The Truth about Impulse Buying

Retailers are smart to focus their time and energy to encourage impulse buying, it is very lucrative business. Savvy retailers use a number of strategies to encourage impulse buying through attractive displays in strategic locations, pleasant sights, smells and sounds in the store and online through web pages that allow shoppers to browse categories of products,  just to name a few.  Entire marketing research studies detail strategies to encourage impulse buying.

Impulse buying is defined as unplanned purchases and can range from the pack of gum you throw in your cart at the grocery store checkout to looking at a new car and driving it off the lot and many purchases in between. Best estimates are that about 40% of consumer spending is impulse buying.  The list of the reasons consumers purchase on impulse are feeling good in the moment, social interaction, finding that truly irresistible bargain and many more. The most significant motivation for impulse buying, which accounts for 88% of the impulse purchases, is that the item is on sale. Whether it is a real or perceived sale, consumers like to get a deal.  The impulse purchase of a sale item may or may not have long term benefits. The only person who can honestly answer that question is the individual consumer. The number of storage units we see in every city and small community may be an indication that consumers like to accumulate a lot of “stuff” they don’t use and end up storing in a rented room.

Let’s take a look at the numbers.  The amount of money that exchanges hands through consumer spending is available from the US Dept. of Commerce, Bureau of Economic Analysis (BEA). BEA figures are closely monitored to measure economic health in the United States. National personal consumption expenditures (PCE) from September through December of 2010 totaled 10,519,800,000,000 (yes, 10.5 trillion dollars).  Within the PCE category are sub-categories of Goods and Services and within those categories are durable and non-durable goods and sub-categories of food and energy.  If we apply the 40% estimate of impulse buying to the 4th quarter of 2010 PCE numbers, impulse buying accounted for 4,207,920,000 ( 4.2 trillion dollars) during that period. These are mind boggling numbers that don’t have much personal meaning to most people.  Suffice it to say that the incentive to market to impulse buyers is significant. If you are an impulse buyer, you can gauge the amount of money you spend on impulse by simply tracking your purchases and calculating 40% of that figure. You may not be exact but you will be close.

The next question is who buys on impulse? Percentages vary by age, income and items purchased. Statistics show that younger consumers with higher incomes have a greater percentage of impulse purchases. Statistics show that 60% of females have made an impulse purchase in the past year. However, no age group, gender or income level is immune to impulse buying.

Impulse buying is actually a good new bad news story. The purchases made on impulse stimulate the economy and increase retail revenues, the bad news is that individuals can easily overspend and create person financial difficulties through impulse buying. Savvy marketing has blurred the line between needs and wants and years of easy credit have made it possible for individuals to take on significant debt due to impulse buying.

Consumers who have created financial problems for themselves through impulse buying can find help to control their finances through online resources and credit counseling agencies. Reducing impulse buying may simply involve changing shopping habits, monitoring purchases and budgeting. Impulse buyers, who have more disposable income and enjoy shopping and spending, thank you for stimulating our economy.  If you have accumulated a lot of unnecessary stuff and want to save money for purchases or savings to make your life truly better, wait 24 hours before making that impulse purchase and if you decide you really don’t need that new item, put the money in savings and make choices to spend your money in ways that will improve your quality of life.

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