Modeling the effects of dynamic group influence on shopper zone choice, purchase conversion, and spending

Abstract

In many retail contexts, social interaction plays an important role in the shopping process. We propose a three-stage dynamic linear model that captures the influence of group discussion on shopper behavior within a hierarchical Bayes framework. The model is tested using a video tracking and transaction dataset from a specialty apparel store. The research reveals that group conversations have a significant impact on the shopper’s department or “zone” choice, purchase likelihood, and spending over time. This group influence is magnified by the size of the group (particularly for zone penetration and purchase conversion), and is also moderated by group composition and cohesiveness. The conversations of mixed-age groups and groups who stay together while shopping have a significant influence on shopper behavior across all three stages, while discussions by adult groups exhibit a marginal carryover effect for purchase conversion. When shoppers have repeated discussions in a specific department, they are more likely to return to and buy from this department, while the cumulative number of discussions in the store drives higher spending levels. We also observe that group shoppers visit more departments than their solo counterparts; and mixed-age groups and solo shoppers are more likely to buy than adults-only or teen groups. This study has important implications for how retailers manage shopper engagement and group interaction in their stores.