot supermarkets in the United States.
So why doesn't every store do it? Livingston says a supermarket needs to have extra money and be certain that shoppers will like the food they're eating.
In Denver, I'm Zachary Barr for Marketplace.
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I want to add something here --- providing samples to customers is not the conventional wisdom for promoting sales -- the conventional wisdom states that a hungry shopper will buy more on impulse! So I love the fact that Costco does not rely on that strategy for success. I have worked for WDS, the company that is in charge of samples -- the goal is simply acquainting the customer with the products that are available. The vendors decide if they want to share/showcase their product or not. As for feeding customers, I love that concept!! A Costco member may not buy the product that day, but if they like it, then they know it may be available for purchase another time. As for the demonstrators needing to fill a quota, we do have sales goals, but are not fired if we do not fulfill them - our top priority (at least at our store) is to provide a quality demonstration for the members and a quality representation of the product on behalf of the vendor - and yes, we hope the customer will like it enough to buy it - that is just common sense, not a pressure or unrealistic expectation.
Smart retailers will realize the "try before you buy" is alive and well. In fact, a shopper who uses a dressing room is 4x more likely to buy than one who just browses which I cover in a blog post at http://www.retaildoc.com/blog/what-if-home-depot-had-a-dressing-room/
The reason stores also do this is because it doesn't cost them anything. They get demo money from the food/beverage companiesm they are the ones that pay for it. So it doesn't cost Costco, Whole Foods etc... a dime and in many cases they actually make money when companies pay to have demos done at their stores so of course it makes sense for them to do sampling.
I think sampling is a great marketing strategy. Off the top of my head I can think of three products that I now buy religiously because I was given a product sample that I really enjoyed. It never would have occured to me to even try these products otherwise. Offering samples is a great way to introduce a wonderful product and potentially win new customers.
Ha! None of this food sampling has anything to do with logical choice (like "I want to taste what I'm going to buy before I buy it.) It's all psychological--they get you to sample food, that titillates your sense of smell + taste, gastric juices begin to flow, you feel hunger and whammo---you buy more food, EVEN if it's not the food you're sampling! Get people eating and they'll buy more food because they're animal hunger system has been activated, tipping the balance on a lot of impulse and discretionary purchases.
It's got nothing to do with logic. We don't buy food logically, unless we make a listy, stick to it--and don't sample the honey baked ham! (P.S. I faithfully shop Costco every two weeks and I only buy the honey baked ham when its on my list around the holidays)
As someone who once worked for WDS (in California) who is the company that works with the outside vendors to get those free samples out there,I can tell you as a fact, its not Costco who paying for those samples. Costco does do product samples for their own products mostly during holiday season, but its mostly outside vendors. What you may not realize also, is those that are promoting those free samples, they have a quota they have to fill. Their job is to sell so many of whatever they are promoting, or they can lose their jobs over it if they don't. Most of those samples that are promoted high sugar, junk food items, that you wouldn't buy unless you are coming into Costco to do so. There people come into Costco just to eat the samples, they don't buy. Does sampling make a difference in what you are buying? That really depends on you.
And do Costco a favor please, if you are trying the samples, put your trash in the trash bin.
Well executed sampling works for suppliers because it increases awareness, promotes trial - and makes the product stand out among both customers and store associates. Sampling programs are paid by suppliers from promotional and advertising budgets.
I do shop at Costco regularly and think they do a good job at sampling, and most customers like the "farmers market atmosphere" it creates.
As a marketer, I love it. But, from my perspective as a regular Costco "get in-get out" power shopper, I never indulge and think they tend to over-do the sampling promotions and create too many "isle blockers" at my neighborhood Costco stores.
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